UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3010
Fidelity Advisor Series VII
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Eric D. Roiter, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | July 31 |
Date of reporting period: | July 31, 2004 |
Item 1. Reports to Stockholders
Fidelity® Advisor
Real Estate
Fund - Class A, Class T, Class B
and Class C
Annual Report
July 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to financial statements. | |
Report of Independent Registered Public Accounting Firm | ||
Trustees and Officers | ||
Distributions | ||
Proxy Voting Results |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Commencing with the fiscal quarter ending October 31, 2004, each fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. The fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of the fund's portfolio holdings, view the fund's most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Fidelity Advisor Real Estate Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of FundA | |
Class A (incl. 5.75% sales charge) | 13.66% | 15.34% | |
Class T (incl. 3.50% sales charge) | 15.92% | 16.43% | |
Class B (incl. contingent deferred sales charge) B | 14.67% | 16.28% | |
Class C (incl. contingent deferred sales charge) C | 18.67% | 18.12% |
A From September 12, 2002.
B Class B shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 5% and 4%, respectively.
C Class C shares' contingent deferred sales charge included in the past one year and life of fund total return figures are 1% and 0%, respectively.
Annual Report
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Advisor Real Estate Fund - Class T on September 12, 2002, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500® Index did over the same period.
Note: Class T performance is shown above. Class A, Class B, and Class C returns may vary due to the difference in sales charges paid by each class or expenses borne by a particular class. Please see prospectus for added detail regarding class-level expenses.
Annual Report
Management's Discussion of Fund Performance
Comments from Steve Buller, Portfolio Manager of Fidelity® Advisor Real Estate Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
During the 12-month period ending July 31, 2004, the fund's Class A, Class T, Class B and Class C shares gained 20.59%, 20.12%, 19.67% and 19.67%, respectively, in a volatile environment for real estate securities. By comparison, the Dow Jones Wilshire Real Estate Securities IndexSM (full-cap) returned 22.86% and the LipperSM Real Estate Funds Average returned 21.60%. The broad stock market, as measured by the Standard & Poor's 500 Index, returned 13.17%. The biggest detractor versus the Dow Jones Wilshire Index during the period was Apartment Investment & Management, which was hurt by the apartment sector's continued poor fundamentals for much of the period. Also hurting relative performance was failing to own a meaningful stake in factory outlet retailer Chelsea Property Group, which enjoyed strong performance and was acquired at a premium late in the period. The fund's best performer was Starwood Hotels & Resorts, which benefited from much-improved fundamentals in the hotel industry. Also adding to results was Reckson Associates. Reckson owns office buildings in the New York City metropolitan area and benefited from that market's strong fundamentals.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,017.90 | $ 7.43 |
HypotheticalA | $ 1,000.00 | $ 1,017.55 | $ 7.45 |
Class T | |||
Actual | $ 1,000.00 | $ 1,016.30 | $ 8.77 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,013.80 | $ 11.27 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 1,013.80 | $ 10.87 |
HypotheticalA | $ 1,000.00 | $ 1,014.07 | $ 10.93 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,020.10 | $ 5.22 |
HypotheticalA | $ 1,000.00 | $ 1,019.76 | $ 5.24 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.48% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.17% |
Institutional Class | 1.04% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2004 | ||
% of fund's | % of fund's net assets | |
Starwood Hotels & Resorts Worldwide, Inc. unit | 7.3 | 4.6 |
Vornado Realty Trust | 7.3 | 5.3 |
ProLogis | 6.2 | 4.7 |
Simon Property Group, Inc. | 5.2 | 5.3 |
CBL & Associates Properties, Inc. | 4.9 | 3.7 |
Equity Office Properties Trust | 4.8 | 3.6 |
CenterPoint Properties Trust (SBI) | 4.8 | 5.0 |
Reckson Associates Realty Corp. | 4.7 | 3.7 |
Duke Realty Corp. | 4.5 | 4.1 |
General Growth Properties, Inc. | 4.0 | 3.7 |
53.7 | ||
Top Five REIT Sectors as of July 31, 2004 | ||
% of fund's | % of fund's net assets | |
REITs - Industrial Buildings | 24.4 | 19.4 |
REITs - Malls | 18.6 | 16.5 |
REITs - Shopping Centers | 14.8 | 14.3 |
REITs - Office Buildings | 14.0 | 13.4 |
REITs - Apartments | 8.3 | 11.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2004 * | As of January 31, 2004 ** | ||||||
 | Stocks 96.2% | | Stocks 95.4% | ||||
 | Short-Term | | Short-Term | ||||
* Foreign investments | 1.6% | ** Foreign investments | 2.1% | ||||
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 96.2% | |||
Shares | Value (Note 1) | ||
HOTELS, RESTAURANTS & LEISURE - 7.3% | |||
Hotels, Resorts & Cruise Lines - 7.3% | |||
Starwood Hotels & Resorts Worldwide, Inc. unit | 126,710 | $ 5,701,948 | |
REAL ESTATE - 88.3% | |||
Real Estate Management & Development - 1.9% | |||
Boardwalk Real Estate Investment Trust | 100,700 | 1,212,870 | |
CB Richard Ellis Group, Inc. Class A | 11,800 | 223,492 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 1,436,362 | ||
REITs - Apartments - 8.3% | |||
Apartment Investment & Management Co. Class A | 87,035 | 2,782,509 | |
Cornerstone Realty Income Trust, Inc. | 26,500 | 232,405 | |
Equity Residential (SBI) | 77,200 | 2,281,260 | |
Home Properties of New York, Inc. | 29,800 | 1,120,480 | |
TOTAL REITS - APARTMENTS | 6,416,654 | ||
REITs - Health Care Facilities - 1.6% | |||
Health Care Property Investors, Inc. | 21,400 | 534,144 | |
Ventas, Inc. | 28,140 | 718,133 | |
TOTAL REITS - HEALTH CARE FACILITIES | 1,252,277 | ||
REITs - Hotels - 0.3% | |||
MeriStar Hospitality Corp. (a) | 44,980 | 260,884 | |
REITs - Industrial Buildings - 24.4% | |||
Catellus Development Corp. | 89,805 | 2,245,125 | |
CenterPoint Properties Trust (SBI) | 96,700 | 3,711,346 | |
Duke Realty Corp. | 113,710 | 3,497,720 | |
Liberty Property Trust (SBI) | 40,600 | 1,559,040 | |
ProLogis | 141,490 | 4,816,320 | |
Public Storage, Inc. | 64,500 | 3,039,885 | |
TOTAL REITS - INDUSTRIAL BUILDINGS | 18,869,436 | ||
REITs - Malls - 18.6% | |||
CBL & Associates Properties, Inc. | 68,530 | 3,776,003 | |
General Growth Properties, Inc. | 103,390 | 3,109,971 | |
Simon Property Group, Inc. | 77,800 | 4,015,258 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
REAL ESTATE - CONTINUED | |||
REITs - Malls - continued | |||
The Mills Corp. | 25,830 | $ 1,177,848 | |
The Rouse Co. | 47,100 | 2,298,480 | |
TOTAL REITS - MALLS | 14,377,560 | ||
REITs - Management/Investment - 1.9% | |||
Capital Automotive (SBI) | 10,202 | 295,756 | |
Newcastle Investment Corp. | 40,730 | 1,152,252 | |
TOTAL REITS - MANAGEMENT/INVESTMENT | 1,448,008 | ||
REITs - Mobile Home Parks - 1.2% | |||
Manufactured Home Communities, Inc. | 29,700 | 941,193 | |
REITs - Mortgage - 0.4% | |||
Capital Trust, Inc. Class A | 6,800 | 166,396 | |
MortgageIT Holdings, Inc. | 12,600 | 151,200 | |
TOTAL REITS - MORTGAGE | 317,596 | ||
REITs - Office Buildings - 14.0% | |||
Boston Properties, Inc. | 51,700 | 2,734,930 | |
Equity Office Properties Trust | 144,500 | 3,749,775 | |
Highwoods Properties, Inc. (SBI) | 8,600 | 199,520 | |
Kilroy Realty Corp. | 15,100 | 534,540 | |
Reckson Associates Realty Corp. | 130,770 | 3,623,637 | |
TOTAL REITS - OFFICE BUILDINGS | 10,842,402 | ||
REITs - Prisons - 0.9% | |||
Correctional Properties Trust | 27,100 | 701,890 | |
REITs - Shopping Centers - 14.8% | |||
Cedar Shopping Centers, Inc. | 9,000 | 111,330 | |
Federal Realty Investment Trust (SBI) | 35,060 | 1,479,532 | |
Inland Real Estate Corp. | 19,600 | 256,172 | |
Kimco Realty Corp. | 20,000 | 962,000 | |
Pan Pacific Retail Properties, Inc. | 31,190 | 1,578,214 | |
Price Legacy Corp. | 24,895 | 455,827 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
REAL ESTATE - CONTINUED | |||
REITs - Shopping Centers - continued | |||
Regency Centers Corp. | 22,700 | $ 964,750 | |
Vornado Realty Trust | 96,850 | 5,626,017 | |
TOTAL REITS - SHOPPING CENTERS | 11,433,842 | ||
TOTAL REAL ESTATE | 68,298,104 | ||
THRIFTS & MORTGAGE FINANCE - 0.6% | |||
Thrifts & Mortgage Finance - 0.6% | |||
HomeBanc Mortgage Corp. Georgia | 55,600 | 461,480 | |
TOTAL COMMON STOCKS (Cost $66,782,521) | 74,461,532 | ||
Money Market Funds - 3.3% | |||
Fidelity Cash Central Fund, 1.33% (b) | 2,552,083 | 2,552,083 | |
TOTAL INVESTMENT PORTFOLIO - 99.5% (Cost $69,334,604) | 77,013,615 | ||
NET OTHER ASSETS - 0.5% | 356,671 | ||
NET ASSETS - 100% | $ 77,370,286 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
Income Tax Information |
The fund hereby designates approximately $181,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (cost $69,334,604) - See accompanying schedule | $ 77,013,615 | |
Foreign currency held at value (cost $3,764) | 3,747 | |
Receivable for investments sold | 219,296 | |
Receivable for fund shares sold | 505,601 | |
Dividends receivable | 99,275 | |
Interest receivable | 3,216 | |
Prepaid expenses | 50 | |
Other receivables | 5,786 | |
Total assets | 77,850,586 | |
Liabilities | ||
Payable for investments purchased | $ 217,911 | |
Payable for fund shares redeemed | 125,693 | |
Accrued management fee | 36,480 | |
Distribution fees payable | 37,288 | |
Other affiliated payables | 25,491 | |
Other payables and accrued expenses | 37,437 | |
Total liabilities | 480,300 | |
Net Assets | $ 77,370,286 | |
Net Assets consist of: | ||
Paid in capital | $ 68,331,424 | |
Undistributed net investment income | 97,635 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,262,216 | |
Net unrealized appreciation (depreciation) on investments | 7,679,011 | |
Net Assets | $ 77,370,286 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
July 31, 2004 | ||
Calculation of Maximum Offering Price | $ 13.22 | |
Maximum offering price per share (100/94.25 of $13.22) | $ 14.03 | |
Class T: | $ 13.21 | |
Maximum offering price per share (100/96.50 of $13.21) | $ 13.69 | |
Class B: | $ 13.18 | |
Class C: | $ 13.18 | |
Institutional Class: | $ 13.28 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 1,966,822 | |
Interest | 23,222 | |
Total income | 1,990,044 | |
Expenses | ||
Management fee | $ 316,239 | |
Transfer agent fees | 199,088 | |
Distribution fees | 329,138 | |
Accounting fees and expenses | 44,276 | |
Non-interested trustees' compensation | 239 | |
Custodian fees and expenses | 18,278 | |
Registration fees | 77,546 | |
Audit | 49,287 | |
Legal | 4,719 | |
Miscellaneous | 10,305 | |
Total expenses before reductions | 1,049,115 | |
Expense reductions | (13,992) | 1,035,123 |
Net investment income (loss) | 954,921 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 1,532,838 | |
Foreign currency transactions | (2,015) | |
Total net realized gain (loss) | 1,530,823 | |
Change in net unrealized appreciation (depreciation) on investment securities | 5,162,230 | |
Net gain (loss) | 6,693,053 | |
Net increase (decrease) in net assets resulting from operations | $ 7,647,974 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
Year ended | For the period | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 954,921 | $ 230,672 |
Net realized gain (loss) | 1,530,823 | 97,534 |
Change in net unrealized appreciation (depreciation) | 5,162,230 | 2,516,781 |
Net increase (decrease) in net assets resulting | 7,647,974 | 2,844,987 |
Distributions to shareholders from net investment income | (926,122) | (178,071) |
Distributions to shareholders from net realized gain | (347,381) | - |
Total distributions | (1,273,503) | (178,071) |
Share transactions - net increase (decrease) | 46,608,300 | 21,720,599 |
Total increase (decrease) in net assets | 52,982,771 | 24,387,515 |
Net Assets | ||
Beginning of period | 24,387,515 | - |
End of period (including undistributed net investment income of $97,635, and undistributed net investment income of $52,029, respectively) | $ 77,370,286 | $ 24,387,515 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.33 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .27 | .21 |
Net realized and unrealized gain (loss) | 2.03 | 1.28 |
Total from investment operations | 2.30 | 1.49 |
Distributions from net investment income | (.30) | (.16) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.41) | (.16) |
Net asset value, end of period | $ 13.22 | $ 11.33 |
Total Return B, C, D | 20.59% | 15.13% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 1.54% | 2.98% A |
Expenses net of voluntary waivers, if any | 1.54% | 1.75% A |
Expenses net of all reductions | 1.52% | 1.72% A |
Net investment income (loss) | 2.10% | 2.35% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 22,273 | $ 3,993 |
Portfolio turnover rate | 52% | 47% A |
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.32 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .23 | .18 |
Net realized and unrealized gain (loss) | 2.02 | 1.29 |
Total from investment operations | 2.25 | 1.47 |
Distributions from net investment income | (.25) | (.15) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.36) | (.15) |
Net asset value, end of period | $ 13.21 | $ 11.32 |
Total Return B, C, D | 20.12% | 14.91% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 1.86% | 3.32% A |
Expenses net of voluntary waivers, if any | 1.85% | 2.00% A |
Expenses net of all reductions | 1.83% | 1.97% A |
Net investment income (loss) | 1.80% | 2.10% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 26,037 | $ 9,049 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.29 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .16 | .14 |
Net realized and unrealized gain (loss) | 2.04 | 1.28 |
Total from investment operations | 2.20 | 1.42 |
Distributions from net investment income | (.20) | (.13) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.31) | (.13) |
Net asset value, end of period | $ 13.18 | $ 11.29 |
Total Return B, C, D | 19.67% | 14.38% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 2.33% | 3.82% A |
Expenses net of voluntary waivers, if any | 2.33% | 2.50% A |
Expenses net of all reductions | 2.31% | 2.47% A |
Net investment income (loss) | 1.31% | 1.60% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 12,910 | $ 5,061 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.29 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .17 | .14 |
Net realized and unrealized gain (loss) | 2.03 | 1.28 |
Total from investment operations | 2.20 | 1.42 |
Distributions from net investment income | (.20) | (.13) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.31) | (.13) |
Net asset value, end of period | $ 13.18 | $ 11.29 |
Total Return B, C, D | 19.67% | 14.38% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 2.29% | 3.76% A |
Expenses net of voluntary waivers, if any | 2.29% | 2.50% A |
Expenses net of all reductions | 2.27% | 2.47% A |
Net investment income (loss) | 1.35% | 1.60% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 13,671 | $ 5,059 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 E |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.35 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) D | .32 | .23 |
Net realized and unrealized gain (loss) | 2.04 | 1.28 |
Total from investment operations | 2.36 | 1.51 |
Distributions from net investment income | (.32) | (.16) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.43) | (.16) |
Net asset value, end of period | $ 13.28 | $ 11.35 |
Total Return B, C | 21.11% | 15.33% |
Ratios to Average Net Assets F | ||
Expenses before expense reductions | 1.12% | 2.68% A |
Expenses net of voluntary waivers, if any | 1.12% | 1.50% A |
Expenses net of all reductions | 1.10% | 1.47% A |
Net investment income (loss) | 2.53% | 2.60% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 2,478 | $ 1,225 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E For the period September 12, 2002 (commencement of operations) to July 31, 2003.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Real Estate Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Foreign Currency - continued
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as realized gain for income tax purposes.
Annual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 8,623,516 |
Unrealized depreciation | (1,379,260) |
Net unrealized appreciation (depreciation) | 7,244,256 |
Undistributed ordinary income | 270,900 |
Undistributed long-term capital gain | 1,365,615 |
Cost for federal income tax purposes | $ 69,769,359 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 1,154,760 | $ 178,071 |
Long-term Capital Gains | 118,743 | - |
Total | $ 1,273,503 | $ 178,071 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
Annual Report
Notes to Financial Statements - continued
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $73,371,960 and $27,706,904, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 29,697 | $ 2,943 |
Class T | .25% | .25% | 95,188 | 6,086 |
Class B | .75% | .25% | 97,756 | 76,444 |
Class C | .75% | .25% | 106,497 | 78,586 |
$ 329,138 | $ 164,059 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Annual Report
4. Fees and Other Transactions with Affiliates - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 53,008 |
Class T | 13,452 |
Class B* | 11,519 |
Class C* | 3,704 |
$ 81,683 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 41,006 | .35 |
Class T | 77,652 | .41 |
Class B | 37,616 | .38 |
Class C | 36,791 | .35 |
Institutional Class | 6,023 | .17 |
$ 199,088 |
Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The fee is based on the level of average net assets for the month.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $14,052 for the period.
Annual Report
Notes to Financial Statements - continued
4. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $5,956 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement. Effective April 1, 2004 the expense limitations were changed to 1.50%, 1.75%, 2.25%, 2.25% and 1.25% for Class A, T, B, C, and I, respectively.
Expense | Reimbursement | |
Class A | 1.75%-1.50%* | $ - |
Class T | 2.00%-1.75%* | 1,600 |
Class B | 2.50%-2.25%* | 34 |
Class C | 2.50%-2.25%* | - |
Institutional Class | 1.50%-1.25%* | - |
$ 1,634 |
* Expense limitation in effect at period end.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $12,358 for the period.
7. Other Information.
At the end of the period, FMR or its affiliates were the owners of record of 13% of the total outstanding shares of the fund and one otherwise unaffiliated shareholder was the owner of record of 15% of the total outstanding shares of the fund.
Annual Report
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended | For the period | |
From net investment income | ||
Class A | $ 223,988 | $ 30,922 |
Class T | 338,921 | 61,195 |
Class B | 134,524 | 34,236 |
Class C | 149,846 | 35,372 |
Institutional Class | 78,843 | 16,346 |
Total | $ 926,122 | $ 178,071 |
From net realized gain | ||
Class A | $ 60,915 | $ - |
Class T | 134,733 | - |
Class B | 65,143 | - |
Class C | 72,033 | - |
Institutional Class | 14,557 | - |
Total | $ 347,381 | $ - |
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Year ended | For the period | Year ended | For the period | |
Class A | ||||
Shares sold | 1,691,797 | 374,553 | $ 21,569,901 | $ 3,787,792 |
Reinvestment of distributions | 21,187 | 2,815 | 260,814 | 28,126 |
Shares redeemed | (380,797) | (24,895) | (4,789,141) | (242,774) |
Net increase (decrease) | 1,332,187 | 352,473 | $ 17,041,574 | $ 3,573,144 |
Class T | ||||
Shares sold | 1,742,381 | 858,384 | $ 21,601,367 | $ 8,638,853 |
Reinvestment of distributions | 34,588 | 5,484 | 422,832 | 55,176 |
Shares redeemed | (606,188) | (64,281) | (7,552,018) | (646,363) |
Net increase (decrease) | 1,170,781 | 799,587 | $ 14,472,181 | $ 8,047,666 |
Class B | ||||
Shares sold | 707,114 | 480,350 | $ 8,864,483 | $ 4,831,900 |
Reinvestment of distributions | 14,020 | 3,062 | 172,618 | 30,564 |
Shares redeemed | (189,581) | (35,079) | (2,352,682) | (357,918) |
Net increase (decrease) | 531,553 | 448,333 | $ 6,684,419 | $ 4,504,546 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Transactions for each class of shares were as follows - continued
Shares | Dollars | |||
Year ended | For the period | Year ended | For the period | |
Class C | ||||
Shares sold | 935,005 | 520,557 | $ 11,727,832 | $ 5,238,277 |
Reinvestment of distributions | 15,332 | 3,142 | 188,794 | 31,324 |
Shares redeemed | (361,431) | (75,617) | (4,519,507) | (754,402) |
Net increase (decrease) | 588,906 | 448,082 | $ 7,397,119 | $ 4,515,199 |
Institutional Class | ||||
Shares sold | 476,197 | 106,368 | $ 6,021,426 | $ 1,064,845 |
Reinvestment of distributions | 6,777 | 1,635 | 85,108 | 16,253 |
Shares redeemed | (404,277) | (107) | (5,093,527) | (1,054) |
Net increase (decrease) | 78,697 | 107,896 | $ 1,013,007 | $ 1,080,044 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Advisor Series VII and Shareholders of Fidelity Advisor Real Estate Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Advisor Real Estate Fund (the Fund), a fund of Fidelity Advisor Series VII, including the portfolio of investments, as of July 31, 2004, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for the year ended July 31, 2004 and for the period from September 12, 2002 (commencement of operations) to July 31, 2003. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Advisor Real Estate Fund as of July 31, 2004, the results of its operations for the year then ended, the changes in its net assets, and its financial highlights for the year ended July 31, 2004 and for the period from September 12, 2002 (commencement of operations) to July 31, 2003, in conformity with accounting principles generally accepted in the United States of America.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 21, 2004
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for William O. McCoy, each of the Trustees oversees 295 funds advised by FMR or an affiliate. Mr. McCoy oversees 297 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests 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; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. In any event, each non-interested Trustee shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (74)** | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, 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 Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc. | |
Abigail P. Johnson (42)** | |
Year of Election or Appointment: 2001 Senior Vice President of Advisor Real Estate (2002). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds. | |
Laura B. Cronin (50) | |
Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002). | |
Robert L. Reynolds (52) | |
Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000). | |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.
Annual Report
Non-Interested Trustees:
Correspondence intended for each non-interested Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
J. Michael Cook (61) | |
Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), The Dow Chemical Company (2000), and Northrop Grumman Corporation (global defense technology, 2003). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Council of the Public Company Accounting Oversight Board (PCAOB), Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater. | |
Ralph F. Cox (72) | |
Year of Election or Appointment: 1991 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin. | |
Robert M. Gates (60) | |
Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001), and Brinker International (restaurant management, 2003). He also serves as a member of the Advisory Board of VoteHere.net (secure Internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy. | |
George H. Heilmeier (68) | |
Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), and Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002). | |
Donald J. Kirk (71) | |
Year of Election or Appointment: 1987 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. (leadership education for arts and culture). Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations). | |
Marie L. Knowles (57) | |
Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. | |
Ned C. Lautenbach (60) | |
Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Co-Chairman and a Director of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations. | |
Marvin L. Mann (71) | |
Year of Election or Appointment: 1993 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals), where he served as CEO until April 1998, retired as Chairman May 1999, and remains a member of the Board. 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. He is a member of the Executive Committee of the Independent Director's Council of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama. | |
William O. McCoy (70) | |
Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998). | |
William S. Stavropoulos (65) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman of the Board (2000), CEO (2002), a position he previously held from 1995-2000, Chairman of the Executive Committee (2000), and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. | |
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Dirks and Ms. Small may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Dennis J. Dirks (56) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). | |
Peter S. Lynch (61) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity® Magellan® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston. | |
Cornelia M. Small (60) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1998). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
Bart A. Grenier (45) | |
Year of Election or Appointment: 2002 Vice President of Advisor Real Estate. Mr. Grenier also serves as Vice President of certain Equity Funds (2001), a position he previously held from 1999 to 2000, and Vice President of certain High Income Funds (2002). He is Senior Vice President of FMR (1999) and FMR Co., Inc. (2001), and President and Director of Strategic Advisers, Inc. (2002). He also heads Fidelity's Asset Allocation Group (2000), Fidelity's Growth and Income Group (2001), Fidelity's Value Group (2001), and Fidelity's High Income Division (2001). Previously, Mr. Grenier served as President of Fidelity Ventures (2000), Vice President of certain High Income Funds (1997-2000), High Income Division Head (1997-2000), Group Leader of the Income-Growth and Asset Allocation-Income Groups (1996-2000), and Assistant Equity Division Head (1997-2000). | |
Steven J. Buller (37) | |
Year of Election or Appointment: 2002 Vice President of Advisor Real Estate. Mr. Buller is also Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Buller managed a variety of Fidelity funds. | |
Eric D. Roiter (55) | |
Year of Election or Appointment: 2002 Secretary of Advisor Real Estate. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management, Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003). | |
Stuart Fross (44) | |
Year of Election or Appointment: 2003 Assistant Secretary of Advisor Real Estate. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR. | |
Christine Reynolds (45) | |
Year of Election or Appointment: 2004 President, Treasurer, and Anti-Money Laundering (AML) officer of Advisor Real Estate. Ms. Reynolds also serves as President, Treasurer, and AML officer of other Fidelity funds (2004) and is a Vice President (2003) and an employee (2002) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was most recently an audit partner with PwC's investment management practice. | |
Timothy F. Hayes (53) | |
Year of Election or Appointment: 2002 Chief Financial Officer of Advisor Real Estate. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998). | |
Kenneth A. Rathgeber (57) | |
Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Real Estate. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004) and Executive Vice President of Risk Oversight for Fidelity Investments (2002). Previously, he served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). | |
John R. Hebble (46) | |
Year of Election or Appointment: 2003 Deputy Treasurer of Advisor Real Estate. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003). | |
Kimberley H. Monasterio (40) | |
Year of Election or Appointment: 2004 Deputy Treasurer of Advisor Real Estate. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). | |
John H. Costello (57) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR. | |
Francis V. Knox, Jr. (57) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002). | |
Peter L. Lydecker (50) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Real Estate. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. | |
Mark Osterheld (49) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR. | |
Kenneth B. Robins (34) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Real Estate. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). | |
Thomas J. Simpson (46) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995). | |
Annual Report
Distributions
The Board of Trustees of Advisor Real Estate Fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
Pay Date | Record Date | Dividends | Capital Gains | |
Class A | 9/7/04 | 9/3/04 | $0.045 | $0.240 |
Class T | 9/7/04 | 9/3/04 | $0.035 | $0.240 |
Class B | 9/7/04 | 9/3/04 | $0.020 | $0.240 |
Class C | 9/7/04 | 9/3/04 | $0.020 | $0.240 |
A total of .04% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund will notify shareholders in January 2005 of amounts for use in preparing 2004 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 19, 2004. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To amend the Declaration of Trust to allow the Board of Trustees, if permitted by applicable law, to authorize fund mergers without shareholder approval.* | ||
# of | % of | |
Affirmative | 1,258,992,294.05 | 67.854 |
Against | 285,112,169.59 | 15.366 |
Abstain | 81,809,335.63 | 4.409 |
Broker | 229,530,071.74 | 12.371 |
TOTAL | 1,855,443,871.01 | 100.000 |
PROPOSAL 2 | ||
To elect a Board of Trustees.* | ||
# of | % of | |
J. Michael Cook | ||
Affirmative | 1,764,542,479.15 | 95.101 |
Withheld | 90,901,391.86 | 4.899 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ralph F. Cox | ||
Affirmative | 1,762,691,678.51 | 95.001 |
Withheld | 92,752,192.50 | 4.999 |
TOTAL | 1,855,443,871.01 | 100.000 |
Laura B. Cronin | ||
Affirmative | 1,764,743,077.37 | 95.112 |
Withheld | 90,700,793.64 | 4.888 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert M. Gates | ||
Affirmative | 1,763,804,232.45 | 95.061 |
Withheld | 91,639,638.56 | 4.939 |
TOTAL | 1,855,443,871.01 | 100.000 |
George H. Heilmeier | ||
Affirmative | 1,764,595,044.83 | 95.104 |
Withheld | 90,848,826.18 | 4.896 |
TOTAL | 1,855,443,871.01 | 100.000 |
Abigail P. Johnson | ||
Affirmative | 1,762,763,373.33 | 95.005 |
Withheld | 92,680,497.68 | 4.995 |
TOTAL | 1,855,443,871.01 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 1,762,006,438.92 | 94.964 |
Withheld | 93,437,432.09 | 5.036 |
TOTAL | 1,855,443,871.01 | 100.000 |
Donald J. Kirk | ||
Affirmative | 1,763,115,160.88 | 95.024 |
Withheld | 92,328,710.13 | 4.976 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marie L. Knowles | ||
Affirmative | 1,764,877,372.29 | 95.119 |
Withheld | 90,566,498.72 | 4.881 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 1,765,030,930.72 | 95.127 |
Withheld | 90,412,940.29 | 4.873 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marvin L. Mann | ||
Affirmative | 1,763,707,568.69 | 95.056 |
Withheld | 91,736,302.32 | 4.944 |
TOTAL | 1,855,443,871.01 | 100.000 |
William O. McCoy | ||
Affirmative | 1,763,731,348.95 | 95.057 |
Withheld | 91,712,522.06 | 4.943 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 1,764,938,615.07 | 95.122 |
Withheld | 90,505,255.94 | 4.878 |
TOTAL | 1,855,443,871.01 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 1,764,361,513.28 | 95.091 |
Withheld | 91,082,357.73 | 4.909 |
TOTAL | 1,855,443,871.01 | 100.000 |
* Denotes trust-wide proposals and voting results. | ||
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ARE-UANN-0904
1.789707.101
Fidelity ® Advisor
Real Estate
Fund - Institutional Class
Annual Report
July 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion | The manager's review of fund performance, strategy and outlook. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to financial statements. | |
Report of Independent Registered Public Accounting Firm | ||
Trustees and Officers | ||
Distributions | ||
Proxy Voting Results |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Commencing with the fiscal quarter ending October 31, 2004, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. The fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of the fund's portfolio holdings, view the fund's most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Fidelity Advisor Real Estate Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of |
Institutional Class | 21.11% | 19.40% |
A From September 12, 2002.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Advisor Real Estate Fund - Institutional Class on September 12, 2002, when the fund started. The chart shows how the value of your investment would have grown, and also shows how the S&P 500® Index did over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Steve Buller, Portfolio Manager of Fidelity® Advisor Real Estate Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
During the 12-month period ending July 31, 2004, the fund's Institutional Class shares gained 21.11% in a volatile environment for real estate securities. By comparison, the Dow Jones Wilshire Real Estate Securities IndexSM (full-cap) returned 22.86% and the LipperSM Real Estate Funds Average returned 21.60%. The broad stock market, as measured by the Standard & Poor's 500 Index, returned 13.17%. The biggest detractor versus the Dow Jones Wilshire Index during the period was Apartment Investment & Management, which was hurt by the apartment sector's continued poor fundamentals for much of the period. Also hurting relative performance was failing to own a meaningful stake in factory outlet retailer Chelsea Property Group, which enjoyed strong performance and was acquired at a premium late in the period. The fund's best performer was Starwood Hotels & Resorts, which benefited from much-improved fundamentals in the hotel industry. Also adding to results was Reckson Associates. Reckson owns office buildings in the New York City metropolitan area and benefited from that market's strong fundamentals.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,017.90 | $ 7.43 |
HypotheticalA | $ 1,000.00 | $ 1,017.55 | $ 7.45 |
Class T | |||
Actual | $ 1,000.00 | $ 1,016.30 | $ 8.77 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,013.80 | $ 11.27 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 1,013.80 | $ 10.87 |
HypotheticalA | $ 1,000.00 | $ 1,014.07 | $ 10.93 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,020.10 | $ 5.22 |
HypotheticalA | $ 1,000.00 | $ 1,019.76 | $ 5.24 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.48% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.17% |
Institutional Class | 1.04% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2004 | ||
% of fund's | % of fund's net assets | |
Starwood Hotels & Resorts Worldwide, Inc. unit | 7.3 | 4.6 |
Vornado Realty Trust | 7.3 | 5.3 |
ProLogis | 6.2 | 4.7 |
Simon Property Group, Inc. | 5.2 | 5.3 |
CBL & Associates Properties, Inc. | 4.9 | 3.7 |
Equity Office Properties Trust | 4.8 | 3.6 |
CenterPoint Properties Trust (SBI) | 4.8 | 5.0 |
Reckson Associates Realty Corp. | 4.7 | 3.7 |
Duke Realty Corp. | 4.5 | 4.1 |
General Growth Properties, Inc. | 4.0 | 3.7 |
53.7 | ||
Top Five REIT Sectors as of July 31, 2004 | ||
% of fund's | % of fund's net assets | |
REITs - Industrial Buildings | 24.4 | 19.4 |
REITs - Malls | 18.6 | 16.5 |
REITs - Shopping Centers | 14.8 | 14.3 |
REITs - Office Buildings | 14.0 | 13.4 |
REITs - Apartments | 8.3 | 11.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2004 * | As of January 31, 2004 ** | ||||||
| Stocks 96.2% | | Stocks 95.4% | ||||
| Short-Term | | Short-Term | ||||
* Foreign investments | 1.6% | ** Foreign investments | 2.1% | ||||
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 96.2% | |||
Shares | Value (Note 1) | ||
HOTELS, RESTAURANTS & LEISURE - 7.3% | |||
Hotels, Resorts & Cruise Lines - 7.3% | |||
Starwood Hotels & Resorts Worldwide, Inc. unit | 126,710 | $ 5,701,948 | |
REAL ESTATE - 88.3% | |||
Real Estate Management & Development - 1.9% | |||
Boardwalk Real Estate Investment Trust | 100,700 | 1,212,870 | |
CB Richard Ellis Group, Inc. Class A | 11,800 | 223,492 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 1,436,362 | ||
REITs - Apartments - 8.3% | |||
Apartment Investment & Management Co. Class A | 87,035 | 2,782,509 | |
Cornerstone Realty Income Trust, Inc. | 26,500 | 232,405 | |
Equity Residential (SBI) | 77,200 | 2,281,260 | |
Home Properties of New York, Inc. | 29,800 | 1,120,480 | |
TOTAL REITS - APARTMENTS | 6,416,654 | ||
REITs - Health Care Facilities - 1.6% | |||
Health Care Property Investors, Inc. | 21,400 | 534,144 | |
Ventas, Inc. | 28,140 | 718,133 | |
TOTAL REITS - HEALTH CARE FACILITIES | 1,252,277 | ||
REITs - Hotels - 0.3% | |||
MeriStar Hospitality Corp. (a) | 44,980 | 260,884 | |
REITs - Industrial Buildings - 24.4% | |||
Catellus Development Corp. | 89,805 | 2,245,125 | |
CenterPoint Properties Trust (SBI) | 96,700 | 3,711,346 | |
Duke Realty Corp. | 113,710 | 3,497,720 | |
Liberty Property Trust (SBI) | 40,600 | 1,559,040 | |
ProLogis | 141,490 | 4,816,320 | |
Public Storage, Inc. | 64,500 | 3,039,885 | |
TOTAL REITS - INDUSTRIAL BUILDINGS | 18,869,436 | ||
REITs - Malls - 18.6% | |||
CBL & Associates Properties, Inc. | 68,530 | 3,776,003 | |
General Growth Properties, Inc. | 103,390 | 3,109,971 | |
Simon Property Group, Inc. | 77,800 | 4,015,258 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
REAL ESTATE - CONTINUED | |||
REITs - Malls - continued | |||
The Mills Corp. | 25,830 | $ 1,177,848 | |
The Rouse Co. | 47,100 | 2,298,480 | |
TOTAL REITS - MALLS | 14,377,560 | ||
REITs - Management/Investment - 1.9% | |||
Capital Automotive (SBI) | 10,202 | 295,756 | |
Newcastle Investment Corp. | 40,730 | 1,152,252 | |
TOTAL REITS - MANAGEMENT/INVESTMENT | 1,448,008 | ||
REITs - Mobile Home Parks - 1.2% | |||
Manufactured Home Communities, Inc. | 29,700 | 941,193 | |
REITs - Mortgage - 0.4% | |||
Capital Trust, Inc. Class A | 6,800 | 166,396 | |
MortgageIT Holdings, Inc. | 12,600 | 151,200 | |
TOTAL REITS - MORTGAGE | 317,596 | ||
REITs - Office Buildings - 14.0% | |||
Boston Properties, Inc. | 51,700 | 2,734,930 | |
Equity Office Properties Trust | 144,500 | 3,749,775 | |
Highwoods Properties, Inc. (SBI) | 8,600 | 199,520 | |
Kilroy Realty Corp. | 15,100 | 534,540 | |
Reckson Associates Realty Corp. | 130,770 | 3,623,637 | |
TOTAL REITS - OFFICE BUILDINGS | 10,842,402 | ||
REITs - Prisons - 0.9% | |||
Correctional Properties Trust | 27,100 | 701,890 | |
REITs - Shopping Centers - 14.8% | |||
Cedar Shopping Centers, Inc. | 9,000 | 111,330 | |
Federal Realty Investment Trust (SBI) | 35,060 | 1,479,532 | |
Inland Real Estate Corp. | 19,600 | 256,172 | |
Kimco Realty Corp. | 20,000 | 962,000 | |
Pan Pacific Retail Properties, Inc. | 31,190 | 1,578,214 | |
Price Legacy Corp. | 24,895 | 455,827 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
REAL ESTATE - CONTINUED | |||
REITs - Shopping Centers - continued | |||
Regency Centers Corp. | 22,700 | $ 964,750 | |
Vornado Realty Trust | 96,850 | 5,626,017 | |
TOTAL REITS - SHOPPING CENTERS | 11,433,842 | ||
TOTAL REAL ESTATE | 68,298,104 | ||
THRIFTS & MORTGAGE FINANCE - 0.6% | |||
Thrifts & Mortgage Finance - 0.6% | |||
HomeBanc Mortgage Corp. Georgia | 55,600 | 461,480 | |
TOTAL COMMON STOCKS (Cost $66,782,521) | 74,461,532 | ||
Money Market Funds - 3.3% | |||
Fidelity Cash Central Fund, 1.33% (b) | 2,552,083 | 2,552,083 | |
TOTAL INVESTMENT PORTFOLIO - 99.5% (Cost $69,334,604) | 77,013,615 | ||
NET OTHER ASSETS - 0.5% | 356,671 | ||
NET ASSETS - 100% | $ 77,370,286 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
Income Tax Information |
The fund hereby designates approximately $181,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (cost $69,334,604) - See accompanying schedule | $ 77,013,615 | |
Foreign currency held at value (cost $3,764) | 3,747 | |
Receivable for investments sold | 219,296 | |
Receivable for fund shares sold | 505,601 | |
Dividends receivable | 99,275 | |
Interest receivable | 3,216 | |
Prepaid expenses | 50 | |
Other receivables | 5,786 | |
Total assets | 77,850,586 | |
Liabilities | ||
Payable for investments purchased | $ 217,911 | |
Payable for fund shares redeemed | 125,693 | |
Accrued management fee | 36,480 | |
Distribution fees payable | 37,288 | |
Other affiliated payables | 25,491 | |
Other payables and accrued expenses | 37,437 | |
Total liabilities | 480,300 | |
Net Assets | $ 77,370,286 | |
Net Assets consist of: | ||
Paid in capital | $ 68,331,424 | |
Undistributed net investment income | 97,635 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,262,216 | |
Net unrealized appreciation (depreciation) on investments | 7,679,011 | |
Net Assets | $ 77,370,286 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
July 31, 2004 | ||
Calculation of Maximum Offering Price | $ 13.22 | |
Maximum offering price per share (100/94.25 of $13.22) | $ 14.03 | |
Class T: | $ 13.21 | |
Maximum offering price per share (100/96.50 of $13.21) | $ 13.69 | |
Class B: | $ 13.18 | |
Class C: | $ 13.18 | |
Institutional Class: | $ 13.28 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 1,966,822 | |
Interest | 23,222 | |
Total income | 1,990,044 | |
Expenses | ||
Management fee | $ 316,239 | |
Transfer agent fees | 199,088 | |
Distribution fees | 329,138 | |
Accounting fees and expenses | 44,276 | |
Non-interested trustees' compensation | 239 | |
Custodian fees and expenses | 18,278 | |
Registration fees | 77,546 | |
Audit | 49,287 | |
Legal | 4,719 | |
Miscellaneous | 10,305 | |
Total expenses before reductions | 1,049,115 | |
Expense reductions | (13,992) | 1,035,123 |
Net investment income (loss) | 954,921 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 1,532,838 | |
Foreign currency transactions | (2,015) | |
Total net realized gain (loss) | 1,530,823 | |
Change in net unrealized appreciation (depreciation) on investment securities | 5,162,230 | |
Net gain (loss) | 6,693,053 | |
Net increase (decrease) in net assets resulting from operations | $ 7,647,974 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | For the period | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 954,921 | $ 230,672 |
Net realized gain (loss) | 1,530,823 | 97,534 |
Change in net unrealized appreciation (depreciation) | 5,162,230 | 2,516,781 |
Net increase (decrease) in net assets resulting | 7,647,974 | 2,844,987 |
Distributions to shareholders from net investment income | (926,122) | (178,071) |
Distributions to shareholders from net realized gain | (347,381) | - |
Total distributions | (1,273,503) | (178,071) |
Share transactions - net increase (decrease) | 46,608,300 | 21,720,599 |
Total increase (decrease) in net assets | 52,982,771 | 24,387,515 |
Net Assets | ||
Beginning of period | 24,387,515 | - |
End of period (including undistributed net investment income of $97,635, and undistributed net investment income of $52,029, respectively) | $ 77,370,286 | $ 24,387,515 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.33 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .27 | .21 |
Net realized and unrealized gain (loss) | 2.03 | 1.28 |
Total from investment operations | 2.30 | 1.49 |
Distributions from net investment income | (.30) | (.16) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.41) | (.16) |
Net asset value, end of period | $ 13.22 | $ 11.33 |
Total Return B, C, D | 20.59% | 15.13% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 1.54% | 2.98% A |
Expenses net of voluntary waivers, if any | 1.54% | 1.75% A |
Expenses net of all reductions | 1.52% | 1.72% A |
Net investment income (loss) | 2.10% | 2.35% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 22,273 | $ 3,993 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.32 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .23 | .18 |
Net realized and unrealized gain (loss) | 2.02 | 1.29 |
Total from investment operations | 2.25 | 1.47 |
Distributions from net investment income | (.25) | (.15) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.36) | (.15) |
Net asset value, end of period | $ 13.21 | $ 11.32 |
Total Return B, C, D | 20.12% | 14.91% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 1.86% | 3.32% A |
Expenses net of voluntary waivers, if any | 1.85% | 2.00% A |
Expenses net of all reductions | 1.83% | 1.97% A |
Net investment income (loss) | 1.80% | 2.10% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 26,037 | $ 9,049 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.29 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .16 | .14 |
Net realized and unrealized gain (loss) | 2.04 | 1.28 |
Total from investment operations | 2.20 | 1.42 |
Distributions from net investment income | (.20) | (.13) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.31) | (.13) |
Net asset value, end of period | $ 13.18 | $ 11.29 |
Total Return B, C, D | 19.67% | 14.38% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 2.33% | 3.82% A |
Expenses net of voluntary waivers, if any | 2.33% | 2.50% A |
Expenses net of all reductions | 2.31% | 2.47% A |
Net investment income (loss) | 1.31% | 1.60% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 12,910 | $ 5,061 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 F |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.29 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) E | .17 | .14 |
Net realized and unrealized gain (loss) | 2.03 | 1.28 |
Total from investment operations | 2.20 | 1.42 |
Distributions from net investment income | (.20) | (.13) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.31) | (.13) |
Net asset value, end of period | $ 13.18 | $ 11.29 |
Total Return B, C, D | 19.67% | 14.38% |
Ratios to Average Net Assets G | ||
Expenses before expense reductions | 2.29% | 3.76% A |
Expenses net of voluntary waivers, if any | 2.29% | 2.50% A |
Expenses net of all reductions | 2.27% | 2.47% A |
Net investment income (loss) | 1.35% | 1.60% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 13,671 | $ 5,059 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F For the period September 12, 2002 (commencement of operations) to July 31, 2003.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 E |
Selected Per-Share Data | ||
Net asset value, beginning of period | $ 11.35 | $ 10.00 |
Income from Investment Operations | ||
Net investment income (loss) D | .32 | .23 |
Net realized and unrealized gain (loss) | 2.04 | 1.28 |
Total from investment operations | 2.36 | 1.51 |
Distributions from net investment income | (.32) | (.16) |
Distributions from net realized gain | (.11) | - |
Total distributions | (.43) | (.16) |
Net asset value, end of period | $ 13.28 | $ 11.35 |
Total Return B, C | 21.11% | 15.33% |
Ratios to Average Net Assets F | ||
Expenses before expense reductions | 1.12% | 2.68% A |
Expenses net of voluntary waivers, if any | 1.12% | 1.50% A |
Expenses net of all reductions | 1.10% | 1.47% A |
Net investment income (loss) | 2.53% | 2.60% A |
Supplemental Data | ||
Net assets, end of period (000 omitted) | $ 2,478 | $ 1,225 |
Portfolio turnover rate | 52% | 47% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E For the period September 12, 2002 (commencement of operations) to July 31, 2003.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Real Estate Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Foreign Currency - continued
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as realized gain for income tax purposes.
Annual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 8,623,516 |
Unrealized depreciation | (1,379,260) |
Net unrealized appreciation (depreciation) | 7,244,256 |
Undistributed ordinary income | 270,900 |
Undistributed long-term capital gain | 1,365,615 |
Cost for federal income tax purposes | $ 69,769,359 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 1,154,760 | $ 178,071 |
Long-term Capital Gains | 118,743 | - |
Total | $ 1,273,503 | $ 178,071 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
Annual Report
Notes to Financial Statements - continued
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $73,371,960 and $27,706,904, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 29,697 | $ 2,943 |
Class T | .25% | .25% | 95,188 | 6,086 |
Class B | .75% | .25% | 97,756 | 76,444 |
Class C | .75% | .25% | 106,497 | 78,586 |
$ 329,138 | $ 164,059 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Annual Report
4. Fees and Other Transactions with Affiliates - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 53,008 |
Class T | 13,452 |
Class B* | 11,519 |
Class C* | 3,704 |
$ 81,683 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 41,006 | .35 |
Class T | 77,652 | .41 |
Class B | 37,616 | .38 |
Class C | 36,791 | .35 |
Institutional Class | 6,023 | .17 |
$ 199,088 |
Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The fee is based on the level of average net assets for the month.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $14,052 for the period.
Annual Report
Notes to Financial Statements - continued
4. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $5,956 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement. Effective April 1, 2004 the expense limitations were changed to 1.50%, 1.75%, 2.25%, 2.25% and 1.25% for Class A, T, B, C, and I, respectively.
Expense | Reimbursement | |
Class A | 1.75%-1.50%* | $ - |
Class T | 2.00%-1.75%* | 1,600 |
Class B | 2.50%-2.25%* | 34 |
Class C | 2.50%-2.25%* | - |
Institutional Class | 1.50%-1.25%* | - |
$ 1,634 |
* Expense limitation in effect at period end.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $12,358 for the period.
7. Other Information.
At the end of the period, FMR or its affiliates were the owners of record of 13% of the total outstanding shares of the fund and one otherwise unaffiliated shareholder was the owner of record of 15% of the total outstanding shares of the fund.
Annual Report
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended | For the period | |
From net investment income | ||
Class A | $ 223,988 | $ 30,922 |
Class T | 338,921 | 61,195 |
Class B | 134,524 | 34,236 |
Class C | 149,846 | 35,372 |
Institutional Class | 78,843 | 16,346 |
Total | $ 926,122 | $ 178,071 |
From net realized gain | ||
Class A | $ 60,915 | $ - |
Class T | 134,733 | - |
Class B | 65,143 | - |
Class C | 72,033 | - |
Institutional Class | 14,557 | - |
Total | $ 347,381 | $ - |
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Year ended | For the period | Year ended | For the period | |
Class A | ||||
Shares sold | 1,691,797 | 374,553 | $ 21,569,901 | $ 3,787,792 |
Reinvestment of distributions | 21,187 | 2,815 | 260,814 | 28,126 |
Shares redeemed | (380,797) | (24,895) | (4,789,141) | (242,774) |
Net increase (decrease) | 1,332,187 | 352,473 | $ 17,041,574 | $ 3,573,144 |
Class T | ||||
Shares sold | 1,742,381 | 858,384 | $ 21,601,367 | $ 8,638,853 |
Reinvestment of distributions | 34,588 | 5,484 | 422,832 | 55,176 |
Shares redeemed | (606,188) | (64,281) | (7,552,018) | (646,363) |
Net increase (decrease) | 1,170,781 | 799,587 | $ 14,472,181 | $ 8,047,666 |
Class B | ||||
Shares sold | 707,114 | 480,350 | $ 8,864,483 | $ 4,831,900 |
Reinvestment of distributions | 14,020 | 3,062 | 172,618 | 30,564 |
Shares redeemed | (189,581) | (35,079) | (2,352,682) | (357,918) |
Net increase (decrease) | 531,553 | 448,333 | $ 6,684,419 | $ 4,504,546 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
Transactions for each class of shares were as follows - continued
Shares | Dollars | |||
Year ended | For the period | Year ended | For the period | |
Class C | ||||
Shares sold | 935,005 | 520,557 | $ 11,727,832 | $ 5,238,277 |
Reinvestment of distributions | 15,332 | 3,142 | 188,794 | 31,324 |
Shares redeemed | (361,431) | (75,617) | (4,519,507) | (754,402) |
Net increase (decrease) | 588,906 | 448,082 | $ 7,397,119 | $ 4,515,199 |
Institutional Class | ||||
Shares sold | 476,197 | 106,368 | $ 6,021,426 | $ 1,064,845 |
Reinvestment of distributions | 6,777 | 1,635 | 85,108 | 16,253 |
Shares redeemed | (404,277) | (107) | (5,093,527) | (1,054) |
Net increase (decrease) | 78,697 | 107,896 | $ 1,013,007 | $ 1,080,044 |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Advisor Series VII and Shareholders of Fidelity Advisor Real Estate Fund:
We have audited the accompanying statement of assets and liabilities of Fidelity Advisor Real Estate Fund (the Fund), a fund of Fidelity Advisor Series VII, including the portfolio of investments, as of July 31, 2004, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for the year ended July 31, 2004 and for the period from September 12, 2002 (commencement of operations) to July 31, 2003. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Advisor Real Estate Fund as of July 31, 2004, the results of its operations for the year then ended, the changes in its net assets, and its financial highlights for the year ended July 31, 2004 and for the period from September 12, 2002 (commencement of operations) to July 31, 2003, in conformity with accounting principles generally accepted in the United States of America.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 21, 2004
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for William O. McCoy, each of the Trustees oversees 295 funds advised by FMR or an affiliate. Mr. McCoy oversees 297 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests 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; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. In any event, each non-interested Trustee shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (74)** | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, 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 Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc. | |
Abigail P. Johnson (42)** | |
Year of Election or Appointment: 2001 Senior Vice President of Advisor Real Estate (2002). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds. | |
Laura B. Cronin (50) | |
Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002). | |
Robert L. Reynolds (52) | |
Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000). | |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.
Annual Report
Non-Interested Trustees:
Correspondence intended for each non-interested Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
J. Michael Cook (61) | |
Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), The Dow Chemical Company (2000), and Northrop Grumman Corporation (global defense technology, 2003). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Council of the Public Company Accounting Oversight Board (PCAOB), Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater. | |
Ralph F. Cox (72) | |
Year of Election or Appointment: 1991 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin. | |
Robert M. Gates (60) | |
Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001), and Brinker International (restaurant management, 2003). He also serves as a member of the Advisory Board of VoteHere.net (secure Internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy. | |
George H. Heilmeier (68) | |
Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), and Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002). | |
Donald J. Kirk (71) | |
Year of Election or Appointment: 1987 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. (leadership education for arts and culture). Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations). | |
Marie L. Knowles (57) | |
Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. | |
Ned C. Lautenbach (60) | |
Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Co-Chairman and a Director of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations. | |
Marvin L. Mann (71) | |
Year of Election or Appointment: 1993 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals), where he served as CEO until April 1998, retired as Chairman May 1999, and remains a member of the Board. 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. He is a member of the Executive Committee of the Independent Director's Council of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama. | |
William O. McCoy (70) | |
Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998). | |
William S. Stavropoulos (65) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman of the Board (2000), CEO (2002), a position he previously held from 1995-2000, Chairman of the Executive Committee (2000), and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. | |
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Dirks and Ms. Small may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Dennis J. Dirks (56) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). | |
Peter S. Lynch (61) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity® Magellan® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston. | |
Cornelia M. Small (60) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1998). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
Bart A. Grenier (45) | |
Year of Election or Appointment: 2002 Vice President of Advisor Real Estate. Mr. Grenier also serves as Vice President of certain Equity Funds (2001), a position he previously held from 1999 to 2000, and Vice President of certain High Income Funds (2002). He is Senior Vice President of FMR (1999) and FMR Co., Inc. (2001), and President and Director of Strategic Advisers, Inc. (2002). He also heads Fidelity's Asset Allocation Group (2000), Fidelity's Growth and Income Group (2001), Fidelity's Value Group (2001), and Fidelity's High Income Division (2001). Previously, Mr. Grenier served as President of Fidelity Ventures (2000), Vice President of certain High Income Funds (1997-2000), High Income Division Head (1997-2000), Group Leader of the Income-Growth and Asset Allocation-Income Groups (1996-2000), and Assistant Equity Division Head (1997-2000). | |
Steven J. Buller (37) | |
Year of Election or Appointment: 2002 Vice President of Advisor Real Estate. Mr. Buller is also Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Buller managed a variety of Fidelity funds. | |
Eric D. Roiter (55) | |
Year of Election or Appointment: 2002 Secretary of Advisor Real Estate. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management, Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003). | |
Stuart Fross (44) | |
Year of Election or Appointment: 2003 Assistant Secretary of Advisor Real Estate. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR. | |
Christine Reynolds (45) | |
Year of Election or Appointment: 2004 President, Treasurer, and Anti-Money Laundering (AML) officer of Advisor Real Estate. Ms. Reynolds also serves as President, Treasurer, and AML officer of other Fidelity funds (2004) and is a Vice President (2003) and an employee (2002) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was most recently an audit partner with PwC's investment management practice. | |
Timothy F. Hayes (53) | |
Year of Election or Appointment: 2002 Chief Financial Officer of Advisor Real Estate. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998). | |
Kenneth A. Rathgeber (57) | |
Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Real Estate. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004) and Executive Vice President of Risk Oversight for Fidelity Investments (2002). Previously, he served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). | |
John R. Hebble (46) | |
Year of Election or Appointment: 2003 Deputy Treasurer of Advisor Real Estate. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003). | |
Kimberley H. Monasterio (40) | |
Year of Election or Appointment: 2004 Deputy Treasurer of Advisor Real Estate. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). | |
John H. Costello (57) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR. | |
Francis V. Knox, Jr. (57) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002). | |
Peter L. Lydecker (50) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Real Estate. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. | |
Mark Osterheld (49) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR. | |
Kenneth B. Robins (34) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Real Estate. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). | |
Thomas J. Simpson (46) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Real Estate. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995). | |
Annual Report
Distributions
The Board of Trustees of Advisor Real Estate Fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
Pay Date | Record Date | Dividends | Capital Gains | |
Institutional Class | 9/7/04 | 9/3/04 | $0.06 | $0.24 |
A total of .04% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund will notify shareholders in January 2005 of amounts for use in preparing 2004 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 19, 2004. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To amend the Declaration of Trust to allow the Board of Trustees, if permitted by applicable law, to authorize fund mergers without shareholder approval.* | ||
# of | % of | |
Affirmative | 1,258,992,294.05 | 67.854 |
Against | 285,112,169.59 | 15.366 |
Abstain | 81,809,335.63 | 4.409 |
Broker | 229,530,071.74 | 12.371 |
TOTAL | 1,855,443,871.01 | 100.000 |
PROPOSAL 2 | ||
To elect a Board of Trustees.* | ||
# of | % of | |
J. Michael Cook | ||
Affirmative | 1,764,542,479.15 | 95.101 |
Withheld | 90,901,391.86 | 4.899 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ralph F. Cox | ||
Affirmative | 1,762,691,678.51 | 95.001 |
Withheld | 92,752,192.50 | 4.999 |
TOTAL | 1,855,443,871.01 | 100.000 |
Laura B. Cronin | ||
Affirmative | 1,764,743,077.37 | 95.112 |
Withheld | 90,700,793.64 | 4.888 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert M. Gates | ||
Affirmative | 1,763,804,232.45 | 95.061 |
Withheld | 91,639,638.56 | 4.939 |
TOTAL | 1,855,443,871.01 | 100.000 |
George H. Heilmeier | ||
Affirmative | 1,764,595,044.83 | 95.104 |
Withheld | 90,848,826.18 | 4.896 |
TOTAL | 1,855,443,871.01 | 100.000 |
Abigail P. Johnson | ||
Affirmative | 1,762,763,373.33 | 95.005 |
Withheld | 92,680,497.68 | 4.995 |
TOTAL | 1,855,443,871.01 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 1,762,006,438.92 | 94.964 |
Withheld | 93,437,432.09 | 5.036 |
TOTAL | 1,855,443,871.01 | 100.000 |
Donald J. Kirk | ||
Affirmative | 1,763,115,160.88 | 95.024 |
Withheld | 92,328,710.13 | 4.976 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marie L. Knowles | ||
Affirmative | 1,764,877,372.29 | 95.119 |
Withheld | 90,566,498.72 | 4.881 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 1,765,030,930.72 | 95.127 |
Withheld | 90,412,940.29 | 4.873 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marvin L. Mann | ||
Affirmative | 1,763,707,568.69 | 95.056 |
Withheld | 91,736,302.32 | 4.944 |
TOTAL | 1,855,443,871.01 | 100.000 |
William O. McCoy | ||
Affirmative | 1,763,731,348.95 | 95.057 |
Withheld | 91,712,522.06 | 4.943 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 1,764,938,615.07 | 95.122 |
Withheld | 90,505,255.94 | 4.878 |
TOTAL | 1,855,443,871.01 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 1,764,361,513.28 | 95.091 |
Withheld | 91,082,357.73 | 4.909 |
TOTAL | 1,855,443,871.01 | 100.000 |
* Denotes trust-wide proposals and voting results. | ||
Annual Report
Annual Report
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
Annual Report
Fidelity Advisor Aggressive Growth Fund |
Fidelity Advisor Asset Allocation Fund |
Fidelity Advisor Balanced Fund |
Fidelity Advisor Biotechnology Fund |
Fidelity Advisor California Municipal |
Fidelity Advisor Consumer Industries Fund |
Fidelity Advisor Cyclical Industries Fund |
Fidelity Advisor Developing Communications Fund |
Fidelity Advisor Diversified International Fund |
Fidelity Advisor Dividend Growth Fund |
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Fidelity Advisor Emerging Markets Fund |
Fidelity Advisor Emerging Markets Income Fund |
Fidelity Advisor Equity Growth Fund |
Fidelity Advisor Equity Income Fund |
Fidelity Advisor Equity Value Fund |
Fidelity Advisor Europe Capital Appreciation Fund |
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Fidelity Advisor Floating Rate High Income Fund |
Fidelity Advisor Freedom Income, 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040 FundsSM |
Fidelity Advisor Global Equity Fund |
Fidelity Advisor Government Investment Fund |
Fidelity Advisor Growth & Income Fund |
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Fidelity Advisor High Income Fund |
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Fidelity Advisor Strategic Dividend & |
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AREI-UANN-0904
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Fidelity Advisor
Focus Funds®
Institutional Class
Biotechnology
Consumer Industries
Cyclical Industries
Developing Communications
Electronics
Financial Services
Health Care
Natural Resources
Technology
Telecommunications &
Utilities Growth
Annual Report
July 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Biotechnology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Consumer Industries | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Cyclical Industries | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Developing Communications | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Electronics | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Financial Services | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Health Care | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Natural Resources | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Technology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Telecommunications & | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Report of Independent | ||
Trustees and Officers | ||
Distributions | ||
Proxy Voting Results |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo) This report is printed on recycled paper using soy-based inks.
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.
Commencing with the fiscal quarter ending October 31, 2004, each fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. Each fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of each fund's portfolio holdings, view each fund's most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board, or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the funds nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.
Annual Report
Advisor Biotechnology Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of | |
Institutional Class | 1.51% | -13.01% |
A From December 27, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Advisor Biotechnology Fund - Institutional Class on December 27, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500
Index did over the same period.
Annual Report
Advisor Biotechnology Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Andraz Razen, Portfolio Manager of Fidelity® Advisor Biotechnology Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
Fidelity Advisor Biotechnology Fund underperformed its benchmark indexes, with the fund's Institutional Class shares returning 1.51% for the 12-month period. In comparison, the Goldman Sachs® Health Care Index returned 4.22%, while the S&P 500 gained 13.17%. Biotechnology stocks generally underperformed the broader market as well as pharmaceutical stocks, which are included in the Goldman Sachs index. Disappointing new product sales hurt several stocks, including MedImmune, Millennium Pharmaceuticals, Trimeris and Gilead Sciences. CV Therapeutics detracted because the Food and Drug Administration required further clinical trials of its Angina drug, Ranexa. I sold both Trimeris and CV Therapeutics before the end of the period. On the other hand, several large holdings performed well, including Genentech, which makes a treatment for colon cancer, and Sepracor, which saw continued strength in its asthma drug, Xopenex. Biogen Idec and Elan, which combined to develop a successful treatment for Crohn's disease, also had solid returns.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 975.60 | $ 7.37 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 975.40 | $ 8.60 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 973.30 | $ 11.04 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 973.30 | $ 11.04 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 979.00 | $ 5.41 |
HypotheticalA | $ 1,000.00 | $ 1,019.46 | $ 5.54 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.25% |
Institutional Class | 1.10% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Biogen Idec, Inc. | 10.8 |
Genentech, Inc. | 10.0 |
Celgene Corp. | 6.8 |
Gilead Sciences, Inc. | 5.7 |
Cephalon, Inc. | 5.6 |
ImClone Systems, Inc. | 5.5 |
Elan Corp. PLC sponsored ADR | 5.3 |
Genzyme Corp. - General Division | 5.2 |
MedImmune, Inc. | 5.1 |
Millennium Pharmaceuticals, Inc. | 4.5 |
64.5 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
 | Biotechnology | 83.1% | |
 | Pharmaceuticals | 13.5% | |
 | Health Care Equipment | 0.1% | |
 | All Others * | 3.3% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 96.7% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 83.1% | |||
Actelion Ltd. (Reg.) (a) | 15,710 | $ 1,499,256 | |
Affymetrix, Inc. (a) | 42,200 | 1,139,822 | |
Alkermes, Inc. (a) | 67,140 | 724,441 | |
Amgen, Inc. (a) | 9,910 | 563,681 | |
Amylin Pharmaceuticals, Inc. (a) | 7,600 | 156,560 | |
Biogen Idec, Inc. (a) | 98,334 | 5,900,038 | |
Celgene Corp. (a) | 69,520 | 3,707,502 | |
Cephalon, Inc. (a) | 61,099 | 3,086,721 | |
Dendreon Corp. (a) | 37,300 | 343,533 | |
Dyax Corp. (a) | 4,200 | 32,298 | |
Enzon Pharmaceuticals, Inc. (a) | 24,000 | 297,840 | |
Genentech, Inc. (a) | 112,600 | 5,481,368 | |
Genta, Inc. (a) | 13,700 | 23,564 | |
Genzyme Corp. - General Division (a) | 55,820 | 2,862,450 | |
Gilead Sciences, Inc. (a) | 48,600 | 3,141,504 | |
Harvard Bioscience, Inc. (a) | 300 | 1,144 | |
ICOS Corp. (a) | 26,900 | 647,214 | |
ImClone Systems, Inc. (a) | 50,864 | 2,996,907 | |
ImmunoGen, Inc. (a) | 56,300 | 302,331 | |
Immunomedics, Inc. (a) | 8,600 | 34,400 | |
Invitrogen Corp. (a) | 30,650 | 1,608,512 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 44,700 | 617,307 | |
Medarex, Inc. (a) | 25,290 | 155,281 | |
MedImmune, Inc. (a) | 120,300 | 2,771,712 | |
Millennium Pharmaceuticals, Inc. (a) | 219,871 | 2,444,966 | |
Neurocrine Biosciences, Inc. (a) | 21,400 | 996,598 | |
NPS Pharmaceuticals, Inc. (a) | 12,000 | 223,800 | |
OSI Pharmaceuticals, Inc. (a) | 2,600 | 156,260 | |
Pharmion Corp. | 13,904 | 624,012 | |
Protein Design Labs, Inc. (a) | 41,900 | 678,780 | |
Regeneron Pharmaceuticals, Inc. (a) | 19,822 | 169,676 | |
Seattle Genetics, Inc. (a) | 22,000 | 131,560 | |
Serologicals Corp. (a) | 27,500 | 539,000 | |
Tanox, Inc. (a) | 10,700 | 167,669 | |
Techne Corp. (a) | 18,410 | 732,718 | |
Telik, Inc. (a) | 8,900 | 175,864 | |
Transkaryotic Therapies, Inc. (a) | 11,640 | 173,552 | |
XOMA Ltd. (a) | 49,300 | 179,452 | |
TOTAL BIOTECHNOLOGY | 45,489,293 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% | |||
Cyberonics, Inc. (a) | 1,300 | 36,374 | |
Epix Medical, Inc. (a) | 3,100 | 55,955 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 92,329 | ||
PHARMACEUTICALS - 13.5% | |||
Cypress Bioscience, Inc. (a) | 2,600 | 25,974 | |
Elan Corp. PLC sponsored ADR (a) | 141,100 | 2,899,605 | |
Guilford Pharmaceuticals, Inc. (a) | 29,300 | 121,595 | |
Medicines Co. (a) | 18,800 | 497,448 | |
Merck KGaA | 15,926 | 893,092 | |
Shares | Value (Note 1) | ||
MGI Pharma, Inc. (a) | 36,200 | $ 1,013,962 | |
Sepracor, Inc. (a) | 40,996 | 1,884,586 | |
SkyePharma PLC (a) | 39,123 | 39,719 | |
TOTAL PHARMACEUTICALS | 7,375,981 | ||
TOTAL COMMON STOCKS (Cost $50,319,142) | 52,957,603 | ||
Money Market Funds - 17.1% | |||
Fidelity Cash Central Fund, 1.33% (b)(c) | 9,337,928 | 9,337,928 | |
TOTAL INVESTMENT PORTFOLIO - 113.8% (Cost $59,657,070) | 62,295,531 | ||
NET OTHER ASSETS - (13.8)% | (7,552,540) | ||
NET ASSETS - 100% | $ 54,742,991 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $12,285,000 all of which will expire on July 31, 2011. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,795,550) (cost $59,657,070) - See accompanying schedule | $ 62,295,531 | |
Receivable for investments sold | 1,069,222 | |
Receivable for fund shares sold | 322,834 | |
Interest receivable | 7,861 | |
Prepaid expenses | 80 | |
Receivable from investment adviser for expense reductions | 12,181 | |
Other affiliated receivables | 347 | |
Other receivables | 2,547 | |
Total assets | 63,710,603 | |
Liabilities | ||
Payable to custodian bank | $ 25,085 | |
Payable for fund shares redeemed | 345,479 | |
Accrued management fee | 27,416 | |
Distribution fees payable | 34,265 | |
Other affiliated payables | 28,089 | |
Other payables and accrued expenses | 52,153 | |
Collateral on securities loaned, at value | 8,455,125 | |
Total liabilities | 8,967,612 | |
Net Assets | $ 54,742,991 | |
Net Assets consist of: | ||
Paid in capital | $ 64,950,896 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (12,846,366) | |
Net unrealized appreciation (depreciation) on investments | 2,638,461 | |
Net Assets | $ 54,742,991 | |
Calculation of Maximum Offering Price | $ 6.00 | |
Maximum offering price per share (100/94.25 of $6.00) | $ 6.37 | |
Class T: | $ 5.95 | |
Maximum offering price per share (100/96.50 of $5.95) | $ 6.17 | |
Class B: | $ 5.84 | |
Class C: | $ 5.84 | |
Institutional Class: | $ 6.06 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 11,637 | |
Interest | 29,644 | |
Security lending | 10,862 | |
Total income | 52,143 | |
Expenses | ||
Management fee | $ 296,962 | |
Transfer agent fees | 282,027 | |
Distribution fees | 375,751 | |
Accounting and security lending fees | 46,078 | |
Non-interested trustees' compensation | 237 | |
Custodian fees and expenses | 8,837 | |
Registration fees | 55,140 | |
Audit | 36,203 | |
Legal | 192 | |
Miscellaneous | 19,757 | |
Total expenses before reductions | 1,121,184 | |
Expense reductions | (114,772) | 1,006,412 |
Net investment income (loss) | (954,269) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 2,868,648 | |
Foreign currency transactions | (1,461) | |
Total net realized gain (loss) | 2,867,187 | |
Change in net unrealized appreciation (depreciation) on investment securities | (2,278,403) | |
Net gain (loss) | 588,784 | |
Net increase (decrease) in net assets resulting from operations | $ (365,485) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Biotechnology Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (954,269) | $ (526,064) |
Net realized gain (loss) | 2,867,187 | (2,908,047) |
Change in net unrealized appreciation (depreciation) | (2,278,403) | 13,954,492 |
Net increase (decrease) in net assets resulting from operations | (365,485) | 10,520,381 |
Share transactions - net increase (decrease) | 10,289,718 | 3,458,182 |
Redemption fees | 18,272 | 25,473 |
Total increase (decrease) in net assets | 9,942,505 | 14,004,036 |
Net Assets | ||
Beginning of period | 44,800,486 | 30,796,450 |
End of period (including undistributed net investment income of $0 and $2,379, respectively) | $ 54,742,991 | $ 44,800,486 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.94 | $ 4.39 | $ 7.09 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.09) | (.05) | (.07) | (.04) |
Net realized and unrealized gain (loss) | .15 | 1.60 | (2.64) | (2.88) |
Total from investment operations | .06 | 1.55 | (2.71) | (2.92) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 6.00 | $ 5.94 | $ 4.39 | $ 7.09 |
Total Return B, C, D | 1.01% | 35.31% | (38.08)% | (29.10)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 1.68% | 2.04% | 1.99% | 3.07% A |
Expenses net of voluntary waivers, if any | 1.50% | 1.50% | 1.50% | 1.50% A |
Expenses net of all reductions | 1.48% | 1.47% | 1.46% | 1.49% A |
Net investment income (loss) | (1.38)% | (1.11)% | (1.19)% | (.94)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 10,197 | $ 7,718 | $ 4,657 | $ 4,232 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.90 | $ 4.37 | $ 7.07 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.10) | (.06) | (.09) | (.05) |
Net realized and unrealized gain (loss) | .15 | 1.59 | (2.62) | (2.89) |
Total from investment operations | .05 | 1.53 | (2.71) | (2.94) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 5.95 | $ 5.90 | $ 4.37 | $ 7.07 |
Total ReturnB,C,D | .85% | 35.01% | (38.19)% | (29.30)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 2.10% | 2.39% | 2.27% | 3.29% A |
Expenses net of voluntary waivers, if any | 1.75% | 1.75% | 1.75% | 1.75% A |
Expenses net of all reductions | 1.73% | 1.72% | 1.72% | 1.74% A |
Net investment income (loss) | (1.63)% | (1.36)% | (1.45)% | (1.19)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 13,367 | $ 10,281 | $ 6,861 | $ 7,721 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.82 | $ 4.33 | $ 7.05 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.13) | (.09) | (.12) | (.07) |
Net realized and unrealized gain (loss) | .15 | 1.58 | (2.61) | (2.89) |
Total from investment operations | .02 | 1.49 | (2.73) | (2.96) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 5.84 | $ 5.82 | $ 4.33 | $ 7.05 |
Total Return B, C, D | .34% | 34.41% | (38.58)% | (29.50)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.46% | 2.78% | 2.74% | 3.83% A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.22% | 2.22% | 2.22% | 2.24% A |
Net investment income (loss) | (2.12)% | (1.86)% | (1.95)% | (1.69)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 16,819 | $ 15,154 | $ 10,218 | $ 8,875 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.82 | $ 4.33 | $ 7.05 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.13) | (.09) | (.12) | (.07) |
Net realized and unrealized gain (loss) | .15 | 1.58 | (2.61) | (2.89) |
Total from investment operations | .02 | 1.49 | (2.73) | (2.96) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 5.84 | $ 5.82 | $ 4.33 | $ 7.05 |
Total Return B, C, D | .34% | 34.41% | (38.58)% | (29.50)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.31% | 2.58% | 2.57% | 3.73% A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.23% | 2.22% | 2.22% | 2.24% A |
Net investment income (loss) | (2.13)% | (1.86)% | (1.95)% | (1.69)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 13,215 | $ 10,493 | $ 8,204 | $ 6,321 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 E |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.97 | $ 4.40 | $ 7.09 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | (.06) | (.04) | (.06) | (.03) |
Net realized and unrealized gain (loss) | .15 | 1.61 | (2.64) | (2.89) |
Total from investment operations | .09 | 1.57 | (2.70) | (2.92) |
Redemption fees added to paid in capital D | - G | - G | .01 | .01 |
Net asset value, end of period | $ 6.06 | $ 5.97 | $ 4.40 | $ 7.09 |
Total Return B, C | 1.51% | 35.68% | (37.94)% | (29.10)% |
Ratios to Average Net Assets F | ||||
Expenses before expense reductions | 1.16% | 1.37% | 1.41% | 2.58% A |
Expenses net of voluntary waivers, if any | 1.16% | 1.25% | 1.25% | 1.25% A |
Expenses net of all reductions | 1.14% | 1.22% | 1.22% | 1.24% A |
Net investment income (loss) | (1.04)% | (.86)% | (.94)% | (.69)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 1,146 | $ 1,153 | $ 857 | $ 911 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E For the period December 27, 2000 (commencement of operations) to July 31, 2001. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Biotechnology Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 8,168,906 | | |
Unrealized depreciation | (6,092,072) | |
Net unrealized appreciation (depreciation) | 2,076,834 | |
Capital loss carryforward | (12,284,743) | |
Cost for federal income tax purposes | $ 60,218,697 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $38,821,556 and $24,431,685, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 22,710 | $ - |
Class T | .25% | .25% | 60,890 | - |
Class B | .75% | .25% | 168,580 | 126,436 |
Class C | .75% | .25% | 123,571 | 32,723 |
$ 375,751 | $ 159,159 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Biotechnology
4. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 21,240 | |
Class T | 10,577 | |
Class B* | 62,296 | |
Class C* | 3,124 | |
$ 97,237 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 48,526 | .53 |
Class T | 85,260 | .70 |
Class B | 94,797 | .56 |
Class C | 50,706 | .41 |
Institutional Class | 2,738 | .26 |
$ 282,027 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $40,870 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $765 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 16,637 |
Class T | 1.75% | 42,438 |
Class B | 2.25% | 36,252 |
Class C | 2.25% | 7,595 |
$ 102,922 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $11,763 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $87.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 878,734 | 680,076 | $ 5,475,076 | $ 3,440,096 |
Shares redeemed | (480,064) | (441,219) | (2,905,863) | (2,151,060) |
Net increase (decrease) | 398,670 | 238,857 | $ 2,569,213 | $ 1,289,036 |
Class T | ||||
Shares sold | 1,105,179 | 780,971 | $ 6,864,105 | $ 3,727,715 |
Shares redeemed | (601,131) | (607,382) | (3,678,218) | (2,754,456) |
Net increase (decrease) | 504,048 | 173,589 | $ 3,185,887 | $ 973,259 |
Class B | ||||
Shares sold | 951,709 | 1,029,065 | $ 5,766,243 | $ 4,968,448 |
Shares redeemed | (675,608) | (781,932) | (4,063,659) | (3,620,850) |
Net increase (decrease) | 276,101 | 247,133 | $ 1,702,584 | $ 1,347,598 |
Class C | ||||
Shares sold | 962,707 | 755,361 | $ 5,865,287 | $ 3,589,348 |
Shares redeemed | (502,895) | (844,807) | (3,048,910) | (3,793,398) |
Net increase (decrease) | 459,812 | (89,446) | $ 2,816,377 | $ (204,050) |
Institutional Class | ||||
Shares sold | 64,860 | 85,342 | $ 427,262 | $ 466,184 |
Shares redeemed | (68,780) | (86,741) | (411,605) | (413,845) |
Net increase (decrease) | (3,920) | (1,399) | $ 15,657 | $ 52,339 |
Biotechnology
Advisor Consumer Industries Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of | |
Institutional Class | 6.16% | -0.86% | 8.40% |
A From September 3, 1996.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Industries Fund - Institutional Class on September 3, 1996, when the fund started. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Consumer Industries Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from John Roth, who became Portfolio Manager of Fidelity ® Advisor Consumer Industries Fund on June 14, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12-month period ending July 31, 2004, the fund's Institutional Class shares returned 6.16%, underperforming the Goldman Sachs ® Consumer Industries Index, which gained 10.73%, and the S&P 500 index. The fund's heavy weighting in media companies involved with radio hurt its relative performance, because most discretionary ad spending went to other media, most notably Internet advertising. Additionally, the S&P and Goldman Sachs indexes both held a broader range of stocks than the fund, and were helped by their larger weightings in better-performing consumer staples stocks during the period. Internet portal Yahoo!, the fund's No. 1 absolute and relative contributor, was a big beneficiary of the shift in ad dollars to the Internet. Also helping was Procter & Gamble, the diversified consumer products giant, which executed its business strategy extremely well and saw its earnings estimates move up consistently. Detractors included Viacom, which owns Infinity Broadcasting, and radio operator Clear Channel Communications. During the period, radio advertising lagged while other forms of advertising picked up, causing these companies' earnings growth to come in lower than expected. Elsewhere, doughnut franchiser Krispy Kreme was not able to sustain the strong growth rate it previously achieved following its initial public offering, which disappointed investors and hurt its stock price.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Consumer Industries Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 950.20 | $ 7.27 |
Hypothetical A | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 948.80 | $ 8.48 |
Hypothetical A | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 947.00 | $ 10.89 |
Hypothetical A | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 947.00 | $ 10.84 |
Hypothetical A | $ 1,000.00 | $ 1,013.72 | $ 11.28 |
Institutional | |||
Actual | $ 1,000.00 | $ 951.80 | $ 6.07 |
Hypothetical A | $ 1,000.00 | $ 1,018.71 | $ 6.29 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.24% |
Institutional | 1.25% |
Annual Report
Advisor Consumer Industries Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Viacom, Inc. Class B (non-vtg.) | 6.7 |
Fox Entertainment Group, Inc. Class A | 5.3 |
Wal-Mart Stores, Inc. | 4.0 |
Home Depot, Inc. | 3.4 |
McDonald's Corp. | 2.9 |
News Corp. Ltd. sponsored ADR | 2.7 |
Univision Communications, Inc. Class A | 2.2 |
Procter & Gamble Co. | 2.0 |
Yahoo!, Inc. | 1.8 |
Target Corp. | 1.7 |
32.7 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Media | 31.9% | |
 | Hotels, Restaurants & Leisure | 15.7% | |
 | Specialty Retail | 11.2% | |
 | Food & Staples Retailing | 6.0% | |
 | Internet Software & Services | 4.4% | |
| All Others * | 30.8% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Consumer Industries Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value (Note 1) | ||
AUTOMOBILES - 2.2% | |||
Harley-Davidson, Inc. | 12,800 | $ 766,336 | |
Thor Industries, Inc. | 12,900 | 403,899 | |
TOTAL AUTOMOBILES | 1,170,235 | ||
BEVERAGES - 2.3% | |||
Anheuser-Busch Companies, Inc. | 10,000 | 519,000 | |
PepsiCo, Inc. | 9,700 | 485,000 | |
The Coca-Cola Co. | 5,200 | 228,072 | |
TOTAL BEVERAGES | 1,232,072 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.8% | |||
Bright Horizons Family Solutions, Inc. (a) | 4,877 | 247,508 | |
Cendant Corp. | 38,200 | 874,016 | |
R.R. Donnelley & Sons Co. | 4,200 | 133,308 | |
Strayer Education, Inc. | 2,300 | 224,066 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,478,898 | ||
FOOD & STAPLES RETAILING - 6.0% | |||
Costco Wholesale Corp. | 14,500 | 589,570 | |
CVS Corp. | 8,500 | 355,895 | |
Sysco Corp. | 200 | 6,890 | |
Wal-Mart Stores, Inc. | 39,880 | 2,114,039 | |
Whole Foods Market, Inc. | 900 | 74,088 | |
TOTAL FOOD & STAPLES RETAILING | 3,140,482 | ||
FOOD PRODUCTS - 3.7% | |||
Bunge Ltd. | 7,100 | 284,923 | |
Dean Foods Co. (a) | 14,050 | 519,569 | |
Fresh Del Monte Produce, Inc. | 9,500 | 252,225 | |
Hershey Foods Corp. | 200 | 9,688 | |
Smithfield Foods, Inc. (a) | 22,500 | 637,650 | |
SunOpta, Inc. (a) | 7,900 | 58,125 | |
The J.M. Smucker Co. | 4,000 | 167,240 | |
TOTAL FOOD PRODUCTS | 1,929,420 | ||
HOTELS, RESTAURANTS & LEISURE - 15.7% | |||
Boyd Gaming Corp. | 200 | 5,258 | |
Brinker International, Inc. (a) | 9,900 | 354,519 | |
Caesars Entertainment, Inc. (a) | 10,100 | 148,773 | |
Carnival Corp. unit | 17,600 | 820,336 | |
CBRL Group, Inc. | 3,700 | 122,914 | |
Hilton Hotels Corp. | 21,700 | 386,911 | |
International Game Technology | 8,300 | 268,422 | |
Kerzner International Ltd. (a) | 3,000 | 140,730 | |
Krispy Kreme Doughnuts, Inc. (a) | 21,500 | 338,410 | |
McDonald's Corp. | 54,700 | 1,504,250 | |
MGM MIRAGE (a) | 12,500 | 551,875 | |
Outback Steakhouse, Inc. | 13,700 | 556,357 | |
Royal Caribbean Cruises Ltd. | 20,700 | 884,925 | |
Shares | Value (Note 1) | ||
Starbucks Corp. (a) | 2,900 | $ 136,184 | |
Starwood Hotels & Resorts Worldwide, Inc. unit | 16,400 | 738,000 | |
Wendy's International, Inc. | 14,640 | 523,673 | |
Wyndham International, Inc. Class A (a) | 262,500 | 257,250 | |
Yum! Brands, Inc. | 14,100 | 541,299 | |
TOTAL HOTELS, RESTAURANTS & LEISURE | 8,280,086 | ||
HOUSEHOLD PRODUCTS - 3.7% | |||
Colgate-Palmolive Co. | 13,400 | 712,880 | |
Kimberly-Clark Corp. | 3,100 | 198,617 | |
Procter & Gamble Co. | 19,970 | 1,041,436 | |
TOTAL HOUSEHOLD PRODUCTS | 1,952,933 | ||
INDUSTRIAL CONGLOMERATES - 0.5% | |||
3M Co. | 3,200 | 263,552 | |
INTERNET & CATALOG RETAIL - 0.7% | |||
Amazon.com, Inc. (a) | 5,700 | 221,844 | |
eBay, Inc. (a) | 1,700 | 133,161 | |
TOTAL INTERNET & CATALOG RETAIL | 355,005 | ||
INTERNET SOFTWARE & SERVICES - 4.4% | |||
iVillage, Inc. (a) | 48,000 | 248,160 | |
Sina Corp. (a) | 20,500 | 581,175 | |
Sohu.com, Inc. (a) | 25,300 | 524,216 | |
Yahoo!, Inc. (a) | 31,870 | 981,596 | |
TOTAL INTERNET SOFTWARE & SERVICES | 2,335,147 | ||
LEISURE EQUIPMENT & PRODUCTS - 3.6% | |||
Brunswick Corp. | 21,000 | 819,630 | |
MarineMax, Inc. (a) | 11,200 | 275,408 | |
Polaris Industries, Inc. | 11,400 | 544,920 | |
SCP Pool Corp. | 5,900 | 243,257 | |
TOTAL LEISURE EQUIPMENT & PRODUCTS | 1,883,215 | ||
MEDIA - 31.9% | |||
ADVO, Inc. | 6,000 | 185,940 | |
Clear Channel Communications, Inc. | 14,549 | 519,399 | |
Comcast Corp.: | |||
Class A (a) | 10,500 | 287,700 | |
Class A (special) (a) | 9,480 | 254,064 | |
E.W. Scripps Co. Class A | 5,200 | 532,584 | |
EchoStar Communications Corp. | 14,200 | 393,624 | |
Fox Entertainment Group, Inc. Class A (a) | 103,200 | 2,789,496 | |
Gannett Co., Inc. | 5,680 | 472,235 | |
Harte-Hanks, Inc. | 4,400 | 106,304 | |
JC Decaux SA (a) | 15,500 | 329,492 | |
Lamar Advertising Co. Class A (a) | 13,220 | 531,576 | |
Liberty Media Corp. Class A (a) | 56,800 | 481,664 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
MEDIA - CONTINUED | |||
Liberty Media International, Inc.: | |||
Class A (a) | 5,240 | $ 163,383 | |
Class A rights 8/23/04 (a) | 1,048 | 6,298 | |
News Corp. Ltd. sponsored ADR | 45,300 | 1,439,181 | |
Omnicom Group, Inc. | 8,600 | 619,372 | |
Radio One, Inc. Class D (non-vtg.) (a) | 36,600 | 556,686 | |
Reuters Group PLC sponsored ADR | 3,800 | 134,406 | |
SBS Broadcasting SA (a) | 100 | 3,631 | |
Spanish Broadcasting System, Inc. | 14,140 | 121,463 | |
Time Warner, Inc. (a) | 44,600 | 742,590 | |
Tribune Co. | 12,500 | 530,625 | |
Univision Communications, Inc. | 40,200 | 1,164,594 | |
Viacom, Inc.: | |||
Class A | 18,700 | 636,735 | |
Class B (non-vtg.) | 104,397 | 3,506,694 | |
Washington Post Co. Class B | 200 | 173,580 | |
Westwood One, Inc. (a) | 4,500 | 107,100 | |
TOTAL MEDIA | 16,790,416 | ||
MULTILINE RETAIL - 4.1% | |||
Big Lots, Inc. (a) | 8,700 | 106,488 | |
Family Dollar Stores, Inc. | 9,000 | 250,740 | |
Federated Department Stores, Inc. | 5,400 | 258,768 | |
JCPenney Co., Inc. | 7,400 | 296,000 | |
Neiman Marcus Group, Inc. Class A | 1,900 | 103,645 | |
Nordstrom, Inc. | 4,500 | 197,550 | |
Saks, Inc. | 3,200 | 41,760 | |
Target Corp. | 21,000 | 915,600 | |
TOTAL MULTILINE RETAIL | 2,170,551 | ||
PERSONAL PRODUCTS - 2.6% | |||
Alberto-Culver Co. | 5,500 | 256,410 | |
Avon Products, Inc. | 20,300 | 873,103 | |
Gillette Co. | 6,400 | 249,472 | |
TOTAL PERSONAL PRODUCTS | 1,378,985 | ||
REAL ESTATE - 0.3% | |||
MeriStar Hospitality Corp. (a) | 24,700 | 143,260 | |
SPECIALTY RETAIL - 11.2% | |||
Aeropostale, Inc. (a) | 4,400 | 134,112 | |
American Eagle Outfitters, Inc. (a) | 25,700 | 842,189 | |
Best Buy Co., Inc. | 4,300 | 207,088 | |
Chico's FAS, Inc. (a) | 5,900 | 247,033 | |
Foot Locker, Inc. | 16,400 | 369,000 | |
Gap, Inc. | 5,600 | 127,120 | |
Home Depot, Inc. | 53,590 | 1,807,055 | |
Hot Topic, Inc. (a) | 4,350 | 69,252 | |
Shares | Value (Note 1) | ||
Limited Brands, Inc. | 8,100 | $ 165,564 | |
Lowe's Companies, Inc. | 10,300 | 501,816 | |
Office Depot, Inc. (a) | 15,900 | 260,760 | |
PETsMART, Inc. | 4,500 | 139,545 | |
Staples, Inc. | 15,500 | 447,640 | |
Steiner Leisure Ltd. (a) | 11,272 | 269,514 | |
Toys 'R' Us, Inc. (a) | 9,200 | 151,432 | |
West Marine, Inc. (a) | 6,100 | 126,026 | |
TOTAL SPECIALTY RETAIL | 5,865,146 | ||
TEXTILES APPAREL & LUXURY GOODS - 3.1% | |||
Coach, Inc. (a) | 2,800 | 119,812 | |
Kenneth Cole Productions, Inc. Class A | 3,200 | 102,688 | |
Liz Claiborne, Inc. | 10,500 | 379,995 | |
NIKE, Inc. Class B | 7,200 | 523,512 | |
Phoenix Footwear Group, Inc. (a) | 10,900 | 119,246 | |
Polo Ralph Lauren Corp. Class A | 7,600 | 250,496 | |
Quiksilver, Inc. (a) | 4,900 | 105,644 | |
TOTAL TEXTILES APPAREL & LUXURY GOODS | 1,601,393 | ||
TOTAL COMMON STOCKS (Cost $51,131,306) | 51,970,796 | ||
Money Market Funds - 3.3% | |||
Fidelity Cash Central Fund, 1.33% (b) | 1,310,661 | 1,310,661 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 412,050 | 412,050 | |
TOTAL MONEY MARKET FUNDS (Cost $1,722,711) | 1,722,711 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $52,854,017) | 53,693,507 | ||
NET OTHER ASSETS - (2.1)% | (1,081,742) | ||
NET ASSETS - 100% | $ 52,611,765 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
The fund hereby designates approximately $184,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
See accompanying notes which are an integral part of the financial statements.
Consumer Industries
Advisor Consumer Industries Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $416,472) (cost $52,854,017) - See accompanying schedule | $ 53,693,507 | |
Cash | 11,805 | |
Receivable for fund shares sold | 167,173 | |
Dividends receivable | 17,666 | |
Interest receivable | 3,380 | |
Prepaid expenses | 87 | |
Receivable from investment adviser for expense reductions | 6,199 | |
Other affiliated receivables | 9 | |
Other receivables | 4,363 | |
Total assets | 53,904,189 | |
Liabilities | ||
Payable for investments purchased | $ 666,408 | |
Payable for fund shares redeemed | 98,403 | |
Accrued management fee | 25,388 | |
Distribution fees payable | 29,411 | |
Other affiliated payables | 21,947 | |
Other payables and accrued expenses | 38,817 | |
Collateral on securities loaned, at value | 412,050 | |
Total liabilities | 1,292,424 | |
Net Assets | $ 52,611,765 | |
Net Assets consist of: | ||
Paid in capital | $ 49,776,131 | |
Accumulated net investment loss | (36) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,996,180 | |
Net unrealized appreciation (depreciation) on investments | 839,490 | |
Net Assets | $ 52,611,765 | |
Calculation of Maximum Offering Price | $ 14.51 | |
Maximum offering price per share (100/94.25 of $14.51) | $ 15.40 | |
Class T: | $ 14.27 | |
Maximum offering price per share (100/96.50 of $14.27) | $ 14.79 | |
Class B: | $ 13.75 | |
Class C: | $ 13.77 | |
Institutional: | $ 14.81 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 482,242 | |
Interest | 18,130 | |
Security lending | 2,470 | |
Total income | 502,842 | |
Expenses | ||
Management fee | $ 304,315 | |
Transfer agent fees | 221,774 | |
Distribution fees | 354,599 | |
Accounting and security lending fees | 44,395 | |
Non-interested trustees' compensation | 286 | |
Custodian fees and expenses | 6,819 | |
Registration fees | 56,012 | |
Audit | 36,600 | |
Legal | 220 | |
Miscellaneous | 12,981 | |
Total expenses before reductions | 1,038,001 | |
Expense reductions | (51,311) | 986,690 |
Net investment income (loss) | (483,848) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 5,966,359 | |
Foreign currency transactions | (254) | |
Total net realized gain (loss) | 5,966,105 | |
Change in net unrealized appreciation (depreciation) on investment securities | (3,103,656) | |
Net gain (loss) | 2,862,449 | |
Net increase (decrease) in net assets resulting from operations | $ 2,378,601 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Industries Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (483,848) | $ (323,122) |
Net realized gain (loss) | 5,966,105 | (2,493,545) |
Change in net unrealized appreciation (depreciation) | (3,103,656) | 5,783,611 |
Net increase (decrease) in net assets resulting from operations | 2,378,601 | 2,966,944 |
Share transactions - net increase (decrease) | 3,962,592 | 3,526,707 |
Redemption fees | 7,430 | 16,225 |
Total increase (decrease) in net assets | 6,348,623 | 6,509,876 |
Net Assets | ||
Beginning of period | 46,263,142 | 39,753,266 |
End of period (including accumulated net investment loss of $36 and $0, respectively) | $ 52,611,765 | $ 46,263,142 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.71 | $ 12.71 | $ 15.20 | $ 15.04 | $ 16.01 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.07) | (.04) | (.05) | .01 | (.04) |
Net realized and unrealized gain (loss) | .87 | 1.04 | (2.09) | .15 | (.68) |
Total from investment operations | .80 | 1.00 | (2.14) | .16 | (.72) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 14.51 | $ 13.71 | $ 12.71 | $ 15.20 | $ 15.04 |
Total Return A, B | 5.84% | 7.87% | (14.30)% | 1.06% | (4.48)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.55% | 1.70% | 1.69% | 1.71% | 1.62% |
Expenses net of voluntary waivers, if any | 1.50% | 1.53% | 1.50% | 1.50% | 1.50% |
Expenses net of all reductions | 1.45% | 1.48% | 1.47% | 1.49% | 1.49% |
Net investment income (loss) | (.50)% | (.33)% | (.36)% | .08% | (.24)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 11,856 | $ 9,101 | $ 7,209 | $ 4,648 | $ 3,609 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Industries
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.51 | $ 12.57 | $ 15.06 | $ 14.93 | $ 15.93 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.07) | (.09) | (.02) | (.08) |
Net realized and unrealized gain (loss) | .87 | 1.01 | (2.05) | .15 | (.67) |
Total from investment operations | .76 | .94 | (2.14) | .13 | (.75) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 14.27 | $ 13.51 | $ 12.57 | $ 15.06 | $ 14.93 |
Total ReturnA,B | 5.63% | 7.48% | (14.44)% | .87% | (4.69)% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.81% | 1.87% | 1.89% | 1.98% | 1.85% |
Expenses net of voluntary waivers, if any | 1.75% | 1.78% | 1.75% | 1.75% | 1.75% |
Expenses net of all reductions | 1.70% | 1.73% | 1.72% | 1.73% | 1.73% |
Net investment income (loss) | (.74)% | (.58)% | (.61)% | (.17)% | (.49)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 15,555 | $ 13,693 | $ 12,132 | $ 12,899 | $ 13,275 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.08 | $ 12.22 | $ 14.73 | $ 14.69 | $ 15.76 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.18) | (.13) | (.15) | (.10) | (.15) |
Net realized and unrealized gain (loss) | .85 | .99 | (2.01) | .14 | (.67) |
Total from investment operations | .67 | .86 | (2.16) | .04 | (.82) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital C | - E | - E | -E | -E | .01 |
Net asset value, end of period | $ 13.75 | $ 13.08 | $ 12.22 | $ 14.73 | $ 14.69 |
Total Return A,B | 5.12% | 7.04% | (14.91)% | .27% | (5.19)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.29% | 2.37% | 2.39% | 2.51% | 2.41% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.20% | 2.19% | 2.22% | 2.24% | 2.24% |
Net investment income (loss) | (1.25)% | (1.05)% | (1.11)% | (.67)% | (.99)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 17,302 | $ 15,944 | $ 13,807 | $ 13,483 | $ 9,021 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.10 | $ 12.24 | $ 14.75 | $ 14.71 | $ 15.78 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.18) | (.13) | (.15) | (.10) | (.15) |
Net realized and unrealized gain (loss) | .85 | .99 | (2.01) | .14 | (.67) |
Total from investment operations | .67 | .86 | (2.16) | .04 | (.82) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.77 | $ 13.10 | $ 12.24 | $ 14.75 | $ 14.71 |
Total Return A,B | 5.11% | 7.03% | (14.89)% | .27% | (5.19)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.24% | 2.33% | 2.35% | 2.49% | 2.42% |
Expenses net of voluntary waivers, if any | 2.24% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.19% | 2.19% | 2.22% | 2.24% | 2.24% |
Net investment income (loss) | (1.24)% | (1.05)% | (1.11)% | (.67)% | (.99)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 6,992 | $ 6,759 | $ 5,391 | $ 5,504 | $ 3,048 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.95 | $ 12.91 | $ 15.38 | $ 15.18 | $ 16.11 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.04) | (.01) | (.02) | .05 | - D |
Net realized and unrealized gain (loss) | .90 | 1.05 | (2.10) | .15 | (.69) |
Total from investment operations | .86 | 1.04 | (2.12) | .20 | (.69) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital B | - D | - D | - D | - D | .02 |
Net asset value, end of period | $ 14.81 | $ 13.95 | $ 12.91 | $ 15.38 | $ 15.18 |
Total Return A | 6.16% | 8.06% | (14.00)% | 1.32% | (4.20)% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | 1.34% | 1.49% | 1.39% | 1.57% | 1.31% |
Expenses net of voluntary waivers, if any | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% |
Expenses net of all reductions | 1.20% | 1.19% | 1.22% | 1.24% | 1.24% |
Net investment income (loss) | (.25)% | (.05)% | (.11)% | .33% | .01% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 907 | $ 766 | $ 1,215 | $ 1,249 | $ 1,449 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. BCalculated based on average shares outstanding during the period. CExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. DAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Industries
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Consumer Industries Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Distributions are recorded on the ex-dividend date.
Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as a distribution from realized gain for income tax purposes. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period. Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 4,079,576 | | |
Unrealized depreciation | (3,318,225) | |
Net unrealized appreciation (depreciation) | 761,351 | |
Undistributed long-term capital gain | 1,928,104 | |
Cost for federal income tax purposes | $ 52,932,156 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $80,991,514 and $77,699,133, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 27,921 | $ - |
Class T | .25% | .25% | 80,665 | 57 |
Class B | .75% | .25% | 178,570 | 133,929 |
Class C | .75% | .25% | 67,443 | 11,582 |
$ 354,599 | $ 145,568 |
Consumer Industries
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 19,384 | |
Class T | 3,826 | |
Class B* | 46,893 | |
Class C* | 637 | |
$ 70,740 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 47,522 | .43 |
Class T | 70,920 | .44 |
Class B | 74,503 | .42 |
Class C | 24,663 | .37 |
Institutional Class | 4,166 | .47 |
$ 221,774 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $18,096 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $6,947 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 5,213 |
Class T | 1.75% | 10,536 |
Class B | 2.25% | 7,489 |
Institutional Class | 1.25% | 835 |
$ 24,073 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $27,238 for the period.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 362,299 | 377,980 | $ 5,424,551 | $ 4,774,106 |
Shares redeemed | (209,272) | (281,020) | (3,099,528) | (3,483,682) |
Net increase (decrease) | 153,027 | 96,960 | $ 2,325,023 | $ 1,290,424 |
Class T | ||||
Shares sold | 372,905 | 363,773 | $ 5,380,121 | $ 4,562,911 |
Shares redeemed | (296,211) | (315,873) | (4,343,994) | (3,918,341) |
Net increase (decrease) | 76,694 | 47,900 | $ 1,036,127 | $ 644,570 |
Class B | ||||
Shares sold | 317,001 | 479,966 | $ 4,519,412 | $ 5,825,118 |
Shares redeemed | (277,375) | (390,683) | (3,946,551) | (4,652,792) |
Net increase (decrease) | 39,626 | 89,283 | $ 572,861 | $ 1,172,326 |
Class C | ||||
Shares sold | 145,559 | 207,444 | $ 2,089,237 | $ 2,509,927 |
Shares redeemed | (153,637) | (131,925) | (2,161,430) | (1,592,035) |
Net increase (decrease) | (8,078) | 75,519 | $ (72,193) | $ 917,892 |
Institutional Class | ||||
Shares sold | 20,688 | 21,067 | $ 317,524 | $ 270,692 |
Shares redeemed | (14,366) | (60,319) | (216,750) | (769,197) |
Net increase (decrease) | 6,322 | (39,252) | $ 100,774 | $ (498,505) |
Consumer Industries
Advisor Cyclical Industries Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of | |
Institutional Class | 28.24% | 6.48% | 10.85% |
A From September 3, 1996.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Cyclical Industries Fund - Institutional Class on September 3, 1996, when the fund started. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Cyclical Industries Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Matthew Friedman, who became Portfolio Manager of Fidelity ® Advisor Cyclical Industries Fund on May 3, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
While the broad market reversed course during the 12-month period, cyclical stocks thrived throughout the time frame. The fund's Institutional Class shares gained 28.24%, easily outdistancing the S&P 500 and the Goldman Sachs ® Cyclical Industries Index, which increased 24.72% for the 12 months. After beginning the period with an overweighting in early-cycle companies - those that see increased profits early in an economic recovery - we reversed our overweighting to late-cycle stocks, which typically profit later when orders for their products increase faster than their expenses. This weighting shift worked in the fund's favor, as late-cycle companies in aerospace and chemicals outperformed. Conglomerates Tyco International and General Electric were among the top contributors to both absolute and relative performance. Tyco emerged strongly from its accounting problems and GE benefited from late-cycle products. Elsewhere, Boeing and Honeywell benefited from new plane orders. Chemical company Solutia, which filed for bankruptcy in December, and Continental Airlines, which was caught in a spiral of higher fuel prices and competition from discount airlines, dragged on performance.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Cyclical Industries Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,067.20 | $ 7.71 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 1,066.10 | $ 8.99 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,062.80 | $ 11.54 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 1,063.10 | $ 11.54 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Institutional | |||
Actual | $ 1,000.00 | $ 1,068.20 | $ 6.43 |
HypotheticalA | $ 1,000.00 | $ 1,018.71 | $ 6.29 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.25% |
Institutional | 1.25% |
Annual Report
Advisor Cyclical Industries Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
General Electric Co. | 7.0 |
Tyco International Ltd. | 6.2 |
3M Co. | 5.3 |
Honeywell International, Inc. | 5.0 |
The Boeing Co. | 3.3 |
Dow Chemical Co. | 3.1 |
Lockheed Martin Corp. | 2.8 |
FedEx Corp. | 2.1 |
Lyondell Chemical Co. | 2.0 |
ITT Industries, Inc. | 1.8 |
38.6 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Industrial Conglomerates | 18.7% | |
| Aerospace & Defense | 17.5% | |
| Chemicals | 14.2% | |
| Machinery | 10.1% | |
| Air Freight & Logistics | 7.5% | |
| All Others * | 32.0% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Cyclical Industries Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 94.7% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 17.5% | |||
Bombardier, Inc. Class B (sub. vtg.) | 1,600 | $ 4,020 | |
DRS Technologies, Inc. (a) | 6,600 | 235,752 | |
EADS NV | 4,579 | 126,077 | |
EDO Corp. | 4,040 | 95,667 | |
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR | 2,800 | 80,080 | |
General Dynamics Corp. | 100 | 9,882 | |
Goodrich Corp. | 10,900 | 352,397 | |
Honeywell International, Inc. | 68,500 | 2,576,285 | |
L-3 Communications Holdings, Inc. | 2,000 | 122,300 | |
Lockheed Martin Corp. | 27,414 | 1,452,668 | |
Northrop Grumman Corp. | 13,354 | 702,420 | |
Precision Castparts Corp. | 8,300 | 467,539 | |
Raytheon Co. | 6,700 | 224,785 | |
Rockwell Collins, Inc. | 5,840 | 199,845 | |
The Boeing Co. | 33,300 | 1,689,975 | |
United Defense Industries, Inc. (a) | 19,100 | 661,815 | |
TOTAL AEROSPACE & DEFENSE | 9,001,507 | ||
AIR FREIGHT & LOGISTICS - 7.5% | |||
C.H. Robinson Worldwide, Inc. | 1,900 | 83,087 | |
CNF, Inc. | 10,200 | 420,852 | |
Dynamex, Inc. (a) | 15,740 | 244,757 | |
EGL, Inc. (a) | 18,000 | 457,380 | |
FedEx Corp. | 13,000 | 1,064,440 | |
J.B. Hunt Transport Services, Inc. | 3,700 | 142,117 | |
Ryder System, Inc. | 3,300 | 141,570 | |
United Parcel Service, Inc. Class B | 10,400 | 748,384 | |
UTI Worldwide, Inc. | 10,580 | 544,764 | |
TOTAL AIR FREIGHT & LOGISTICS | 3,847,351 | ||
AIRLINES - 2.3% | |||
AirTran Holdings, Inc. (a) | 9,800 | 109,270 | |
Alaska Air Group, Inc. (a) | 2,300 | 47,909 | |
AMR Corp. (a) | 31,000 | 261,330 | |
Continental Airlines, Inc. Class B (a) | 33,400 | 300,266 | |
Frontier Airlines, Inc. (a) | 80 | 630 | |
Southwest Airlines Co. | 33,100 | 478,957 | |
TOTAL AIRLINES | 1,198,362 | ||
AUTO COMPONENTS - 1.7% | |||
American Axle & Manufacturing Holdings, Inc. | 2,100 | 72,135 | |
Autoliv, Inc. | 100 | 4,209 | |
BorgWarner, Inc. | 1,800 | 84,942 | |
Delphi Corp. | 100 | 951 | |
Gentex Corp. | 7,300 | 261,340 | |
Goodyear Tire & Rubber Co. (a) | 200 | 2,190 | |
Shares | Value (Note 1) | ||
Johnson Controls, Inc. | 8,000 | $ 451,600 | |
Lear Corp. | 100 | 5,513 | |
TOTAL AUTO COMPONENTS | 882,880 | ||
AUTOMOBILES - 0.5% | |||
Bayerische Motoren Werke AG (BMW) | 4,400 | 195,319 | |
Ford Motor Co. | 100 | 1,472 | |
Hyundai Motor Co. Ltd. | 1,150 | 42,786 | |
TOTAL AUTOMOBILES | 239,577 | ||
BUILDING PRODUCTS - 1.4% | |||
American Standard Companies, Inc. (a) | 10,700 | 405,423 | |
Masco Corp. | 10,800 | 326,592 | |
TOTAL BUILDING PRODUCTS | 732,015 | ||
CHEMICALS - 14.2% | |||
Air Products & Chemicals, Inc. | 16,100 | 833,175 | |
Airgas, Inc. | 8,500 | 184,875 | |
Cytec Industries, Inc. | 6,000 | 279,600 | |
Dow Chemical Co. | 39,700 | 1,583,633 | |
Eastman Chemical Co. | 3,740 | 167,103 | |
Ecolab, Inc. | 8,100 | 247,050 | |
Ferro Corp. | 8,300 | 165,253 | |
Georgia Gulf Corp. | 3,600 | 127,980 | |
Hercules, Inc. (a) | 18,700 | 220,847 | |
Lyondell Chemical Co. | 57,223 | 1,040,314 | |
Millennium Chemicals, Inc. | 27,700 | 488,905 | |
Minerals Technologies, Inc. | 400 | 22,348 | |
Monsanto Co. | 8,500 | 308,210 | |
Olin Corp. | 12,000 | 207,360 | |
PolyOne Corp. (a) | 20,700 | 149,661 | |
Potash Corp. of Saskatchewan | 1,600 | 154,337 | |
PPG Industries, Inc. | 4,200 | 247,590 | |
Praxair, Inc. | 21,500 | 848,175 | |
Rohm & Haas Co. | 300 | 11,760 | |
Spartech Corp. | 100 | 2,390 | |
TOTAL CHEMICALS | 7,290,566 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.5% | |||
Allied Waste Industries, Inc. (a) | 14,400 | 133,056 | |
Central Parking Corp. | 6,700 | 106,731 | |
Herman Miller, Inc. | 11,600 | 310,880 | |
HNI Corp. | 1,300 | 52,585 | |
Republic Services, Inc. | 2,600 | 74,360 | |
Waste Connections, Inc. (a) | 5,550 | 160,173 | |
Waste Management, Inc. | 16,900 | 475,566 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,313,351 | ||
CONSTRUCTION & ENGINEERING - 2.5% | |||
Dycom Industries, Inc. (a) | 25,700 | 692,358 | |
EMCOR Group, Inc. (a) | 2,600 | 112,502 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSTRUCTION & ENGINEERING - CONTINUED | |||
Fluor Corp. | 4,400 | $ 200,420 | |
Granite Construction, Inc. | 10,700 | 190,353 | |
Jacobs Engineering Group, Inc. (a) | 1,700 | 67,966 | |
TOTAL CONSTRUCTION & ENGINEERING | 1,263,599 | ||
CONSTRUCTION MATERIALS - 0.4% | |||
Eagle Materials, Inc. | 40 | 2,639 | |
Martin Marietta Materials, Inc. | 64 | 2,800 | |
Texas Industries, Inc. | 4,700 | 201,301 | |
TOTAL CONSTRUCTION MATERIALS | 206,740 | ||
CONTAINERS & PACKAGING - 0.1% | |||
Owens-Illinois, Inc. (a) | 900 | 13,230 | |
Packaging Corp. of America | 1,800 | 42,048 | |
TOTAL CONTAINERS & PACKAGING | 55,278 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.1% | |||
GATX Corp. | 2,500 | 63,700 | |
ELECTRICAL EQUIPMENT - 1.0% | |||
Baldor Electric Co. | 100 | 2,288 | |
Cooper Industries Ltd. Class A | 1,500 | 85,305 | |
Emerson Electric Co. | 3,600 | 218,520 | |
Roper Industries, Inc. | 3,700 | 207,200 | |
TOTAL ELECTRICAL EQUIPMENT | 513,313 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5% | |||
Cognex Corp. | 3,000 | 90,240 | |
Mettler-Toledo International, Inc. (a) | 1,500 | 62,550 | |
Molex, Inc. | 2,400 | 69,504 | |
Tech Data Corp. (a) | 1,300 | 48,698 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 270,992 | ||
ENERGY EQUIPMENT & SERVICES - 0.2% | |||
Cooper Cameron Corp. (a) | 2,100 | 107,289 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% | |||
Millipore Corp. (a) | 1,800 | 94,842 | |
Thermo Electron Corp. (a) | 3,500 | 90,020 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 184,862 | ||
HOUSEHOLD DURABLES - 3.9% | |||
D.R. Horton, Inc. | 17,100 | 472,473 | |
Harman International Industries, Inc. | 500 | 42,865 | |
Hovnanian Enterprises, Inc. Class A (a) | 100 | 3,103 | |
KB Home | 4,600 | 294,630 | |
Leggett & Platt, Inc. | 2,300 | 62,215 | |
Pulte Homes, Inc. | 7,800 | 426,114 | |
Ryland Group, Inc. | 5,000 | 387,100 | |
Shares | Value (Note 1) | ||
Standard Pacific Corp. | 100 | $ 4,641 | |
Toll Brothers, Inc. (a) | 7,600 | 302,024 | |
TOTAL HOUSEHOLD DURABLES | 1,995,165 | ||
INDUSTRIAL CONGLOMERATES - 18.7% | |||
3M Co. | 32,860 | 2,706,350 | |
Carlisle Companies, Inc. | 700 | 44,443 | |
General Electric Co. | 108,500 | 3,607,626 | |
Teleflex, Inc. | 700 | 31,115 | |
Tyco International Ltd. | 103,800 | 3,217,800 | |
TOTAL INDUSTRIAL CONGLOMERATES | 9,607,334 | ||
MACHINERY - 10.1% | |||
AGCO Corp. (a) | 19,500 | 407,940 | |
Astec Industries, Inc. (a) | 8,000 | 136,240 | |
Caterpillar, Inc. | 8,300 | 609,967 | |
Cummins, Inc. | 6,800 | 472,124 | |
Danaher Corp. | 2,300 | 116,495 | |
Dover Corp. | 7,600 | 301,568 | |
IDEX Corp. | 4,750 | 152,428 | |
Ingersoll-Rand Co. Ltd. Class A | 5,700 | 391,533 | |
ITT Industries, Inc. | 11,700 | 935,415 | |
Kennametal, Inc. | 873 | 38,412 | |
Manitowoc Co., Inc. | 16,600 | 562,906 | |
Navistar International Corp. (a) | 3,140 | 112,883 | |
Oshkosh Truck Co. | 600 | 31,782 | |
PACCAR, Inc. | 1,650 | 98,934 | |
Pall Corp. | 8,600 | 199,262 | |
Pentair, Inc. | 8,000 | 250,560 | |
SPX Corp. | 3,000 | 122,850 | |
Terex Corp. (a) | 1,500 | 58,365 | |
Timken Co. | 2,100 | 52,164 | |
Toro Co. | 1,200 | 78,600 | |
Wabash National Corp. (a) | 3,000 | 86,640 | |
TOTAL MACHINERY | 5,217,068 | ||
MEDIA - 0.4% | |||
EchoStar Communications Corp. | 7,300 | 202,356 | |
METALS & MINING - 1.8% | |||
Massey Energy Co. | 4,600 | 127,190 | |
Nucor Corp. | 9,600 | 803,040 | |
TOTAL METALS & MINING | 930,230 | ||
OFFICE ELECTRONICS - 0.0% | |||
Xerox Corp. (a) | 100 | 1,386 | |
OIL & GAS - 1.1% | |||
OMI Corp. | 10,500 | 152,775 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
OIL & GAS - CONTINUED | |||
Overseas Shipholding Group, Inc. | 4,000 | $ 179,640 | |
Teekay Shipping Corp. | 5,500 | 218,790 | |
TOTAL OIL & GAS | 551,205 | ||
ROAD & RAIL - 4.7% | |||
Canadian National Railway Co. | 10,450 | 468,707 | |
CSX Corp. | 27,750 | 868,575 | |
Landstar System, Inc. (a) | 3,825 | 190,523 | |
Marten Transport Ltd. (a) | 600 | 11,790 | |
Norfolk Southern Corp. | 6,300 | 168,147 | |
P.A.M. Transportation Services, Inc. (a) | 1,900 | 34,979 | |
Union Pacific Corp. | 11,700 | 659,178 | |
USF Corp. | 500 | 17,750 | |
TOTAL ROAD & RAIL | 2,419,649 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | |||
Cabot Microelectronics Corp. (a) | 800 | 28,392 | |
SPECIALTY RETAIL - 0.6% | |||
Advance Auto Parts, Inc. (a) | 7,800 | 289,536 | |
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Fastenal Co. | 2,100 | 130,998 | |
W.W. Grainger, Inc. | 2,840 | 150,378 | |
TOTAL TRADING COMPANIES & DISTRIBUTORS | 281,376 | ||
TOTAL COMMON STOCKS (Cost $42,658,296) | 48,695,079 | ||
Nonconvertible Preferred Stocks - 0.2% | |||
AUTOMOBILES - 0.2% | |||
Porsche AG (non-vtg.) | 148 | 95,674 | |
Money Market Funds - 6.7% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 3,151,374 | $ 3,151,374 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 285,000 | 285,000 | |
TOTAL MONEY MARKET FUNDS (Cost $3,436,374) | 3,436,374 | ||
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $46,191,217) | 52,227,127 | ||
NET OTHER ASSETS - (1.6)% | (807,475) | ||
NET ASSETS - 100% | $ 51,419,652 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
The fund hereby designates approximately $33,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Cyclical Industries Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $269,700) (cost $46,191,217) - See accompanying schedule | $ 52,227,127 | |
Cash | 687 | |
Receivable for investments sold | 7,327 | |
Receivable for fund shares sold | 251,155 | |
Dividends receivable | 16,439 | |
Interest receivable | 4,436 | |
Prepaid expenses | 47 | |
Receivable from investment adviser for expense reductions | 4,890 | |
Other receivables | 3,989 | |
Total assets | 52,516,097 | |
Liabilities | ||
Payable for investments purchased | $ 414,003 | |
Payable for fund shares redeemed | 292,503 | |
Accrued management fee | 24,231 | |
Distribution fees payable | 27,851 | |
Other affiliated payables | 16,569 | |
Other payables and accrued expenses | 36,288 | |
Collateral on securities loaned, at value | 285,000 | |
Total liabilities | 1,096,445 | |
Net Assets | $ 51,419,652 | |
Net Assets consist of: | ||
Paid in capital | $ 43,695,443 | |
Accumulated net investment loss | (20) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,688,317 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 6,035,912 | |
Net Assets | $ 51,419,652 | |
Calculation of Maximum Offering Price | $ 18.10 | |
Maximum offering price per share (100/94.25 of $18.10) | $ 19.20 | |
Class T: | $ 17.90 | |
Maximum offering price per share (100/96.50 of $17.90) | $ 18.55 | |
Class B: | $ 17.27 | |
Class C: | $ 17.36 | |
Institutional: | $ 18.48 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 490,281 | |
Interest | 17,164 | |
Security lending | 1,667 | |
Total income | 509,112 | |
Expenses | ||
Management fee | $ 216,642 | |
Transfer agent fees | 137,318 | |
Distribution fees | 263,248 | |
Accounting and security lending fees | 44,341 | |
Non-interested trustees' compensation | 191 | |
Custodian fees and expenses | 11,749 | |
Registration fees | 56,511 | |
Audit | 36,531 | |
Legal | 152 | |
Miscellaneous | 8,739 | |
Total expenses before reductions | 775,422 | |
Expense reductions | (54,000) | 721,422 |
Net investment income (loss) | (212,310) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 3,764,121 | |
Foreign currency transactions | (1,026) | |
Total net realized gain (loss) | 3,763,095 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 4,474,845 | |
Assets and liabilities in foreign currencies | (7) | |
Total change in net unrealized appreciation (depreciation) | 4,474,838 | |
Net gain (loss) | 8,237,933 | |
Net increase (decrease) in net assets resulting from operations | $ 8,025,623 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Cyclical Industries Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (212,310) | $ 5,720 |
Net realized gain (loss) | 3,763,095 | (481,261) |
Change in net unrealized appreciation (depreciation) | 4,474,838 | 2,738,197 |
Net increase (decrease) in net assets resulting from operations | 8,025,623 | 2,262,656 |
Distributions to shareholders from net investment income | - | (14,952) |
Share transactions - net increase (decrease) | 18,136,365 | (2,648,164) |
Redemption fees | 24,255 | 2,815 |
Total increase (decrease) in net assets | 26,186,243 | (397,645) |
Net Assets | ||
Beginning of period | 25,233,409 | 25,631,054 |
End of period (including accumulated net investment loss of $20 and $0, respectively) | $ 51,419,652 | $ 25,233,409 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.15 | $ 12.75 | $ 15.15 | $ 13.56 | $ 14.13 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.02) E | .06 | (.04) | .04 | .02 |
Net realized and unrealized gain (loss) | 3.96 | 1.36 | (2.37) | 1.98 | (.33) |
Total from investment operations | 3.94 | 1.42 | (2.41) | 2.02 | (.31) |
Distributions from net investment income | - | (.02) | - | (.04) | - |
Distributions from net realized gain | - | - | - | (.40) | (.27) |
Total distributions | - | (.02) | - | (.44) | (.27) |
Redemption fees added to paid in capital C | .01 | - E | .01 | .01 | .01 |
Net asset value, end of period | $ 18.10 | $ 14.15 | $ 12.75 | $ 15.15 | $ 13.56 |
Total Return A, B | 27.92% | 11.16% | (15.84)% | 15.27% | (2.13)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.65% | 1.99% | 1.83% | 2.59% | 2.87% |
Expenses net of voluntary waivers, if any | 1.50% | 1.53% | 1.50% | 1.50% | 1.50% |
Expenses net of all reductions | 1.47% | 1.46% | 1.49% | 1.49% | 1.49% |
Net investment income (loss) | (.12)% | .46% | (.25)% | .28% | .18% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,612 | $ 4,272 | $ 3,160 | $ 2,270 | $ 973 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Cyclical Industries
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.02 | $ 12.66 | $ 15.09 | $ 13.48 | $ 14.07 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.06) | .03 | (.07) | - E | (.01) |
Net realized and unrealized gain (loss) | 3.93 | 1.34 | (2.36) | 2.00 | (.34) |
Total from investment operations | 3.87 | 1.37 | (2.43) | 2.00 | (.35) |
Distributions from net investment income | - | (.01) | - | (.01) | - |
Distributions from net realized gain | - | - | - | (.39) | (.25) |
Total distributions | - | (.01) | - | (.40) | (.25) |
Redemption fees added to paid in capital C | .01 | - E | - E | .01 | .01 |
Net asset value, end of period | $ 17.90 | $ 14.02 | $ 12.66 | $ 15.09 | $ 13.48 |
Total Return A, B | 27.67% | 10.84% | (16.10)% | 15.18% | (2.43)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.90% | 2.25% | 2.07% | 2.85% | 3.12% |
Expenses net of voluntary waivers, if any | 1.75% | 1.78% | 1.75% | 1.75% | 1.75% |
Expenses net of all reductions | 1.72% | 1.71% | 1.74% | 1.74% | 1.74% |
Net investment income (loss) | (.36)% | .22% | (.50)% | .03% | (.07)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,089 | $ 5,493 | $ 6,216 | $ 5,654 | $ 3,885 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.61 | $ 12.33 | $ 14.77 | $ 13.25 | $ 13.89 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.03) | (.14) | (.07) | (.07) |
Net realized and unrealized gain (loss) | 3.79 | 1.31 | (2.30) | 1.95 | (.34) |
Total from investment operations | 3.65 | 1.28 | (2.44) | 1.88 | (.41) |
Distributions from net realized gain | - | - | - | (.37) | (.24) |
Redemption fees added to paid in capital C | .01 | - E | - E | .01 | .01 |
Net asset value, end of period | $ 17.27 | $ 13.61 | $ 12.33 | $ 14.77 | $ 13.25 |
Total Return A, B | 26.89% | 10.38% | (16.52)% | 14.51% | (2.90)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.37% | 2.68% | 2.58% | 3.39% | 3.64% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.22% | 2.18% | 2.24% | 2.24% | 2.24% |
Net investment income (loss) | (.87)% | (.26)% | (1.00)% | (.47)% | (.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 14,722 | $ 9,005 | $ 9,008 | $ 5,674 | $ 1,879 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.67 | $ 12.39 | $ 14.84 | $ 13.26 | $ 13.91 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.03) | (.14) | (.07) | (.08) |
Net realized and unrealized gain (loss) | 3.82 | 1.31 | (2.31) | 2.00 | (.36) |
Total from investment operations | 3.68 | 1.28 | (2.45) | 1.93 | (.44) |
Distributions from net realized gain | - | - | - | (.35) | (.22) |
Redemption fees added to paid in capital C | .01 | - E | - E | - E | .01 |
Net asset value, end of period | $ 17.36 | $ 13.67 | $ 12.39 | $ 14.84 | $ 13.26 |
Total Return A, B | 26.99% | 10.33% | (16.51)% | 14.78% | (3.11)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.28% | 2.57% | 2.49% | 3.36% | 3.62% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.22% | 2.18% | 2.24% | 2.24% | 2.24% |
Net investment income (loss) | (.87)% | (.26)% | (1.00)% | (.47)% | (.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 9,507 | $ 5,307 | $ 5,143 | $ 2,847 | $ 625 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.41 | $ 12.96 | $ 15.37 | $ 13.70 | $ 14.28 |
Income from Investment Operations | |||||
Net investment income (loss) B | .02 | .09 | - D | .08 | .06 |
Net realized and unrealized gain (loss) | 4.04 | 1.39 | (2.41) | 2.05 | (.36) |
Total from investment operations | 4.06 | 1.48 | (2.41) | 2.13 | (.30) |
Distributions from net investment income | - | (.03) | - | (.07) | - |
Distributions from net realized gain | - | - | - | (.40) | (.29) |
Total distributions | - | (.03) | - | (.47) | (.29) |
Redemption fees added to paid in capital B | .01 | - D | - D | .01 | .01 |
Net asset value, end of period | $ 18.48 | $ 14.41 | $ 12.96 | $ 15.37 | $ 13.70 |
Total Return A | 28.24% | 11.46% | (15.68)% | 15.95% | (2.04)% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | 1.38% | 1.55% | 1.45% | 2.27% | 2.50% |
Expenses net of voluntary waivers, if any | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% |
Expenses net of all reductions | 1.22% | 1.18% | 1.24% | 1.24% | 1.24% |
Net investment income (loss) | .13% | .74% | - | .53% | .43% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 1,490 | $ 1,156 | $ 2,104 | $ 1,751 | $ 1,706 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Cyclical Industries
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Cyclical Industries Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Distributions are recorded on the ex-dividend date.
Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as a distribution from net investment income and realized gain for income tax purposes. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period. Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), net operating losses, capital loss carryforwards and losses deferred due to wash sales.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 6,915,811 | | |
Unrealized depreciation | (1,317,531) | |
Net unrealized appreciation (depreciation) | 5,598,280 | |
Undistributed ordinary income | 714,922 | |
Undistributed long-term capital gain | 1,342,472 | |
Cost for federal income tax purposes | $ 46,628,847 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ - | $ 14,952 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $53,901,173 and $38,156,857, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 19,471 | $ - |
Class T | .25% | .25% | 42,018 | - |
Class B | .75% | .25% | 121,958 | 91,469 |
Class C | .75% | .25% | 79,801 | 26,220 |
$ 263,248 | $ 117,689 |
Cyclical Industries
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 27,909 |
Class T | 3,899 |
Class B* | 29,896 |
Class C* | 2,911 |
$ 64,615 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 30,863 | .40 |
Class T | 33,895 | .40 |
Class B | 45,337 | .37 |
Class C | 22,581 | .28 |
Institutional Class | 4,642 | .38 |
$ 137,318 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $17,139 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $6,684 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 11,698 |
Class T | 1.75% | 13,264 |
Class B | 2.25% | 15,332 |
Class C | 2.25% | 2,838 |
Institutional Class | 1.25% | 1,604 |
$ 44,736 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $9,264 for the period.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2004 | 2003 | |
From net investment income | ||
Class A | $ - | $ 5,752 |
Class T | - | 4,663 |
Institutional Class | - | 4,537 |
Total | $ - | $ 14,952 |
Cyclical Industries
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 906,243 | 236,068 | $ 15,361,054 | $ 2,919,194 |
Reinvestment of distributions | - | 416 | - | 5,011 |
Shares redeemed | (511,353) | (182,486) | (8,642,465) | (2,231,044) |
Net increase (decrease) | 394,890 | 53,998 | $ 6,718,589 | $ 693,161 |
Class T | ||||
Shares sold | 524,204 | 99,527 | $ 8,942,910 | $ 1,210,658 |
Reinvestment of distributions | - | 347 | - | 4,150 |
Shares redeemed | (184,575) | (199,161) | (3,062,075) | (2,441,170) |
Net increase (decrease) | 339,629 | (99,287) | $ 5,880,835 | $ (1,226,362) |
Class B | ||||
Shares sold | 439,402 | 176,262 | $ 7,031,675 | $ 2,099,562 |
Shares redeemed | (249,000) | (245,144) | (4,000,080) | (2,926,892) |
Net increase (decrease) | 190,402 | (68,882) | $ 3,031,595 | $ (827,330) |
Class C | ||||
Shares sold | 350,466 | 106,747 | $ 5,537,878 | $ 1,304,843 |
Shares redeemed | (191,062) | (133,698) | (3,095,385) | (1,603,922) |
Net increase (decrease) | 159,404 | (26,951) | $ 2,442,493 | $ (299,079) |
Institutional Class | ||||
Shares sold | 56,561 | 18,786 | $ 991,073 | $ 240,107 |
Reinvestment of distributions | - | 308 | - | 3,771 |
Shares redeemed | (56,142) | (101,267) | (928,220) | (1,232,432) |
Net increase (decrease) | 419 | (82,173) | $ 62,853 | $ (988,554) |
Annual Report
Advisor Developing Communications Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of | |
Institutional Class | 17.65% | -10.92% |
A From December 27, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Developing Communications Fund - Institutional Class on December 27, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Developing Communications Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity ® Advisor Developing Communications Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months ending July 31, 2004, the fund's Institutional Class shares returned 17.65%, beating both the 9.15% return of the Goldman Sachs ® Technology Index and the Standard & Poor's 500 Index. A sizable overweighting in wireless telecommunications equipment was the most important factor helping the fund's performance. The strongest contributor during the period was LM Ericsson, which was aided by an effective cost-cutting program and increased competition among wireless service providers to improve their networks. Wireless handset provider Motorola also turned in a strong performance, helped by a number of exciting new products. On the negative side, the fund's results suffered from unfavorable stock picking in semiconductors, computer storage and peripherals, and wireline telecom equipment. In the latter category, CIENA underperformed, as the company missed its earnings targets due in part to difficulties in integrating a recent acquisition. Enterasys Networks was one of the enterprise equipment stocks I bought that didn't live up to my expectations. Despite a relatively cheap valuation, the stock was hurt by cautious corporate spending resulting from doubts about the staying power of the U.S. economic recovery.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Developing Communications Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 805.20 | $ 6.73 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 804.00 | $ 7.85 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 802.00 | $ 10.08 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 802.00 | $ 10.08 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 806.80 | $ 5.62 |
HypotheticalA | $ 1,000.00 | $ 1,018.71 | $ 6.29 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.25% |
Institutional Class | 1.25% |
Annual Report
Advisor Developing Communications Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
QUALCOMM, Inc. | 8.0 |
Marconi Corp. PLC | 6.9 |
Alcatel SA sponsored ADR | 5.7 |
Comverse Technology, Inc. | 5.2 |
Telefonaktiebolaget LM Ericsson ADR | 3.3 |
Motorola, Inc. | 2.6 |
F5 Networks, Inc. | 2.6 |
Mindspeed Technologies, Inc. | 2.3 |
Powerwave Technologies, Inc. | 2.2 |
Extreme Networks, Inc. | 2.0 |
40.8 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Communications | 64.6% | |
| Semiconductors & | 13.9% | |
| Wireless | 4.4% | |
| Software | 3.4% | |
| Electronic Equipment & | 2.5% | |
| All Others* | 11.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Developing Communications Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 94.2% | |||
Shares | Value (Note 1) | ||
COMMUNICATIONS EQUIPMENT - 64.6% | |||
3Com Corp. (a) | 34,600 | $ 170,578 | |
Aastra Technologies Ltd. (a) | 3,300 | 45,928 | |
ADC Telecommunications, Inc. (a) | 38,105 | 91,452 | |
Adtran, Inc. | 3,100 | 82,801 | |
Adva AG Optical Networking (a) | 16,952 | 105,580 | |
Advanced Fibre Communications, Inc. (a) | 60 | 1,006 | |
Airspan Networks, Inc. (a) | 4,000 | 17,480 | |
Alcatel SA sponsored ADR (a) | 59,340 | 767,860 | |
Alvarion Ltd. (a) | 21,400 | 260,866 | |
Arris Group, Inc. (a) | 6,800 | 29,886 | |
AudioCodes Ltd. (a) | 3,800 | 40,280 | |
Avaya, Inc. (a) | 3,050 | 44,683 | |
Bookham Technology PLC sponsored ADR (a) | 5,700 | 5,187 | |
Brooktrout, Inc. (a) | 6,200 | 54,684 | |
C-COR.net Corp. (a) | 4,224 | 34,299 | |
Carrier Access Corp. (a) | 15,200 | 113,088 | |
CIENA Corp. (a) | 91,350 | 257,607 | |
Comverse Technology, Inc. (a) | 41,360 | 705,602 | |
Ditech Communications Corp. (a) | 3,350 | 68,977 | |
Emulex Corp. (a) | 2,120 | 22,875 | |
Endwave Corp. (a) | 500 | 5,260 | |
Enterasys Networks, Inc. (a) | 103,530 | 173,930 | |
Extreme Networks, Inc. (a) | 50,320 | 272,734 | |
F5 Networks, Inc. (a) | 13,200 | 345,708 | |
Foundry Networks, Inc. (a) | 23,080 | 236,801 | |
Harmonic, Inc. (a) | 11,300 | 73,563 | |
Ixia (a) | 3,200 | 24,960 | |
Juniper Networks, Inc. (a) | 2,950 | 67,732 | |
Marconi Corp. PLC (a) | 81,696 | 929,828 | |
Motorola, Inc. | 22,200 | 353,646 | |
Network Equipment Technologies, Inc. (a) | 4,500 | 32,040 | |
Nokia Corp. sponsored ADR | 14,800 | 171,976 | |
Nortel Networks Corp. (a) | 56,580 | 207,083 | |
Oplink Communications, Inc. (a) | 3,100 | 5,549 | |
Packeteer, Inc. (a) | 2,600 | 24,388 | |
Powerwave Technologies, Inc. (a) | 53,940 | 298,828 | |
QLogic Corp. (a) | 1,300 | 31,785 | |
QUALCOMM, Inc. | 15,700 | 1,084,551 | |
Redback Networks, Inc. (a) | 37,900 | 202,386 | |
REMEC, Inc. (a) | 30,100 | 140,868 | |
Research in Motion Ltd. (a) | 1,940 | 119,968 | |
Riverstone Networks, Inc. (a) | 113,800 | 142,250 | |
Scientific-Atlanta, Inc. | 6,140 | 188,805 | |
SpectraLink Corp. | 3,600 | 33,156 | |
Stratex Networks, Inc. (a) | 2,700 | 6,696 | |
Sycamore Networks, Inc. (a) | 18,700 | 69,938 | |
Tekelec (a) | 2,820 | 54,793 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 16,422 | 438,632 | |
Telson Electronics Co. Ltd. (a) | 16,942 | 799 | |
Shares | Value (Note 1) | ||
Vyyo, Inc. (a) | 4,500 | $ 24,300 | |
WJ Communications, Inc. (a) | 19,200 | 50,112 | |
TOTAL COMMUNICATIONS EQUIPMENT | 8,733,784 | ||
COMPUTERS & PERIPHERALS - 1.7% | |||
Compal Electronics, Inc. | 74,000 | 73,804 | |
Concurrent Computer Corp. (a) | 12,990 | 21,304 | |
Hutchinson Technology, Inc. (a) | 1,300 | 28,951 | |
NEC Corp. ADR | 90 | 567 | |
Seagate Technology | 6,280 | 72,032 | |
Synaptics, Inc. (a) | 700 | 10,353 | |
Western Digital Corp. (a) | 3,700 | 25,937 | |
TOTAL COMPUTERS & PERIPHERALS | 232,948 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.4% | |||
Philippine Long Distance Telephone Co. sponsored ADR (a) | 1,000 | 22,410 | |
PT Indosat Tbk sponsored ADR | 700 | 16,037 | |
PT Telkomunikasi Indonesia Tbk sponsored ADR | 1,000 | 17,010 | |
Verizon Communications, Inc. | 10 | 385 | |
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 55,842 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.5% | |||
Aeroflex, Inc. (a) | 6,000 | 66,540 | |
Anritsu Corp. | 7,000 | 40,856 | |
AU Optronics Corp. sponsored ADR | 8,975 | 105,456 | |
Ingram Micro, Inc. Class A (a) | 2,960 | 42,180 | |
Merix Corp. (a) | 3,100 | 31,806 | |
Richardson Electronics Ltd. | 1,500 | 14,025 | |
Sirenza Microdevices, Inc. (a) | 8,100 | 39,366 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 340,229 | ||
HOUSEHOLD DURABLES - 0.5% | |||
LG Electronics, Inc. | 1,580 | 65,963 | |
INTERNET SOFTWARE & SERVICES - 1.6% | |||
InfoSpace, Inc. (a) | 1,100 | 41,206 | |
Openwave Systems, Inc. (a) | 15,360 | 174,643 | |
TOTAL INTERNET SOFTWARE & SERVICES | 215,849 | ||
MEDIA - 1.2% | |||
EchoStar Communications Corp. | 5,300 | 146,916 | |
News Corp. Ltd. sponsored ADR | 267 | 8,483 | |
Viacom, Inc. Class B (non-vtg.) | 10 | 336 | |
TOTAL MEDIA | 155,735 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 13.9% | |||
Advanced Energy Industries, Inc. (a) | 9,300 | 91,698 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Agere Systems, Inc. Class B (a) | 103,650 | $ 117,125 | |
Amkor Technology, Inc. (a) | 3,200 | 12,960 | |
Analog Devices, Inc. | 6,800 | 269,960 | |
Applied Materials, Inc. (a) | 2,700 | 45,819 | |
Conexant Systems, Inc. (a) | 45,795 | 72,814 | |
Freescale Semiconductor, Inc. Class A | 3,700 | 51,985 | |
Helix Technology Corp. | 2,900 | 41,876 | |
Intel Corp. | 2,840 | 69,239 | |
Intersil Corp. Class A | 7,900 | 145,123 | |
KLA-Tencor Corp. (a) | 2,400 | 98,904 | |
LTX Corp. (a) | 4,500 | 36,585 | |
Marvell Technology Group Ltd. (a) | 1,600 | 37,152 | |
Mindspeed Technologies, Inc. (a) | 94,581 | 305,497 | |
National Semiconductor Corp. (a) | 3,800 | 65,170 | |
Novellus Systems, Inc. (a) | 1,500 | 40,500 | |
O2Micro International Ltd. (a) | 7,300 | 93,951 | |
PMC-Sierra, Inc. (a) | 3,670 | 43,600 | |
RF Micro Devices, Inc. (a) | 2,100 | 12,432 | |
Rohm Co. Ltd. | 800 | 85,759 | |
Silicon Laboratories, Inc. (a) | 800 | 28,232 | |
Teradyne, Inc. (a) | 1,200 | 20,520 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 2,100 | 62,727 | |
Vitesse Semiconductor Corp. (a) | 10,100 | 28,280 | |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 1,877,908 | ||
SOFTWARE - 3.4% | |||
Intervoice, Inc. (a) | 10,600 | 93,386 | |
RADWARE Ltd. (a) | 14,900 | 266,412 | |
Ulticom, Inc. (a) | 1,398 | 15,001 | |
Verint Systems, Inc. (a) | 20 | 634 | |
VERITAS Software Corp. (a) | 4,400 | 83,864 | |
TOTAL SOFTWARE | 459,297 | ||
WIRELESS TELECOMMUNICATION SERVICES - 4.4% | |||
Centennial Communications Corp. Class A (a) | 800 | 4,496 | |
KDDI Corp. | 1 | 5,117 | |
Nextel Communications, Inc. Class A (a) | 4,800 | 109,248 | |
Nextel Partners, Inc. Class A (a) | 6,500 | 104,455 | |
NII Holdings, Inc. (a) | 2,200 | 83,644 | |
Telesystem International Wireless, Inc. (a) | 14,020 | 148,506 | |
Western Wireless Corp. Class A (a) | 1,410 | 37,210 | |
Wireless Facilities, Inc. (a) | 14,370 | 107,488 | |
TOTAL WIRELESS TELECOMMUNICATION SERVICES | 600,164 | ||
TOTAL COMMON STOCKS (Cost $15,689,701) | 12,737,719 | ||
Money Market Funds - 1.8% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 243,430 | $ 243,430 | |
TOTAL INVESTMENT PORTFOLIO - 96.0% (Cost $15,933,131) | 12,981,149 | ||
NET OTHER ASSETS - 4.0% | 534,089 | ||
NET ASSETS - 100% | $ 13,515,238 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 69.3% |
United Kingdom | 6.9% |
France | 5.7% |
Israel | 4.2% |
Canada | 3.8% |
Sweden | 3.3% |
Taiwan | 1.3% |
Finland | 1.3% |
Cayman Islands | 1.2% |
Others (individually less than 1%) | 3.0% |
100.0% |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $480,000 all of which will expire on July 31, 2011. |
See accompanying notes which are an integral part of the financial statements.
Developing Communications
Advisor Developing Communications Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (cost $15,933,131) - See accompanying schedule | $ 12,981,149 | |
Cash | 7,049 | |
Foreign currency held at value (cost $74,209) | 74,110 | |
Receivable for investments sold | 930,959 | |
Receivable for fund shares sold | 43,105 | |
Dividends receivable | 927 | |
Interest receivable | 405 | |
Prepaid expenses | 12 | |
Receivable from investment adviser for expense reductions | 10,326 | |
Other affiliated receivables | 24 | |
Other receivables | 8,630 | |
Total assets | 14,056,696 | |
Liabilities | ||
Payable for investments purchased | $ 327,230 | |
Payable for fund shares redeemed | 155,078 | |
Accrued management fee | 6,909 | |
Distribution fees payable | 7,656 | |
Other affiliated payables | 9,271 | |
Other payables and accrued expenses | 35,314 | |
Total liabilities | 541,458 | |
Net Assets | $ 13,515,238 | |
Net Assets consist of: | ||
Paid in capital | $ 17,426,699 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (959,380) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (2,952,081) | |
Net Assets | $ 13,515,238 | |
Calculation of Maximum Offering Price | $ 6.53 | |
Maximum offering price per share (100/94.25 of $6.53) | $ 6.93 | |
Class T: | $ 6.48 | |
Maximum offering price per share (100/96.50 of $6.48) | $ 6.72 | |
Class B: | $ 6.36 | |
Class C: | $ 6.36 | |
Institutional Class: | $ 6.60 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 18,937 | |
Interest | 6,681 | |
25,618 | ||
Less foreign taxes withheld | (2,092) | |
Total income | 23,526 | |
Expenses | ||
Management fee | $ 78,909 | |
Transfer agent fees | 68,179 | |
Distribution fees | 85,712 | |
Accounting fees and expenses | 44,256 | |
Non-interested trustees' compensation | 61 | |
Custodian fees and expenses | 26,016 | |
Registration fees | 54,283 | |
Audit | 36,683 | |
Legal | 73 | |
Miscellaneous | 4,824 | |
Total expenses before reductions | 398,996 | |
Expense reductions | (162,598) | 236,398 |
Net investment income (loss) | (212,872) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 3,028,098 | |
Investments not meeting investment restrictions | 103 | |
Foreign currency transactions | 3,516 | |
Total net realized gain (loss) | 3,031,717 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (3,435,175) | |
Assets and liabilities in foreign currencies | (100) | |
Total change in net unrealized appreciation (depreciation) | (3,435,275) | |
Net gain (loss) | (403,558) | |
Net increase (decrease) in net assets resulting from operations | $ (616,430) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Developing Communications Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (212,872) | $ (49,080) |
Net realized gain (loss) | 3,031,717 | (575,030) |
Change in net unrealized appreciation (depreciation) | (3,435,275) | 2,034,921 |
Net increase (decrease) in net assets resulting from operations | (616,430) | 1,410,811 |
Share transactions - net increase (decrease) | 8,358,921 | 1,213,427 |
Redemption fees | 70,726 | 1,900 |
Total increase (decrease) in net assets | 7,813,217 | 2,626,138 |
Net Assets | ||
Beginning of period | 5,702,021 | 3,075,883 |
End of period | $ 13,515,238 | $ 5,702,021 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.57 | $ 3.96 | $ 8.40 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)E | (.09) | (.04) | (.05) | (.04) |
Net realized and unrealized gain (loss) | 1.01 | 1.65 | (4.40) | (1.57) |
Total from investment operations | .92 | 1.61 | (4.45) | (1.61) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.53 | $ 5.57 | $ 3.96 | $ 8.40 |
Total ReturnB,C,D | 17.24% | 40.66% | (52.86)% | (16.00)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 2.38% | 6.13% | 4.97% | 6.46%A |
Expenses net of voluntary waivers, if any | 1.50% | 1.50% | 1.50% | 1.50%A |
Expenses net of all reductions | 1.35% | 1.36% | 1.40% | 1.45%A |
Net investment income (loss) | (1.18)% | (.82)% | (.85)% | (.74)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 3,480 | $ 970 | $ 371 | $ 934 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Developing Communications
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.54 | $ 3.95 | $ 8.40 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.10) | (.05) | (.07) | (.05) |
Net realized and unrealized gain (loss) | 1.00 | 1.64 | (4.39) | (1.56) |
Total from investment operations | .90 | 1.59 | (4.46) | (1.61) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.48 | $ 5.54 | $ 3.95 | $ 8.40 |
Total ReturnB,C,D | 16.97% | 40.25% | (52.98)% | (16.00)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 3.06% | 6.82% | 5.36% | 6.66%A |
Expenses net of voluntary waivers, if any | 1.75% | 1.75% | 1.75% | 1.75%A |
Expenses net of all reductions | 1.60% | 1.61% | 1.64% | 1.70%A |
Net investment income (loss) | (1.43)% | (1.07)% | (1.10)% | (.99)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 3,250 | $ 1,723 | $ 775 | $ 2,131 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.47 | $ 3.92 | $ 8.37 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)E | (.13) | (.07) | (.10) | (.07) |
Net realized and unrealized gain (loss) | .98 | 1.62 | (4.36) | (1.57) |
Total from investment operations | .85 | 1.55 | (4.46) | (1.64) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.36 | $ 5.47 | $ 3.92 | $ 8.37 |
Total ReturnB,C,D | 16.27% | 39.54% | (53.17)% | (16.30)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 3.48% | 6.88% | 5.62% | 7.21%A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25%A |
Expenses net of all reductions | 2.11% | 2.11% | 2.14% | 2.20%A |
Net investment income (loss) | (1.93)% | (1.56)% | (1.60)% | (1.49)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 2,998 | $ 1,846 | $ 1,162 | $ 2,236 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.47 | $ 3.92 | $ 8.37 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)E | (.14) | (.07) | (.10) | (.07) |
Net realized and unrealized gain (loss) | .99 | 1.62 | (4.36) | (1.57) |
Total from investment operations | .85 | 1.55 | (4.46) | (1.64) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.36 | $ 5.47 | $ 3.92 | $ 8.37 |
Total ReturnB,C,D | 16.27% | 39.54% | (53.17)% | (16.30)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 3.19% | 6.81% | 5.49% | 7.09%A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25%A |
Expenses net of all reductions | 2.10% | 2.11% | 2.14% | 2.20%A |
Net investment income (loss) | (1.93)% | (1.57)% | (1.60)% | (1.49)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 3,180 | $ 1,009 | $ 667 | $ 1,566 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001E |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.61 | $ 3.98 | $ 8.42 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)D | (.07) | (.03) | (.04) | (.03) |
Net realized and unrealized gain (loss) | 1.02 | 1.66 | (4.41) | (1.56) |
Total from investment operations | .95 | 1.63 | (4.45) | (1.59) |
Redemption fees added to paid in capitalD | .04 | -G | .01 | .01 |
Net asset value, end of period | $ 6.60 | $ 5.61 | $ 3.98 | $ 8.42 |
Total ReturnB,C | 17.65% | 40.95% | (52.73)% | (15.80)% |
Ratios to Average Net AssetsF | ||||
Expenses before expense reductions | 1.55% | 5.34% | 4.24% | 5.95%A |
Expenses net of voluntary waivers, if any | 1.25% | 1.25% | 1.25% | 1.25%A |
Expenses net of all reductions | 1.11% | 1.11% | 1.14% | 1.20%A |
Net investment income (loss) | (.93)% | (.57)% | (.60)% | (.49)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 607 | $ 154 | $ 100 | $ 283 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFor the period December 27, 2000 (commencement of operations) to July 31, 2001. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Developing Communications
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Developing Communications Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 333,424 | | |
Unrealized depreciation | (3,765,046) | |
Net unrealized appreciation (depreciation) | (3,431,622) | |
Capital loss carryforward | (479,837) | |
Cost for federal income tax purposes | $ 16,412,771 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $46,261,610 and $38,364,478, respectively. The fund realized a gain on the sale of an investment not meeting the investment restrictions of the fund.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 7,992 | $ 301 |
Class T | .25% | .25% | 17,266 | 684 |
Class B | .75% | .25% | 33,471 | 25,429 |
Class C | .75% | .25% | 26,983 | 13,419 |
$ 85,712 | $ 39,833 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Developing Communications
4. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 15,017 | |
Class T | 4,574 | |
Class B* | 22,936 | |
Class C* | 4,566 | |
$ 47,093 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 13,363 | .42 |
Class T | 22,506 | .65 |
Class B | 18,672 | .56 |
Class C | 12,072 | .45 |
Institutional Class | 1,566 | .16 |
$ 68,179 |
Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The fee is based on the level of average net assets for the month.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $6,498 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $7,448 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 28,265 |
Class T | 1.75% | 45,111 |
Class B | 2.25% | 40,954 |
Class C | 2.25% | 25,422 |
Institutional Class | 1.25% | 2,869 |
$ 142,621 |
Annual Report
Notes to Financial Statements - continued
6. Expense Reductions - continued
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $19,977 for the period.
7. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 856,040 | 109,128 | $ 6,688,889 | $ 507,048 |
Shares redeemed | (497,414) | (28,681) | (3,670,051) | (128,278) |
Net increase (decrease) | 358,626 | 80,447 | $ 3,018,838 | $ 378,770 |
Class T | ||||
Shares sold | 608,342 | 172,249 | $ 4,433,681 | $ 779,171 |
Shares redeemed | (417,749) | (57,631) | (2,928,626) | (255,329) |
Net increase (decrease) | 190,593 | 114,618 | $ 1,505,055 | $ 523,842 |
Class B | ||||
Shares sold | 592,476 | 122,332 | $ 4,376,737 | $ 576,220 |
Shares redeemed | (458,816) | (81,826) | (3,282,550) | (356,626) |
Net increase (decrease) | 133,660 | 40,506 | $ 1,094,187 | $ 219,594 |
Class C | ||||
Shares sold | 580,072 | 80,758 | $ 4,396,643 | $ 363,207 |
Shares redeemed | (264,829) | (66,535) | (1,922,022) | (282,621) |
Net increase (decrease) | 315,243 | 14,223 | $ 2,474,621 | $ 80,586 |
Institutional Class | ||||
Shares sold | 609,795 | 5,027 | $ 4,639,769 | $ 23,470 |
Shares redeemed | (545,179) | (2,812) | (4,373,549) | (12,835) |
Net increase (decrease) | 64,616 | 2,215 | $ 266,220 | $ 10,635 |
Developing Communications
Advisor Electronics Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of | |
Institutional Class | 0.15% | -10.73% |
A From December 27, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Electronics Fund - Institutional Class on December 27, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Electronics Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Jim Morrow, Portfolio Manager of Fidelity ® Advisor Electronics Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
Fidelity Advisor Electronics Fund's Institutional Class shares returned 0.15% during the 12-month period, trailing the 9.15% return of the Goldman Sachs ® Technology Index and the 13.17% return of the Standard & Poor's 500 Index. The fund's overweighting in semiconductor industry stocks caused the bulk of its weakness relative to the Goldman Sachs index, as this was among the worst-performing industries within the tech sector. Among the fund's biggest detractors were semiconductor equipment manufacturing stocks such as KLA-Tencor and Applied Materials. Underweighting wireless telecommunications equipment manufacturer QUALCOMM relative to the sector benchmark also was disappointing, as the share price of the company rallied sharply. On the positive side of the ledger, overweighted holdings in Motorola and Texas Instruments, two suppliers of chips to the wireless communications industry, worked out well, and I eliminated the position in Motorola to lock in a profit. Elsewhere, testing and measurement instruments provider Tektronix performed well due in large part to positive quarterly earnings surprises throughout the period.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Electronics Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 768.70 | $ 6.60 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 767.30 | $ 7.69 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 765.20 | $ 9.87 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 765.80 | $ 9.83 |
HypotheticalA | $ 1,000.00 | $ 1,013.72 | $ 11.28 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 769.70 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.41 | $ 5.59 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.24% |
Institutional Class | 1.11% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
National Semiconductor Corp. | 8.7 |
Micron Technology, Inc. | 8.6 |
Analog Devices, Inc. | 7.6 |
Intel Corp. | 6.6 |
Applied Materials, Inc. | 5.2 |
KLA-Tencor Corp. | 5.1 |
Flextronics International Ltd. | 3.7 |
Texas Instruments, Inc. | 3.5 |
Samsung Electronics Co. Ltd. | 2.7 |
Altera Corp. | 2.6 |
54.3 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Semiconductors & | 76.3% | |
| Electronic Equipment & | 12.0% | |
| Communications | 2.5% | |
| Computers & | 1.5% | |
| Software | 1.1% | |
| All Others * | 6.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 95.0% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 0.2% | |||
Affymetrix, Inc. (a) | 4,000 | $ 108,040 | |
CHEMICALS - 0.7% | |||
Nitto Denko Corp. | 7,700 | 322,694 | |
COMMUNICATIONS EQUIPMENT - 2.5% | |||
Corning, Inc. (a) | 36,200 | 447,432 | |
QLogic Corp. (a) | 9,200 | 224,940 | |
Scientific-Atlanta, Inc. | 14,900 | 458,175 | |
TOTAL COMMUNICATIONS EQUIPMENT | 1,130,547 | ||
COMPUTERS & PERIPHERALS - 1.5% | |||
Applied Films Corp. (a) | 4,500 | 83,925 | |
Hutchinson Technology, Inc. (a) | 11,600 | 258,332 | |
Quanta Computer, Inc. | 209,274 | 338,631 | |
TOTAL COMPUTERS & PERIPHERALS | 680,888 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 12.0% | |||
Amphenol Corp. Class A (a) | 12,760 | 401,047 | |
Arrow Electronics, Inc. (a) | 20,000 | 473,200 | |
AVX Corp. | 34,900 | 435,203 | |
Flextronics International Ltd. (a) | 134,300 | 1,688,151 | |
Hon Hai Precision Industries Co. Ltd. | 316,000 | 1,138,864 | |
Ingram Micro, Inc. Class A (a) | 43,200 | 615,600 | |
Solectron Corp. (a) | 58,800 | 323,400 | |
Staktek Holdings, Inc. | 51,100 | 254,478 | |
Veeco Instruments, Inc. (a) | 5,000 | 113,750 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 5,443,693 | ||
LEISURE EQUIPMENT & PRODUCTS - 0.1% | |||
Leapfrog Enterprises, Inc. Class A (a) | 1,200 | 23,760 | |
OFFICE ELECTRONICS - 0.6% | |||
Canon, Inc. ADR | 5,000 | 245,000 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 76.3% | |||
Altera Corp. (a) | 57,100 | 1,188,822 | |
Analog Devices, Inc. | 86,850 | 3,447,945 | |
Applied Materials, Inc. (a) | 138,460 | 2,349,666 | |
ASML Holding NV (NY Shares) (a) | 22,800 | 323,988 | |
ATMI, Inc. (a) | 22,613 | 460,401 | |
Axcelis Technologies, Inc. (a) | 64,700 | 603,651 | |
Cabot Microelectronics Corp. (a) | 2,100 | 74,529 | |
Cohu, Inc. | 29,700 | 562,370 | |
Credence Systems Corp. (a) | 10,800 | 96,768 | |
Cypress Semiconductor Corp. (a) | 19,900 | 225,666 | |
DSP Group, Inc. (a) | 45,300 | 892,863 | |
Fairchild Semiconductor International, Inc. (a) | 17,900 | 262,951 | |
FormFactor, Inc. | 16,000 | 321,280 | |
Integrated Circuit Systems, Inc. (a) | 35,000 | 837,200 | |
Intel Corp. | 122,390 | 2,983,868 | |
International Rectifier Corp. (a) | 10,600 | 415,520 | |
Shares | Value (Note 1) | ||
Intersil Corp. Class A | 6,700 | $ 123,079 | |
KLA-Tencor Corp. (a) | 56,690 | 2,336,195 | |
Lam Research Corp. (a) | 44,630 | 1,064,426 | |
Lattice Semiconductor Corp. (a) | 51,800 | 253,820 | |
Micron Technology, Inc. (a) | 286,860 | 3,881,216 | |
National Semiconductor Corp. (a) | 228,920 | 3,925,979 | |
Novellus Systems, Inc. (a) | 25,200 | 680,400 | |
O2Micro International Ltd. (a) | 34,700 | 446,589 | |
Photronics, Inc. (a) | 17,300 | 250,331 | |
PMC-Sierra, Inc. (a) | 10,300 | 122,364 | |
Samsung Electronics Co. Ltd. | 3,440 | 1,229,729 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 62,718 | 446,552 | |
Teradyne, Inc. (a) | 62,730 | 1,072,683 | |
Texas Instruments, Inc. | 74,380 | 1,586,525 | |
Trident Microsystems, Inc. (a) | 29,600 | 361,416 | |
United Microelectronics Corp. sponsored ADR (a) | 61,889 | 228,989 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 15,000 | 448,050 | |
Volterra Semiconductor Corp. | 400 | 3,236 | |
Xilinx, Inc. | 37,020 | 1,089,499 | |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 34,598,566 | ||
SOFTWARE - 1.1% | |||
Cadence Design Systems, Inc. (a) | 36,983 | 498,161 | |
TOTAL COMMON STOCKS (Cost $49,881,671) | 43,051,349 | ||
Money Market Funds - 9.5% | |||
Fidelity Cash Central Fund, 1.33% (b)(c) | 4,326,597 | 4,326,597 | |
TOTAL INVESTMENT PORTFOLIO - 104.5% (Cost $54,208,268) | 47,377,946 | ||
NET OTHER ASSETS - (4.5)% | (2,051,748) | ||
NET ASSETS - 100% | $ 45,326,198 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 85.9% |
Taiwan | 4.7% |
Singapore | 3.7% |
Korea (South) | 2.7% |
Japan | 1.3% |
Cayman Islands | 1.0% |
Others (individually less than 1%) | 0.7% |
100.0% |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $13,968,000 of which $5,873,000, $5,828,000 and $2,267,000 will expire on July 31, 2010, 2011 and 2012, respectively. |
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $2,067,384) (cost $54,208,268) - See accompanying schedule | $ 47,377,946 | |
Foreign currency held at value (cost $28,767) | 28,476 | |
Receivable for fund shares sold | 222,924 | |
Dividends receivable | 38,636 | |
Interest receivable | 3,322 | |
Prepaid expenses | 91 | |
Receivable from investment adviser for expense reductions | 10,948 | |
Other affiliated receivables | 10 | |
Other receivables | 11,271 | |
Total assets | 47,693,624 | |
Liabilities | ||
Payable for investments purchased | $ 34,226 | |
Payable for fund shares redeemed | 77,704 | |
Accrued management fee | 22,518 | |
Distribution fees payable | 26,388 | |
Other affiliated payables | 23,081 | |
Other payables and accrued expenses | 44,309 | |
Collateral on securities loaned, at value | 2,139,200 | |
Total liabilities | 2,367,426 | |
Net Assets | $ 45,326,198 | |
Net Assets consist of: | ||
Paid in capital | $ 67,148,867 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (14,991,820) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (6,830,849) | |
Net Assets | $ 45,326,198 | |
Calculation of Maximum Offering Price | $ 6.58 | |
Maximum offering price per share (100/94.25 of $6.58) | $ 6.98 | |
Class T: | $ 6.53 | |
Maximum offering price per share (100/96.50 of $6.53) | $ 6.77 | |
Class B: | $ 6.42 | |
Class C: | $ 6.41 | |
Institutional Class: | $ 6.65 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 182,556 | |
Interest | 15,273 | |
Security lending | 10,957 | |
208,786 | ||
Less foreign taxes withheld | (17,419) | |
Total income | 191,367 | |
Expenses | ||
Management fee | $ 333,989 | |
Transfer agent fees | 249,957 | |
Distribution fees | 401,627 | |
Accounting and security lending fees | 45,802 | |
Non-interested trustees' compensation | 271 | |
Custodian fees and expenses | 17,121 | |
Registration fees | 54,197 | |
Audit | 39,371 | |
Legal | 222 | |
Miscellaneous | 17,378 | |
Total expenses before reductions | 1,159,935 | |
Expense reductions | (54,385) | 1,105,550 |
Net investment income (loss) | (914,183) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 5,040,584 | |
Foreign currency transactions | (6,149) | |
Total net realized gain (loss) | 5,034,435 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (4,663,952) | |
Assets and liabilities in foreign currencies | (474) | |
Total change in net unrealized appreciation (depreciation) | (4,664,426) | |
Net gain (loss) | 370,009 | |
Net increase (decrease) in net assets resulting from operations | $ (544,174) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Electronics Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (914,183) | $ (522,102) |
Net realized gain (loss) | 5,034,435 | (11,837,556) |
Change in net unrealized appreciation (depreciation) | (4,664,426) | 18,576,586 |
Net increase (decrease) in net assets resulting from operations | (544,174) | 6,216,928 |
Share transactions - net increase (decrease) | (1,655,023) | 5,255,566 |
Redemption fees | 26,533 | 32,181 |
Total increase (decrease) in net assets | (2,172,664) | 11,504,675 |
Net Assets | ||
Beginning of period | 47,498,862 | 35,994,187 |
End of period | $ 45,326,198 | $ 47,498,862 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.59 | $ 5.57 | $ 9.62 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.09) | (.06) | (.10) | (.04) |
Net realized and unrealized gain (loss) | .08 | 1.07 | (3.96) | (.35) |
Total from investment operations | (.01) | 1.01 | (4.06) | (.39) |
Redemption fees added to paid in capital E | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 6.58 | $ 6.59 | $ 5.57 | $ 9.62 |
Total Return B, C, D | (.15)% | 18.31% | (42.10)% | (3.80)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 1.55% | 1.89% | 1.68% | 2.57% A |
Expenses net of voluntary waivers, if any | 1.50% | 1.50% | 1.50% | 1.50% A |
Expenses net of all reductions | 1.48% | 1.46% | 1.49% | 1.49% A |
Net investment income (loss) | (1.15)% | (1.09)% | (1.14)% | (.77)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 8,374 | $ 8,116 | $ 4,912 | $ 3,400 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.56 | $ 5.55 | $ 9.62 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.11) | (.07) | (.12) | (.06) |
Net realized and unrealized gain (loss) | .08 | 1.07 | (3.96) | (.33) |
Total from investment operations | (.03) | 1.00 | (4.08) | (.39) |
Redemption fees added to paid in capital E | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 6.53 | $ 6.56 | $ 5.55 | $ 9.62 |
Total Return B, C, D | (.46)% | 18.20% | (42.31)% | (3.80)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 1.83% | 2.14% | 1.91% | 2.81% A |
Expenses net of voluntary waivers, if any | 1.75% | 1.75% | 1.75% | 1.75% A |
Expenses net of all reductions | 1.72% | 1.71% | 1.74% | 1.74% A |
Net investment income (loss) | (1.39)% | (1.33)% | (1.39)% | (1.02)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 15,445 | $ 14,362 | $ 11,615 | $ 11,493 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.48 | $ 5.52 | $ 9.60 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.14) | (.10) | (.16) | (.08) |
Net realized and unrealized gain (loss) | .08 | 1.06 | (3.93) | (.33) |
Total from investment operations | (.06) | .96 | (4.09) | (.41) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 6.42 | $ 6.48 | $ 5.52 | $ 9.60 |
Total Return B, C, D | (.93)% | 17.39% | (42.50)% | (4.00)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.41% | 2.76% | 2.43% | 3.34% A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.23% | 2.21% | 2.24% | 2.24% A |
Net investment income (loss) | (1.90)% | (1.83)% | (1.89)% | (1.52)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 8,498 | $ 11,335 | $ 8,362 | $ 10,941 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.47 | $ 5.51 | $ 9.59 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.14) | (.10) | (.16) | (.09) |
Net realized and unrealized gain (loss) | .08 | 1.06 | (3.93) | (.33) |
Total from investment operations | (.06) | .96 | (4.09) | (.42) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 6.41 | $ 6.47 | $ 5.51 | $ 9.59 |
Total Return B, C, D | (.93)% | 17.42% | (42.54)% | (4.10)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.24% | 2.52% | 2.34% | 3.25% A |
Expenses net of voluntary waivers, if any | 2.24% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.21% | 2.21% | 2.24% | 2.24% A |
Net investment income (loss) | (1.88)% | (1.83)% | (1.89)% | (1.52)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 12,322 | $ 13,061 | $ 9,921 | $ 10,782 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 E |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.64 | $ 5.60 | $ 9.64 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | (.06) | (.04) | (.08) | (.03) |
Net realized and unrealized gain (loss) | .07 | 1.07 | (3.97) | (.34) |
Total from investment operations | .01 | 1.03 | (4.05) | (.37) |
Redemption fees added to paid in capital D | - G | .01 | .01 | .01 |
Net asset value, end of period | $ 6.65 | $ 6.64 | $ 5.60 | $ 9.64 |
Total Return B, C | .15% | 18.57% | (41.91)% | (3.60)% |
Ratios to Average Net Assets F | ||||
Expenses before expense reductions | 1.12% | 1.46% | 1.31% | 2.16% A |
Expenses net of voluntary waivers, if any | 1.12% | 1.25% | 1.25% | 1.25% A |
Expenses net of all reductions | 1.09% | 1.21% | 1.24% | 1.24% A |
Net investment income (loss) | (.76)% | (.84)% | (.89)% | (.52)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 687 | $ 625 | $ 1,184 | $ 622 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFor the period December 27, 2000 (commencement of operations) to July 31, 2001. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Electronics
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Electronics Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,569,412 | | |
Unrealized depreciation | (9,423,833) | |
Net unrealized appreciation (depreciation) | (7,854,421) | |
Capital loss carryforward | (13,968,243) | |
Cost for federal income tax purposes | $ 55,232,367 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $46,680,952 and $47,801,653, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 28,058 | $ 84 |
Class T | .25% | .25% | 86,126 | - |
Class B | .75% | .25% | 124,924 | 93,708 |
Class C | .75% | .25% | 162,519 | 31,387 |
$ 401,627 | $ 125,179 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Electronics
4. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 23,659 | |
Class T | 6,151 | |
Class B* | 36,813 | |
Class C* | 4,195 | |
$ 70,818 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 46,961 | .42 |
Class T | 78,020 | .45 |
Class B | 65,201 | .52 |
Class C | 58,026 | .36 |
Institutional Class | 1,749 | .24 |
$ 249,957 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $22,935 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $3,336 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 4,984 |
Class T | 1.75% | 14,667 |
Class B | 2.25% | 18,849 |
$ 38,500 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $15,885 for the period.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 1,163,033 | 890,305 | $ 9,193,928 | $ 4,733,982 |
Shares redeemed | (1,121,519) | (540,592) | (8,464,153) | (2,676,332) |
Net increase (decrease) | 41,514 | 349,713 | $ 729,775 | $ 2,057,650 |
Class T | ||||
Shares sold | 880,005 | 732,407 | $ 6,765,488 | $ 3,899,064 |
Shares redeemed | (704,477) | (633,473) | (5,391,404) | (3,094,794) |
Net increase (decrease) | 175,528 | 98,934 | $ 1,374,084 | $ 804,270 |
Class B | ||||
Shares sold | 538,613 | 983,554 | $ 4,191,366 | $ 5,591,186 |
Shares redeemed | (963,986) | (749,700) | (7,331,908) | (3,905,482) |
Net increase (decrease) | (425,373) | 233,854 | $ (3,140,542) | $ 1,685,704 |
Class C | ||||
Shares sold | 604,856 | 702,366 | $ 4,611,449 | $ 3,686,077 |
Shares redeemed | (701,380) | (484,780) | (5,302,803) | (2,418,447) |
Net increase (decrease) | (96,524) | 217,586 | $ (691,354) | $ 1,267,630 |
Institutional Class | ||||
Shares sold | 63,253 | 40,336 | $ 495,615 | $ 222,173 |
Shares redeemed | (54,003) | (157,790) | (422,601) | (781,861) |
Net increase (decrease) | 9,250 | (117,454) | $ 73,014 | $ (559,688) |
Electronics
Advisor Financial Services Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of | |
Institutional Class | 12.18% | 5.95% | 12.78% |
A From September 3, 1996.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Financial Services Fund - Institutional Class on September 3, 1996, when the fund started. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Financial Services Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Matthew Fruhan, who became Portfolio Manager of Fidelity ® Advisor Financial Services Fund on April 1, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months that ended July 31, 2004, Fidelity Advisor Financial Services Fund's Institutional Class had a total return of 12.18%. During the same period, the Goldman Sachs ® Financial Services Index rose 14.75%, while the Standard & Poor's 500 Index gained 13.17%. Financial stocks showed impressive performance during the first half of the 12-month period, but lost ground later on. Early on, banks had strong earnings gains, benefiting from improved loan quality and low funding costs. Investment banks and specialty lenders also were aided by the economic recovery. However, the environment changed during the second half of the period as interest rates began to rise and investors worried that banks and other financial institutions were vulnerable to rising rates. Contributing factors in the underperformance relative to the Goldman Sachs index included underweighting regional banks and real estate investment trusts, and stock selection in the consumer finance industry. Stocks that helped performance included National Bank of Canada, which rose from a low valuation after recording strong earnings improvements, and General Electric. GE gains about half its income from its GE Capital Unit, whose superior knowledge of specific industries gave it a competitive advantage over other lenders. Countrywide Financial also appreciated as investors recognized the benefits of management's decision to build up its mortgage servicing business as a hedge against a decline in the mortgage origination business. National Community Bancorp was a significant detractor. The market worried about the company's decision to use the proceeds from a stock offering to invest in mortgage-backed securities. Bank of New York and Northern Trust, two institutions heavily engaged in securities processing, also declined as asset growth slowed because of weak returns in the financial markets.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Financial Services Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 961.80 | $ 6.29 |
HypotheticalA | $ 1,000.00 | $ 1,018.51 | $ 6.49 |
Class T | |||
Actual | $ 1,000.00 | $ 960.40 | $ 7.41 |
HypotheticalA | $ 1,000.00 | $ 1,017.35 | $ 7.65 |
Class B | |||
Actual | $ 1,000.00 | $ 958.40 | $ 9.88 |
HypotheticalA | $ 1,000.00 | $ 1,014.78 | $ 10.22 |
Class C | |||
Actual | $ 1,000.00 | $ 958.40 | $ 9.64 |
HypotheticalA | $ 1,000.00 | $ 1,015.03 | $ 9.97 |
Institutional | |||
Actual | $ 1,000.00 | $ 963.40 | $ 4.34 |
HypotheticalA | $ 1,000.00 | $ 1,020.52 | $ 4.48 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.29% |
Class T | 1.52% |
Class B | 2.03% |
Class C | 1.98% |
Institutional | .89% |
Annual Report
Advisor Financial Services Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Bank of America Corp. | 8.4 |
American International Group, Inc. | 6.7 |
Citigroup, Inc. | 5.1 |
J.P. Morgan Chase & Co. | 4.2 |
Fannie Mae | 3.9 |
MBNA Corp. | 3.8 |
American Express Co. | 3.5 |
Wachovia Corp. | 3.4 |
Wells Fargo & Co. | 3.0 |
Morgan Stanley | 2.8 |
44.8 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Commercial Banks | 23.2% | |
| Insurance | 22.5% | |
| Capital Markets | 15.3% | |
| Diversified Financial Services | 11.0% | |
| Consumer Finance | 11.0% | |
| All Others* | 17.0% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 97.9% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 15.3% | |||
American Capital Strategies Ltd. | 12,100 | $ 353,683 | |
Ameritrade Holding Corp. (a) | 734,800 | 8,148,932 | |
Bank of New York Co., Inc. | 142,160 | 4,084,257 | |
Bear Stearns Companies, Inc. | 21,500 | 1,793,530 | |
E*TRADE Financial Corp. (a) | 239,900 | 2,655,693 | |
Federated Investors, Inc. Class B (non-vtg.) | 20,200 | 567,822 | |
Franklin Resources, Inc. | 45,300 | 2,185,725 | |
Goldman Sachs Group, Inc. | 83,400 | 7,355,046 | |
Janus Capital Group, Inc. | 41,800 | 554,268 | |
LaBranche & Co., Inc. | 31,500 | 257,985 | |
Lehman Brothers Holdings, Inc. | 131,000 | 9,183,100 | |
Merrill Lynch & Co., Inc. | 221,900 | 11,032,868 | |
Morgan Stanley | 270,300 | 13,333,899 | |
Northern Trust Corp. | 155,200 | 6,228,176 | |
Piper Jaffray Companies (a) | 2,479 | 101,019 | |
State Street Corp. | 96,100 | 4,114,041 | |
TradeStation Group, Inc. (a) | 82,400 | 490,280 | |
Waddell & Reed Financial, Inc. Class A | 67,867 | 1,317,977 | |
TOTAL CAPITAL MARKETS | 73,758,301 | ||
COMMERCIAL BANKS - 23.2% | |||
Banco Popolare di Verona e Novara | 103,500 | 1,724,783 | |
Bank of America Corp. | 478,851 | 40,707,122 | |
Banknorth Group, Inc. | 28,700 | 915,817 | |
BB&T Corp. | 37,900 | 1,467,867 | |
Cathay General Bancorp | 31,070 | 2,082,001 | |
City National Corp. | 10,100 | 651,450 | |
East West Bancorp, Inc. | 48,677 | 1,641,388 | |
Hanmi Financial Corp. | 52,500 | 1,522,500 | |
HDFC Bank Ltd. sponsored ADR | 46,800 | 1,267,344 | |
M&T Bank Corp. | 21,500 | 2,004,445 | |
Mercantile Bankshares Corp. | 14,400 | 653,904 | |
Mitsubishi Tokyo Financial Group, Inc. (MTFG) sponsored ADR | 177,500 | 1,608,150 | |
National Bank of Canada | 69,400 | 2,336,915 | |
National Commerce Financial Corp. | 52,800 | 1,716,000 | |
North Fork Bancorp, Inc., New York | 31,800 | 1,241,790 | |
Royal Bank of Canada | 50,500 | 2,336,468 | |
Silicon Valley Bancshares (a) | 7,600 | 278,236 | |
SouthTrust Corp. | 31,300 | 1,214,127 | |
Synovus Financial Corp. | 1,100 | 28,017 | |
TCF Financial Corp. | 11,400 | 688,560 | |
U.S. Bancorp, Delaware | 351,200 | 9,938,960 | |
UCBH Holdings, Inc. | 85,000 | 3,322,650 | |
Valley National Bancorp | 245 | 6,096 | |
Wachovia Corp. | 370,420 | 16,413,310 | |
Wells Fargo & Co. | 253,000 | 14,524,730 | |
Zions Bancorp | 28,300 | 1,712,150 | |
TOTAL COMMERCIAL BANKS | 112,004,780 | ||
Shares | Value (Note 1) | ||
COMMERCIAL SERVICES & SUPPLIES - 1.0% | |||
Asset Acceptance Capital Corp. | 219,248 | $ 3,775,451 | |
Portfolio Recovery Associates, Inc. (a) | 40,400 | 1,069,388 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 4,844,839 | ||
CONSUMER FINANCE - 11.0% | |||
American Express Co. | 337,300 | 16,949,325 | |
AmeriCredit Corp. (a) | 146,800 | 2,803,880 | |
Capital One Financial Corp. | 134,700 | 9,337,404 | |
First Marblehead Corp. | 49,500 | 2,077,020 | |
MBNA Corp. | 747,075 | 18,445,282 | |
SLM Corp. | 84,300 | 3,196,656 | |
TOTAL CONSUMER FINANCE | 52,809,567 | ||
DIVERSIFIED FINANCIAL SERVICES - 11.0% | |||
Chicago Mercantile Exchange Holdings, Inc. Class A | 400 | 50,200 | |
CIT Group, Inc. | 198,800 | 6,910,288 | |
Citigroup, Inc. | 556,469 | 24,534,718 | |
Encore Capital Group, Inc. (a) | 30,500 | 467,260 | |
J.P. Morgan Chase & Co. | 540,894 | 20,191,573 | |
Principal Financial Group, Inc. | 32,400 | 1,101,276 | |
TOTAL DIVERSIFIED FINANCIAL SERVICES | 53,255,315 | ||
INDUSTRIAL CONGLOMERATES - 0.7% | |||
General Electric Co. | 108,300 | 3,600,975 | |
INSURANCE - 22.5% | |||
ACE Ltd. | 166,200 | 6,746,058 | |
AFLAC, Inc. | 92,200 | 3,654,808 | |
Allstate Corp. | 40,900 | 1,925,572 | |
AMBAC Financial Group, Inc. | 76,350 | 5,429,249 | |
American International Group, Inc. | 459,660 | 32,474,979 | |
Berkshire Hathaway, Inc. Class B (a) | 4,124 | 11,934,856 | |
Cincinnati Financial Corp. | 33,421 | 1,332,829 | |
Endurance Specialty Holdings Ltd. | 141,970 | 4,692,109 | |
Everest Re Group Ltd. | 32,900 | 2,417,492 | |
Fidelity National Financial, Inc. | 32,350 | 1,172,688 | |
Genworth Financial, Inc. Class A | 26,700 | 607,158 | |
Hartford Financial Services Group, Inc. | 110,400 | 7,187,040 | |
HCC Insurance Holdings, Inc. | 28,100 | 851,430 | |
Lincoln National Corp. | 6,500 | 284,050 | |
Marsh & McLennan Companies, Inc. | 71,500 | 3,173,170 | |
MBIA, Inc. | 67,200 | 3,627,456 | |
MetLife, Inc. | 185,000 | 6,598,950 | |
Montpelier Re Holdings Ltd. | 24,500 | 866,810 | |
PartnerRe Ltd. | 8,000 | 418,480 | |
Protective Life Corp. | 17,200 | 623,500 | |
Scottish Re Group Ltd. | 27,500 | 561,000 | |
Sun Life Financial, Inc. | 142,200 | 3,947,474 | |
Torchmark Corp. | 17,500 | 914,900 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INSURANCE - CONTINUED | |||
UnumProvident Corp. | 88,800 | $ 1,416,360 | |
XL Capital Ltd. Class A | 80,800 | 5,710,944 | |
TOTAL INSURANCE | 108,569,362 | ||
IT SERVICES - 0.2% | |||
Paychex, Inc. | 24,000 | 737,040 | |
REAL ESTATE - 2.7% | |||
Apartment Investment & Management Co. Class A | 130,500 | 4,172,085 | |
CBL & Associates Properties, Inc. | 12,146 | 669,245 | |
Duke Realty Corp. | 23,000 | 707,480 | |
Equity Residential (SBI) | 29,600 | 874,680 | |
Federal Realty Investment Trust (SBI) | 7,400 | 312,280 | |
Healthcare Realty Trust, Inc. | 47,000 | 1,697,640 | |
Manufactured Home Communities, Inc. | 14,200 | 449,998 | |
Reckson Associates Realty Corp. | 25,400 | 703,834 | |
Simon Property Group, Inc. | 54,400 | 2,807,584 | |
The Mills Corp. | 9,500 | 433,200 | |
Vornado Realty Trust | 300 | 17,427 | |
TOTAL REAL ESTATE | 12,845,453 | ||
SOFTWARE - 0.1% | |||
Fair, Isaac & Co., Inc. | 15,800 | 451,564 | |
THRIFTS & MORTGAGE FINANCE - 10.2% | |||
Countrywide Financial Corp. | 60,408 | 4,355,417 | |
Doral Financial Corp. | 800 | 31,400 | |
Fannie Mae | 264,335 | 18,757,212 | |
Golden West Financial Corp., Delaware | 47,100 | 5,035,461 | |
Greenpoint Financial Corp. | 26,400 | 1,072,632 | |
MGIC Investment Corp. | 36,200 | 2,570,200 | |
NetBank, Inc. | 146,800 | 1,576,632 | |
New York Community Bancorp, Inc. | 100,533 | 1,934,255 | |
Radian Group, Inc. | 45,455 | 2,091,839 | |
Sovereign Bancorp, Inc. | 434,800 | 9,465,596 | |
The PMI Group, Inc. | 28,200 | 1,162,686 | |
W Holding Co., Inc. | 29,600 | 488,400 | |
Washington Mutual, Inc. | 12,400 | 481,120 | |
TOTAL THRIFTS & MORTGAGE FINANCE | 49,022,850 | ||
TOTAL COMMON STOCKS (Cost $394,282,976) | 471,900,046 | ||
Money Market Funds - 1.1% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 5,274,915 | $ 5,274,915 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 255,750 | 255,750 | |
TOTAL MONEY MARKET FUNDS (Cost $5,530,665) | 5,530,665 | ||
TOTAL INVESTMENT PORTFOLIO - 99.0% (Cost $399,813,641) | 477,430,711 | ||
NET OTHER ASSETS - 1.0% | 4,757,801 | ||
NET ASSETS - 100% | $ 482,188,512 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
The fund hereby designates approximately $4,729,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $253,890) (cost $399,813,641) - See accompanying schedule | $ 477,430,711 | |
Receivable for investments sold | 13,272,826 | |
Receivable for fund shares sold | 103,958 | |
Dividends receivable | 795,892 | |
Interest receivable | 6,817 | |
Prepaid expenses | 957 | |
Other affiliated receivables | 936 | |
Other receivables | 220,396 | |
Total assets | 491,832,493 | |
Liabilities | ||
Payable for investments purchased | $ 7,256,929 | |
Payable for fund shares redeemed | 1,314,465 | |
Accrued management fee | 233,828 | |
Distribution fees payable | 298,062 | |
Other affiliated payables | 159,404 | |
Other payables and accrued expenses | 125,543 | |
Collateral on securities loaned, at value | 255,750 | |
Total liabilities | 9,643,981 | |
Net Assets | $ 482,188,512 | |
Net Assets consist of: | ||
Paid in capital | $ 370,382,581 | |
Undistributed net investment income | 1,503 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 34,187,064 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 77,617,364 | |
Net Assets | $ 482,188,512 | |
Calculation of Maximum Offering Price | $ 22.17 | |
Maximum offering price per share (100/94.25 of $22.17) | $ 23.52 | |
Class T: | $ 22.07 | |
Maximum offering price per share (100/96.50 of $22.07) | $ 22.87 | |
Class B: | $ 21.65 | |
Class C: | $ 21.65 | |
Institutional: | $ 22.37 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 9,895,622 | |
Interest | 43,378 | |
Security lending | 53,021 | |
Total income | 9,992,021 | |
Expenses | ||
Management fee | $ 3,061,745 | |
Transfer agent fees | 1,799,314 | |
Distribution fees | 3,912,453 | |
Accounting and security lending fees | 204,603 | |
Non-interested trustees' compensation | 2,929 | |
Custodian fees and expenses | 18,868 | |
Registration fees | 63,775 | |
Audit | 39,911 | |
Legal | 1,886 | |
Miscellaneous | 112,528 | |
Total expenses before reductions | 9,218,012 | |
Expense reductions | (113,546) | 9,104,466 |
Net investment income (loss) | 887,555 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 60,134,324 | |
Foreign currency transactions | (45,282) | |
Total net realized gain (loss) | 60,089,042 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (3,466,311) | |
Assets and liabilities in foreign currencies | 1,590 | |
Total change in net unrealized appreciation (depreciation) | (3,464,721) | |
Net gain (loss) | 56,624,321 | |
Net increase (decrease) in net assets resulting from operations | $ 57,511,876 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Financial Services Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 887,555 | $ 2,210,845 |
Net realized gain (loss) | 60,089,042 | 2,197,120 |
Change in net unrealized appreciation (depreciation) | (3,464,721) | 48,537,174 |
Net increase (decrease) in net assets resulting from operations | 57,511,876 | 52,945,139 |
Distributions to shareholders from net investment income | (1,712,624) | (1,354,216) |
Share transactions - net increase (decrease) | (93,511,617) | (91,318,552) |
Redemption fees | 62,072 | 20,838 |
Total increase (decrease) in net assets | (37,650,293) | (39,706,791) |
Net Assets | ||
Beginning of period | 519,838,805 | 559,545,596 |
End of period (including undistributed net investment income of $1,503 and undistributed net investment income of $849,010, respectively) | $ 482,188,512 | $ 519,838,805 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.98 | $ 17.83 | $ 20.45 | $ 18.29 | $ 17.49 |
Income from Investment Operations | |||||
Net investment income (loss)C | .14 | .16 | .12 | .15 | .15 |
Net realized and unrealized gain (loss) | 2.20 | 2.07 | (2.60) | 2.20 | .73 |
Total from investment operations | 2.34 | 2.23 | (2.48) | 2.35 | .88 |
Distributions from net investment income | (.15) | (.08) | (.14) | (.19) | (.09) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 22.17 | $ 19.98 | $ 17.83 | $ 20.45 | $ 18.29 |
Total ReturnA,B | 11.76% | 12.57% | (12.16)% | 12.86% | 5.12% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.27% | 1.31% | 1.27% | 1.20% | 1.25% |
Expenses net of voluntary waivers, if any | 1.27% | 1.31% | 1.27% | 1.20% | 1.25% |
Expenses net of all reductions | 1.25% | 1.27% | 1.23% | 1.18% | 1.22% |
Net investment income (loss) | .63% | .89% | .60% | .77% | .92% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 58,222 | $ 57,255 | $ 60,475 | $ 78,115 | $ 48,088 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.90 | $ 17.77 | $ 20.38 | $ 18.21 | $ 17.42 |
Income from Investment Operations | |||||
Net investment income (loss)C | .09 | .12 | .07 | .11 | .12 |
Net realized and unrealized gain (loss) | 2.19 | 2.07 | (2.59) | 2.19 | .71 |
Total from investment operations | 2.28 | 2.19 | (2.52) | 2.30 | .83 |
Distributions from net investment income | (.11) | (.06) | (.09) | (.13) | (.05) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 22.07 | $ 19.90 | $ 17.77 | $ 20.38 | $ 18.21 |
Total ReturnA,B | 11.49% | 12.37% | (12.39)% | 12.64% | 4.84% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.50% | 1.53% | 1.49% | 1.43% | 1.47% |
Expenses net of voluntary waivers, if any | 1.50% | 1.53% | 1.49% | 1.43% | 1.47% |
Expenses net of all reductions | 1.48% | 1.49% | 1.45% | 1.41% | 1.44% |
Net investment income (loss) | .41% | .67% | .38% | .54% | .70% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 144,887 | $ 157,238 | $ 169,429 | $ 234,268 | $ 179,862 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.53 | $ 17.50 | $ 20.08 | $ 17.95 | $ 17.21 |
Income from Investment Operations | |||||
Net investment income (loss)C | (.02) | .03 | (.03) | - | .03 |
Net realized and unrealized gain (loss) | 2.16 | 2.03 | (2.55) | 2.16 | .70 |
Total from investment operations | 2.14 | 2.06 | (2.58) | 2.16 | .73 |
Distributions from net investment income | (.02) | (.03) | - | (.03) | - |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 21.65 | $ 19.53 | $ 17.50 | $ 20.08 | $ 17.95 |
Total ReturnA,B | 10.96% | 11.80% | (12.85)% | 12.03% | 4.30% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 2.02% | 2.03% | 2.01% | 1.96% | 2.01% |
Expenses net of voluntary waivers, if any | 2.02% | 2.03% | 2.01% | 1.96% | 2.01% |
Expenses net of all reductions | 2.00% | 1.99% | 1.97% | 1.94% | 1.98% |
Net investment income (loss) | (.11)% | .17% | (.14)% | .01% | .16% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 179,873 | $ 193,373 | $ 206,460 | $ 269,612 | $ 150,880 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.53 | $ 17.49 | $ 20.05 | $ 17.96 | $ 17.24 |
Income from Investment Operations | |||||
Net investment income (loss)C | (.01) | .04 | (.02) | .01 | .03 |
Net realized and unrealized gain (loss) | 2.15 | 2.03 | (2.54) | 2.15 | .70 |
Total from investment operations | 2.14 | 2.07 | (2.56) | 2.16 | .73 |
Distributions from net investment income | (.02) | (.03) | - | (.07) | (.02) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 21.65 | $ 19.53 | $ 17.49 | $ 20.05 | $ 17.96 |
Total ReturnA,B | 10.96% | 11.86% | (12.77)% | 12.03% | 4.30% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.97% | 1.99% | 1.96% | 1.92% | 1.96% |
Expenses net of voluntary waivers, if any | 1.97% | 1.99% | 1.96% | 1.92% | 1.96% |
Expenses net of all reductions | 1.95% | 1.95% | 1.92% | 1.90% | 1.93% |
Net investment income (loss) | (.06)% | .22% | (.09)% | .05% | .21% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 86,199 | $ 97,434 | $ 107,899 | $ 149,160 | $ 83,078 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.17 | $ 17.95 | $ 20.59 | $ 18.39 | $ 17.60 |
Income from Investment Operations | |||||
Net investment income (loss)B | .23 | .24 | .19 | .22 | .21 |
Net realized and unrealized gain (loss) | 2.21 | 2.09 | (2.62) | 2.22 | .72 |
Total from investment operations | 2.44 | 2.33 | (2.43) | 2.44 | .93 |
Distributions from net investment income | (.24) | (.11) | (.21) | (.24) | (.15) |
Redemption fees added to paid in capitalB | -D | -D | -D | -D | .01 |
Net asset value, end of period | $ 22.37 | $ 20.17 | $ 17.95 | $ 20.59 | $ 18.39 |
Total ReturnA | 12.18% | 13.07% | (11.84)% | 13.29% | 5.40% |
Ratios to Average Net AssetsC | |||||
Expenses before expense reductions | .88% | .88% | .89% | .87% | .90% |
Expenses net of voluntary waivers, if any | .88% | .88% | .89% | .87% | .90% |
Expenses net of all reductions | .85% | .84% | .85% | .84% | .87% |
Net investment income (loss) | 1.03% | 1.32% | .98% | 1.10% | 1.27% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,008 | $ 14,539 | $ 15,283 | $ 17,966 | $ 9,749 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BCalculated based on average shares outstanding during the period. CExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. DAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Financial Services Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as a distribution from net investment income and realized gain for income tax purposes.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 83,886,754 | |
Unrealized depreciation | (8,607,848) | |
Net unrealized appreciation (depreciation) | 75,278,906 | |
Undistributed long-term capital gain | 32,055,411 | |
Cost for federal income tax purposes | $ 402,151,805 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 1,674,060 | $ 1,354,216 |
Long-term Capital Gains | 38,564 | - |
Total | $ 1,712,624 | $ 1,354,216 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $390,518,639 and $494,584,050, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Financial Services
4. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 152,368 | $ 136 |
Class T | .25% | .25% | 797,600 | 3,990 |
Class B | .75% | .25% | 1,982,856 | 1,487,588 |
Class C | .75% | .25% | 979,629 | 73,897 |
$ 3,912,453 | $ 1,565,611 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 29,407 | |
Class T | 12,628 | |
Class B* | 519,390 | |
Class C* | 31,184 | |
$ 592,609 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 221,140 | .36 |
Class T | 538,347 | .34 |
Class B | 708,097 | .36 |
Class C | 300,870 | .31 |
Institutional Class | 30,860 | .22 |
$ 1,799,314 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $43,343 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $19,477 for the period.
Annual Report
Notes to Financial Statements - continued
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $113,546 for the period.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2004 | 2003 | |
From net investment income | ||
Class A | $ 420,433 | $ 252,487 |
Class T | 838,212 | 523,447 |
Class B | 192,478 | 326,913 |
Class C | 96,077 | 167,726 |
Institutional Class | 165,424 | 83,643 |
Total | $ 1,712,624 | $ 1,354,216 |
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 614,653 | 466,106 | $ 13,695,749 | $ 8,361,698 |
Reinvestment of distributions | 18,128 | 12,924 | 378,140 | 225,396 |
Shares redeemed | (872,521) | (1,005,991) | (19,145,577) | (17,596,177) |
Net increase (decrease) | (239,740) | (526,961) | $ (5,071,688) | $ (9,009,083) |
Class T | ||||
Shares sold | 658,242 | 786,561 | $ 14,430,306 | $ 14,027,178 |
Reinvestment of distributions | 37,421 | 27,729 | 777,299 | 482,206 |
Shares redeemed | (2,033,778) | (2,445,445) | (44,388,616) | (42,791,925) |
Net increase (decrease) | (1,338,115) | (1,631,155) | $ (29,181,011) | $ (28,282,541) |
Class B | ||||
Shares sold | 461,768 | 669,921 | $ 9,850,610 | $ 11,895,054 |
Reinvestment of distributions | 7,853 | 15,797 | 162,959 | 270,445 |
Shares redeemed | (2,060,890) | (2,581,642) | (44,422,627) | (44,031,477) |
Net increase (decrease) | (1,591,269) | (1,895,924) | $ (34,409,058) | $ (31,865,978) |
Class C | ||||
Shares sold | 653,543 | 411,834 | $ 13,848,576 | $ 7,357,880 |
Reinvestment of distributions | 3,576 | 7,556 | 74,185 | 129,283 |
Shares redeemed | (1,665,874) | (1,598,865) | (35,686,628) | (27,368,101) |
Net increase (decrease) | (1,008,755) | (1,179,475) | $ (21,763,867) | $ (19,880,938) |
Institutional Class | ||||
Shares sold | 67,364 | 104,118 | $ 1,519,011 | $ 1,915,337 |
Reinvestment of distributions | 5,506 | 3,152 | 115,490 | 55,316 |
Shares redeemed | (212,405) | (237,964) | (4,720,494) | (4,250,665) |
Net increase (decrease) | (139,535) | (130,694) | $ (3,085,993) | $ (2,280,012) |
Financial Services
Advisor Health Care Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of | |
Institutional Class | 3.77% | 2.21% | 10.97% |
A From September 3, 1996.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Health Care Fund - Institutional Class on September 3, 1996, when the fund started. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Health Care Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Sam Peters, Portfolio Manager of Fidelity ® Advisor Health Care Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months that ended July 31, 2004, the fund's Institutional Class shares posted a return of 3.77%, underperforming both the Goldman Sachs ® Health Care Index and the Standard & Poor's 500, which returned 4.22% and 13.17%, respectively. The fund's underperformance was attributable mainly to its somewhat defensive positioning relative to the health care sector, which benefited from having more exposure to growth-oriented stocks in a period of cyclical recovery. In the biotechnology space, Millennium Pharmaceuticals detracted from performance not because it performed poorly, but because the company did not meet investors' expectations. Pharmaceutical giants Merck and Wyeth fell victim to investor concerns about future governmental efforts to control health care costs. Performance was helped by Genentech, whose stock rose on robust sales of a new colorectal cancer drug; St. Jude Medical, which holds a strong position in heart therapy devices; and Caremark Rx, a leading prescription benefits manager that is helping to lower drug costs through group purchases.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 959.90 | $ 6.53 |
HypotheticalA | $ 1,000.00 | $ 1,018.25 | $ 6.75 |
Class T | |||
Actual | $ 1,000.00 | $ 959.30 | $ 7.75 |
HypotheticalA | $ 1,000.00 | $ 1,016.99 | $ 8.01 |
Class B | |||
Actual | $ 1,000.00 | $ 956.70 | $ 10.12 |
HypotheticalA | $ 1,000.00 | $ 1,014.53 | $ 10.47 |
Class C | |||
Actual | $ 1,000.00 | $ 956.80 | $ 9.78 |
HypotheticalA | $ 1,000.00 | $ 1,014.88 | $ 10.12 |
Institutional | |||
Actual | $ 1,000.00 | $ 962.10 | $ 4.49 |
HypotheticalA | $ 1,000.00 | $ 1,020.37 | $ 4.63 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.34% |
Class T | 1.59% |
Class B | 2.08% |
Class C | 2.01% |
Institutional | .92% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Johnson & Johnson | 10.4 |
Pfizer, Inc. | 7.5 |
Medtronic, Inc. | 7.1 |
Abbott Laboratories | 5.5 |
Genentech, Inc. | 5.2 |
UnitedHealth Group, Inc. | 5.1 |
Merck & Co., Inc. | 5.0 |
Baxter International, Inc. | 4.9 |
Amgen, Inc. | 4.1 |
Eli Lilly & Co. | 4.1 |
58.9 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Pharmaceuticals | 41.8% | |
| Health Care Equipment & Supplies | 26.0% | |
| Health Care Providers | 15.7% | |
| Biotechnology | 15.5% | |
| Insurance | 0.2% | |
| All Others * | 0.8% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 15.5% | |||
Affymetrix, Inc. (a) | 56,600 | $ 1,528,766 | |
Alkermes, Inc. (a) | 331,200 | 3,573,648 | |
Amgen, Inc. (a) | 563,900 | 32,074,632 | |
Biogen Idec, Inc. (a) | 165,500 | 9,930,000 | |
Celgene Corp. (a) | 102,100 | 5,444,993 | |
Genentech, Inc. (a) | 840,300 | 40,905,804 | |
Genzyme Corp. - General Division (a) | 160,600 | 8,235,568 | |
ImClone Systems, Inc. (a) | 49,500 | 2,916,540 | |
MedImmune, Inc. (a) | 213,030 | 4,908,211 | |
Millennium Pharmaceuticals, Inc. (a) | 496,100 | 5,516,632 | |
Neurocrine Biosciences, Inc. (a) | 85,600 | 3,986,392 | |
OSI Pharmaceuticals, Inc. (a) | 26,000 | 1,562,600 | |
Protein Design Labs, Inc. (a) | 59,600 | 965,520 | |
TOTAL BIOTECHNOLOGY | 121,549,306 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 26.0% | |||
Alcon, Inc. | 168,400 | 12,899,440 | |
Animas Corp. | 200 | 3,044 | |
Baxter International, Inc. | 1,283,600 | 38,597,852 | |
Biomet, Inc. | 431,275 | 18,971,787 | |
Boston Scientific Corp. (a) | 426,600 | 16,321,716 | |
Cytyc Corp. (a) | 119,900 | 2,897,983 | |
Dade Behring Holdings, Inc. (a) | 65,500 | 3,254,695 | |
Edwards Lifesciences Corp. (a) | 302,200 | 10,628,374 | |
Epix Medical, Inc. (a) | 102,500 | 1,850,125 | |
Guidant Corp. | 19,100 | 1,056,612 | |
Hospira, Inc. (a) | 4,182 | 108,356 | |
Kinetic Concepts, Inc. | 69,100 | 3,103,972 | |
Medtronic, Inc. | 1,113,196 | 55,292,445 | |
Novoste Corp. (a)(d) | 12,500 | 25,625 | |
ResMed, Inc. (a) | 66,300 | 3,248,700 | |
Respironics, Inc. (a) | 59,200 | 3,298,624 | |
Smith & Nephew PLC sponsored ADR | 25,000 | 1,291,500 | |
St. Jude Medical, Inc. (a) | 300,900 | 20,500,317 | |
Thoratec Corp. (a) | 78,700 | 802,740 | |
Waters Corp. (a) | 44,700 | 1,961,436 | |
Zimmer Holdings, Inc. (a) | 94,300 | 7,196,033 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 203,311,376 | ||
HEALTH CARE PROVIDERS & SERVICES - 15.7% | |||
Cardinal Health, Inc. | 57,600 | 2,563,200 | |
Caremark Rx, Inc. (a) | 558,700 | 17,040,350 | |
Coventry Health Care, Inc. (a) | 146,100 | 7,467,171 | |
DaVita, Inc. (a) | 71,550 | 2,172,974 | |
Shares | Value (Note 1) | ||
Health Management Associates, Inc. Class A | 3,800 | $ 76,228 | |
Health Net, Inc. (a) | 93,500 | 2,256,155 | |
IMS Health, Inc. | 190,200 | 4,610,448 | |
Inveresk Research Group, Inc. (a) | 32,100 | 1,165,230 | |
Laboratory Corp. of America Holdings (a) | 102,600 | 4,017,816 | |
McKesson Corp. | 228,000 | 7,334,760 | |
Omnicare, Inc. | 162,400 | 4,591,048 | |
PacifiCare Health Systems, Inc. (a) | 386,090 | 11,802,771 | |
Patterson Companies, Inc. (a) | 25,400 | 1,864,868 | |
Quest Diagnostics, Inc. | 77,200 | 6,336,576 | |
Tenet Healthcare Corp. (a) | 354,500 | 3,963,310 | |
UnitedHealth Group, Inc. | 639,900 | 40,249,710 | |
WebMD Corp. (a) | 618,700 | 5,036,218 | |
TOTAL HEALTH CARE PROVIDERS & SERVICES | 122,548,833 | ||
INSURANCE - 0.2% | |||
American Medical Securities Group, Inc. (a) | 65,100 | 1,654,191 | |
PERSONAL PRODUCTS - 0.1% | |||
NBTY, Inc. (a) | 42,700 | 929,152 | |
PHARMACEUTICALS - 41.8% | |||
Abbott Laboratories | 1,094,920 | 43,085,102 | |
Allergan, Inc. | 98,900 | 7,480,796 | |
Barr Pharmaceuticals, Inc. (a) | 87,902 | 3,019,434 | |
Biovail Corp. (a) | 220,470 | 3,429,994 | |
Eli Lilly & Co. | 499,500 | 31,828,140 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 89,000 | 1,708,800 | |
Forest Laboratories, Inc. (a) | 89,000 | 4,475,810 | |
Hollis-Eden Pharmaceutcals, Inc. (a) | 165,100 | 1,581,658 | |
Johnson & Johnson | 1,477,362 | 81,653,798 | |
King Pharmaceuticals, Inc. (a) | 351,500 | 3,968,435 | |
Medicis Pharmaceutical Corp. Class A | 30,300 | 1,083,831 | |
Merck & Co., Inc. | 867,600 | 39,345,660 | |
Novartis AG sponsored ADR | 102,000 | 4,555,320 | |
Perrigo Co. | 148,200 | 2,469,012 | |
Pfizer, Inc. | 1,846,320 | 59,008,387 | |
Schering-Plough Corp. | 1,024,500 | 19,936,770 | |
Sepracor, Inc. (a) | 60,100 | 2,762,797 | |
Watson Pharmaceuticals, Inc. (a) | 102,300 | 2,578,983 | |
Wyeth | 384,220 | 13,601,388 | |
TOTAL PHARMACEUTICALS | 327,574,115 | ||
TOTAL COMMON STOCKS (Cost $728,781,855) | 777,566,973 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
BIOTECHNOLOGY - 0.0% | |||
Geneprot, Inc. Series A (e) | 43,000 | 150,500 | |
Money Market Funds - 0.6% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 3,534,017 | $ 3,534,017 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 1,327,000 | 1,327,000 | |
TOTAL MONEY MARKET FUNDS (Cost $4,861,017) | 4,861,017 | ||
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $733,879,372) | 782,578,490 | ||
NET OTHER ASSETS - 0.1% | 696,554 | ||
NET ASSETS - 100% | $ 783,275,044 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $25,625 or 0.0% of net assets. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $150,500 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Geneprot, Inc. Series A | 7/7/00 | $ 236,500 |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $39,599,000 of which $26,199,000 and $13,400,000 will expire on |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,271,266) (cost $733,879,372) - See accompanying schedule | $ 782,578,490 | |
Receivable for investments sold | 14,631,105 | |
Receivable for fund shares sold | 482,949 | |
Dividends receivable | 296,449 | |
Interest receivable | 10,702 | |
Prepaid expenses | 1,571 | |
Other affiliated receivables | 1,161 | |
Other receivables | 13,338 | |
Total assets | 798,015,765 | |
Liabilities | ||
Payable for investments purchased | $ 10,269,641 | |
Payable for fund shares redeemed | 1,766,128 | |
Accrued management fee | 387,378 | |
Distribution fees payable | 484,369 | |
Other affiliated payables | 297,205 | |
Other payables and accrued expenses | 209,000 | |
Collateral on securities loaned, at value | 1,327,000 | |
Total liabilities | 14,740,721 | |
Net Assets | $ 783,275,044 | |
Net Assets consist of: | ||
Paid in capital | $ 791,501,801 | |
Accumulated net investment loss | (581) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (56,925,294) | |
Net unrealized appreciation (depreciation) on investments | 48,699,118 | |
Net Assets | $ 783,275,044 | |
Calculation of Maximum | $ 18.91 | |
Maximum offering price per share (100/94.25 of $18.91) | $ 20.06 | |
Class T: | $ 18.60 | |
Maximum offering price per share (100/96.50 of $18.60) | $ 19.27 | |
Class B: | $ 17.91 | |
Class C: | $ 17.94 | |
Institutional: | $ 19.28 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 8,514,928 | |
Interest | 90,455 | |
Security lending | 32,350 | |
Total income | 8,637,733 | |
Expenses | ||
Management fee | $ 4,857,388 | |
Transfer agent fees | 3,322,048 | |
Distribution fees | 6,102,170 | |
Accounting and security lending fees | 279,659 | |
Non-interested trustees' compensation | 4,639 | |
Custodian fees and expenses | 15,107 | |
Registration fees | 75,906 | |
Audit | 40,437 | |
Legal | 3,294 | |
Miscellaneous | 209,535 | |
Total expenses before | 14,910,183 | |
Expense reductions | (224,391) | 14,685,792 |
Net investment income (loss) | (6,048,059) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 55,613,597 | |
Foreign currency transactions | 5,472 | |
Total net realized gain (loss) | 55,619,069 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (24,649,715) | |
Assets and liabilities in foreign currencies | (6,063) | |
Total change in net unrealized appreciation (depreciation) | (24,655,778) | |
Net gain (loss) | 30,963,291 | |
Net increase (decrease) in net assets resulting from operations | $ 24,915,232 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Health Care Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (6,048,059) | $ (3,893,423) |
Net realized gain (loss) | 55,619,069 | 13,765,258 |
Change in net unrealized appreciation (depreciation) | (24,655,778) | 71,504,161 |
Net increase (decrease) in net assets resulting from operations | 24,915,232 | 81,375,996 |
Share transactions - net increase (decrease) | (106,348,165) | (125,179,240) |
Redemption fees | 55,534 | 65,218 |
Total increase (decrease) in net assets | (81,377,399) | (43,738,026) |
Net Assets | ||
Beginning of period | 864,652,443 | 908,390,469 |
End of period (including accumulated net investment loss of $581 and $0, respectively) | $ 783,275,044 | $ 864,652,443 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 18.29 | $ 16.51 | $ 20.41 | $ 22.02 | $ 18.52 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.05) | - E | (.04) | .01 | .01 |
Net realized and unrealized gain (loss) | .67 | 1.78 | (3.86) | (.50) | 3.89 |
Total from investment operations | .62 | 1.78 | (3.90) | (.49) | 3.90 |
Distributions from net realized gain | - | - | - | (1.12) | (.41) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 18.91 | $ 18.29 | $ 16.51 | $ 20.41 | $ 22.02 |
Total Return A, B | 3.39% | 10.78% | (19.11)% | (2.50)% | 21.44% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.32% | 1.34% | 1.29% | 1.19% | 1.20% |
Expenses net of voluntary waivers, if any | 1.32% | 1.34% | 1.29% | 1.19% | 1.20% |
Expenses net of all reductions | 1.29% | 1.27% | 1.24% | 1.17% | 1.18% |
Net investment income (loss) | (.26)% | (.01)% | (.23)% | .05% | .07% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 104,258 | $ 108,692 | $ 103,292 | $ 136,304 | $ 108,248 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 18.03 | $ 16.31 | $ 20.22 | $ 21.87 | $ 18.40 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.04) | (.09) | (.04) | (.03) |
Net realized and unrealized gain (loss) | .66 | 1.76 | (3.82) | (.49) | 3.86 |
Total from investment operations | .57 | 1.72 | (3.91) | (.53) | 3.83 |
Distributions from net realized gain | - | - | - | (1.12) | (.37) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 18.60 | $ 18.03 | $ 16.31 | $ 20.22 | $ 21.87 |
Total Return A, B | 3.16% | 10.55% | (19.34)% | (2.71)% | 21.16% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.56% | 1.59% | 1.52% | 1.43% | 1.42% |
Expenses net of voluntary waivers, if any | 1.56% | 1.59% | 1.52% | 1.43% | 1.42% |
Expenses net of all reductions | 1.53% | 1.51% | 1.47% | 1.41% | 1.40% |
Net investment income (loss) | (.51)% | (.26)% | (.46)% | (.18)% | (.15)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 243,176 | $ 264,115 | $ 274,243 | $ 383,643 | $ 361,351 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.45 | $ 15.86 | $ 19.76 | $ 21.50 | $ 18.16 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.18) | (.12) | (.18) | (.14) | (.13) |
Net realized and unrealized gain (loss) | .64 | 1.71 | (3.72) | (.48) | 3.80 |
Total from investment operations | .46 | 1.59 | (3.90) | (.62) | 3.67 |
Distributions from net realized gain | - | - | - | (1.12) | (.34) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 17.91 | $ 17.45 | $ 15.86 | $ 19.76 | $ 21.50 |
Total Return A, B | 2.64% | 10.03% | (19.74)% | (3.20)% | 20.53% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.06% | 2.05% | 2.02% | 1.95% | 1.94% |
Expenses net of voluntary waivers, if any | 2.06% | 2.05% | 2.02% | 1.95% | 1.94% |
Expenses net of all reductions | 2.03% | 1.98% | 1.98% | 1.93% | 1.93% |
Net investment income (loss) | (1.01) % | (.73)% | (.97)% | (.70)% | (.68)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 285,299 | $ 317,906 | $ 334,056 | $ 456,851 | $ 366,413 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.47 | $ 15.87 | $ 19.76 | $ 21.50 | $ 18.17 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.17) | (.11) | (.17) | (.14) | (.12) |
Net realized and unrealized gain (loss) | .64 | 1.71 | (3.72) | (.48) | 3.80 |
Total from investment operations | .47 | 1.60 | (3.89) | (.62) | 3.68 |
Distributions from net realized gain | - | - | - | (1.12) | (.36) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 17.94 | $ 17.47 | $ 15.87 | $ 19.76 | $ 21.50 |
Total Return A, B | 2.69% | 10.08% | (19.69)% | (3.20)% | 20.59% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.00% | 2.00% | 1.97% | 1.91% | 1.91% |
Expenses net of voluntary waivers, if any | 2.00% | 2.00% | 1.97% | 1.91% | 1.91% |
Expenses net of all reductions | 1.97% | 1.92% | 1.93% | 1.89% | 1.89% |
Net investment income (loss) | (.95)% | (.67)% | (.92)% | (.66)% | (.64)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 130,184 | $ 150,576 | $ 160,877 | $ 229,494 | $ 183,264 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 18.58 | $ 16.70 | $ 20.58 | $ 22.13 | $ 18.59 |
Income from Investment Operations | |||||
Net investment income (loss) B | .03 | .06 | .02 | .07 | .07 |
Net realized and unrealized gain (loss) | .67 | 1.82 | (3.90) | (.50) | 3.90 |
Total from investment operations | .70 | 1.88 | (3.88) | (.43) | 3.97 |
Distributions from net investment income | - | - | - | - | (.03) |
Distributions from net realized gain | - | - | - | (1.12) | (.41) |
Total distributions | - | - | - | (1.12) | (.44) |
Redemption fees added to paid in capital B | - D | - D | - D | - D | .01 |
Net asset value, end of period | $ 19.28 | $ 18.58 | $ 16.70 | $ 20.58 | $ 22.13 |
Total Return A | 3.77% | 11.26% | (18.85)% | (2.21)% | 21.77% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | .91% | .96% | .95% | .91% | .93% |
Expenses net of voluntary waivers, if any | .91% | .96% | .95% | .91% | .93% |
Expenses net of all reductions | .88% | .88% | .90% | .89% | .92% |
Net investment income (loss) | .14% | .37% | .11% | .33% | .33% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 20,358 | $ 23,364 | $ 35,923 | $ 45,200 | $ 40,320 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Health Care Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 83,446,487 | |
Unrealized depreciation | (50,019,877) | |
Net unrealized appreciation (depreciation) | 33,426,610 | |
Capital loss carryforward | (39,598,744) | |
Cost for federal income tax purposes | $ 749,151,880 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally
may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the fund's Schedule of Investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $497,867,080 and $606,249,674, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 265,277 | $ 125 |
Class T | .25% | .25% | 1,301,860 | 8,192 |
Class B | .75% | .25% | 3,101,804 | 2,326,466 |
Class C | .75% | .25% | 1,433,229 | 105,800 |
$ 6,102,170 | $ 2,440,583 |
Health Care
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 61,017 | |
Class T | 39,283 | |
Class B* | 813,736 | |
Class C* | 8,645 | |
$ 922,681 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 439,635 | .41 |
Class T | 1,056,432 | .41 |
Class B | 1,269,262 | .41 |
Class C | 498,550 | .35 |
Institutional Class | 58,169 | .26 |
$ 3,322,048 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $90,391 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $13,807 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $224,341 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $50.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 1,326,830 | 1,203,411 | $ 25,583,854 | $ 20,267,921 |
Shares redeemed | (1,754,987) | (1,518,948) | (33,233,576) | (25,469,009) |
Net increase (decrease) | (428,157) | (315,537) | $ (7,649,722) | $ (5,201,088) |
Class T | ||||
Shares sold | 2,113,234 | 1,868,517 | $ 40,035,265 | $ 31,251,267 |
Shares redeemed | (3,681,338) | (4,033,622) | (68,961,682) | (66,788,799) |
Net increase (decrease) | (1,568,104) | (2,165,105) | $ (28,926,417) | $ (35,537,532) |
Class B | ||||
Shares sold | 1,131,221 | 1,399,903 | $ 20,552,323 | $ 22,699,963 |
Shares redeemed | (3,413,291) | (4,244,862) | (61,904,937) | (67,782,071) |
Net increase (decrease) | (2,282,070) | (2,844,959) | $ (41,352,614) | $ (45,082,108) |
Class C | ||||
Shares sold | 865,725 | 882,963 | $ 15,749,574 | $ 14,326,120 |
Shares redeemed | (2,225,887) | (2,401,732) | (40,266,820) | (38,459,329) |
Net increase (decrease) | (1,360,162) | (1,518,769) | $ (24,517,246) | $ (24,133,209) |
Institutional Class | ||||
Shares sold | 122,545 | 185,023 | $ 2,394,261 | $ 3,143,586 |
Shares redeemed | (324,350) | (1,078,595) | (6,296,427) | (18,368,889) |
Net increase (decrease) | (201,805) | (893,572) | $ (3,902,166) | $ (15,225,303) |
Health Care
Advisor Natural Resources Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 35.60% | 8.26% | 10.42% |
A The initial offering of Institutional Class shares took place on July 3, 1995. Institutional Class shares are sold to eligible investors without a sales load or 12b-1 fee. Returns prior to July 3, 1995 are those of Class T and reflect a 0.65% 12b-1 fee.
$10,000 Over Past 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Natural Resources Fund - Institutional Class on July 31, 1994. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Natural Resources Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Matt Friedman, who became Portfolio Manager of Fidelity ® Advisor Natural Resources Fund on June 1, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
Although it posted strong absolute performance during the past year and easily outdistanced the overall market's gain, the fund lagged its sector benchmark. For the 12 months ending July 31, 2004, the fund's Institutional Class shares returned 35.60%, significantly higher than the S&P 500, but lagging the Goldman Sachs ® Natural Resources Index, which gained 36.88% during the same time frame. Flat capital expenditures, strong refining margins and higher fuel prices helped place integrated oil companies, such as BP and ConocoPhillips, among the fund's top contributors to absolute performance and relative to the Goldman Sachs index. Oil services companies, which depend on increased capital spending by integrated oil companies, generally didn't fare as well, although oil refiner Schlumberger also saw its stock price rise as its international exploration efforts increased. Russian oil companies YUKOS and Sibneft detracted from performance - the former embroiled in a year-long tax dispute with the Kremlin. Gold producer Kinross also struggled as gold prices plummeted during the period.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Natural Resources Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,117.90 | $ 6.79 |
HypotheticalA | $ 1,000.00 | $ 1,018.51 | $ 6.49 |
Class T | |||
Actual | $ 1,000.00 | $ 1,116.90 | $ 7.84 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.50 |
Class B | |||
Actual | $ 1,000.00 | $ 1,114.00 | $ 10.62 |
HypotheticalA | $ 1,000.00 | $ 1,014.83 | $ 10.17 |
Class C | |||
Actual | $ 1,000.00 | $ 1,113.80 | $ 10.41 |
HypotheticalA | $ 1,000.00 | $ 1,015.03 | $ 9.97 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,119.80 | $ 4.80 |
HypotheticalA | $ 1,000.00 | $ 1,020.42 | $ 4.58 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.29% |
Class T | 1.49% |
Class B | 2.02% |
Class C | 1.98% |
Institutional Class | .91% |
Annual Report
Advisor Natural Resources Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
BP PLC sponsored ADR | 9.3 |
Exxon Mobil Corp. | 8.6 |
ChevronTexaco Corp. | 6.6 |
ConocoPhillips | 4.8 |
Schlumberger Ltd. (NY Shares) | 4.5 |
Newmont Mining Corp. | 3.8 |
Occidental Petroleum Corp. | 3.7 |
Alcoa, Inc. | 3.3 |
Halliburton Co. | 3.1 |
Total SA sponsored ADR | 2.7 |
50.4 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Oil & Gas | 51.9% | |
| Energy Equipment & Services | 22.9% | |
| Metals & Mining | 14.5% | |
| Paper & Forest Products | 5.8% | |
| Containers & Packaging | 1.4% | |
| All Others * | 3.5% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Natural Resources Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 96.8% | |||
Shares | Value (Note 1) | ||
CONTAINERS & PACKAGING - 1.4% | |||
Packaging Corp. of America | 63,300 | $ 1,478,688 | |
Smurfit-Stone Container Corp. (a) | 186,687 | 3,474,245 | |
TOTAL CONTAINERS & PACKAGING | 4,952,933 | ||
ENERGY EQUIPMENT & SERVICES - 22.9% | |||
Baker Hughes, Inc. | 136,750 | 5,511,025 | |
BJ Services Co. (a) | 89,200 | 4,429,672 | |
Cal Dive International, Inc. (a) | 13,700 | 424,700 | |
Cooper Cameron Corp. (a) | 12,600 | 643,734 | |
Diamond Offshore Drilling, Inc. | 52,300 | 1,278,212 | |
ENSCO International, Inc. | 99,000 | 2,980,890 | |
GlobalSantaFe Corp. | 109,766 | 3,007,588 | |
Grant Prideco, Inc. (a) | 130,800 | 2,470,812 | |
Grey Wolf, Inc. (a) | 105,200 | 472,348 | |
Halliburton Co. | 348,700 | 11,071,225 | |
Helmerich & Payne, Inc. | 200 | 5,064 | |
Maverick Tube Corp. (a) | 13,300 | 383,572 | |
Nabors Industries Ltd. (a) | 65,100 | 3,027,150 | |
National-Oilwell, Inc. (a) | 80,800 | 2,702,760 | |
Noble Corp. (a) | 39,000 | 1,510,080 | |
Pason Systems, Inc. | 17,900 | 457,179 | |
Patterson-UTI Energy, Inc. | 32,600 | 594,298 | |
Precision Drilling Corp. (a) | 27,200 | 1,350,536 | |
Pride International, Inc. (a) | 111,700 | 2,010,600 | |
Rowan Companies, Inc. (a) | 65,600 | 1,601,952 | |
Schlumberger Ltd. (NY Shares) | 246,300 | 15,842,016 | |
Smith International, Inc. (a) | 152,000 | 8,858,560 | |
Tidewater, Inc. | 14,700 | 446,145 | |
Transocean, Inc. (a) | 34,700 | 985,480 | |
Varco International, Inc. (a) | 69,300 | 1,674,981 | |
Weatherford International Ltd. (a) | 148,400 | 6,942,152 | |
Willbros Group, Inc. (a) | 42,600 | 626,646 | |
TOTAL ENERGY EQUIPMENT & SERVICES | 81,309,377 | ||
MACHINERY - 0.2% | |||
Bucyrus International, Inc. Class A | 26,600 | 638,400 | |
METALS & MINING - 14.5% | |||
Aber Diamond Corp. (a) | 9,300 | 279,437 | |
Alcan, Inc. | 134,900 | 5,336,123 | |
Alcoa, Inc. | 363,200 | 11,633,296 | |
Anglo American PLC ADR | 200 | 4,256 | |
Apex Silver Mines Ltd. (a) | 19,300 | 346,049 | |
CONSOL Energy, Inc. | 95,000 | 3,404,800 | |
Freeport-McMoRan Copper & Gold, | 103,097 | 3,592,930 | |
Goldcorp, Inc. | 132,300 | 1,524,797 | |
Inco Ltd. (a) | 31,600 | 1,047,905 | |
Kinross Gold Corp. (a) | 66,500 | 353,199 | |
Massey Energy Co. | 37,000 | 1,023,050 | |
Shares | Value (Note 1) | ||
Meridian Gold, Inc. (a) | 32,800 | $ 436,511 | |
Newmont Mining Corp. | 336,800 | 13,630,296 | |
Nucor Corp. | 10,000 | 836,500 | |
Peabody Energy Corp. | 66,100 | 3,713,498 | |
Phelps Dodge Corp. | 55,900 | 4,356,846 | |
TOTAL METALS & MINING | 51,519,493 | ||
OIL & GAS - 51.9% | |||
Amerada Hess Corp. | 31,900 | 2,658,865 | |
BP PLC sponsored ADR | 587,148 | 33,091,664 | |
Burlington Resources, Inc. | 153,500 | 5,859,095 | |
ChevronTexaco Corp. | 243,718 | 23,311,627 | |
ConocoPhillips | 217,499 | 17,132,396 | |
Cross Timbers Royalty Trust | 511 | 15,764 | |
EnCana Corp. | 185,732 | 8,229,915 | |
Encore Acquisition Co. (a) | 56,400 | 1,662,108 | |
EOG Resources, Inc. | 200 | 12,710 | |
Exxon Mobil Corp. | 659,560 | 30,537,628 | |
Forest Oil Corp. (a) | 31,500 | 891,135 | |
Frontier Oil Corp. | 41,900 | 898,755 | |
Kerr-McGee Corp. | 390 | 20,475 | |
Kinder Morgan, Inc. | 17,400 | 1,044,174 | |
Marathon Oil Corp. | 65,000 | 2,448,550 | |
Newfield Exploration Co. (a) | 9,200 | 543,444 | |
Noble Energy, Inc. | 200 | 11,062 | |
Occidental Petroleum Corp. | 266,600 | 13,135,382 | |
Patina Oil & Gas Corp. | 60,600 | 1,787,094 | |
Petro-Canada | 111,100 | 5,186,199 | |
Pioneer Natural Resources Co. | 100 | 3,605 | |
Pogo Producing Co. | 200 | 8,876 | |
Premcor, Inc. (a) | 63,900 | 2,294,010 | |
Quicksilver Resources, Inc. (a) | 114,100 | 3,613,547 | |
Range Resources Corp. | 108,700 | 1,820,725 | |
Royal Dutch Petroleum Co. (NY Shares) | 9,000 | 452,700 | |
Sibneft sponsored ADR | 700 | 17,661 | |
Sunoco, Inc. | 34,900 | 2,379,133 | |
Talisman Energy, Inc. | 281,600 | 6,683,829 | |
Total SA sponsored ADR | 99,500 | 9,686,325 | |
Ultra Petroleum Corp. (a) | 36,900 | 1,655,703 | |
Valero Energy Corp. | 78,400 | 5,873,728 | |
Vintage Petroleum, Inc. | 53,900 | 921,690 | |
YUKOS Corp. sponsored ADR | 18,983 | 298,982 | |
TOTAL OIL & GAS | 184,188,556 | ||
PAPER & FOREST PRODUCTS - 5.8% | |||
Bowater, Inc. | 200 | 7,460 | |
Canfor Corp. | 2,629 | 30,260 | |
Domtar, Inc. | 100 | 1,298 | |
Georgia-Pacific Corp. | 91,900 | 3,087,840 | |
International Paper Co. | 200,100 | 8,650,323 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
PAPER & FOREST PRODUCTS - CONTINUED | |||
MeadWestvaco Corp. | 71,137 | $ 2,124,151 | |
Weyerhaeuser Co. | 110,600 | 6,857,200 | |
TOTAL PAPER & FOREST PRODUCTS | 20,758,532 | ||
SPECIALTY RETAIL - 0.1% | |||
Boise Cascade Corp. | 11,100 | 357,975 | |
TOTAL COMMON STOCKS (Cost $267,323,399) | 343,725,266 | ||
Money Market Funds - 3.4% | |||
Fidelity Cash Central Fund, 1.33% (b) | 10,852,614 | 10,852,614 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 1,294,425 | 1,294,425 | |
TOTAL MONEY MARKET FUNDS (Cost $12,147,039) | 12,147,039 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $279,470,438) | 355,872,305 | ||
NET OTHER ASSETS - (0.2)% | (611,614) | ||
NET ASSETS - 100% | $ 355,260,691 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 72.6% |
United Kingdom | 9.3% |
Canada | 9.2% |
Netherlands Antilles | 4.5% |
France | 2.7% |
Cayman Islands | 1.3% |
Others (individually less than 1%) | 0.4% |
100.0% |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $9,417,000 all of which will expire on July 31, 2011. |
See accompanying notes which are an integral part of the financial statements.
Natural Resources
Advisor Natural Resources Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,278,212) (cost $279,470,438) - See accompanying schedule | $ 355,872,305 | |
Cash | 676 | |
Receivable for investments sold | 10,238,293 | |
Receivable for fund shares sold | 480,065 | |
Dividends receivable | 194,928 | |
Interest receivable | 13,767 | |
Prepaid expenses | 470 | |
Other affiliated receivables | 819 | |
Other receivables | 36,943 | |
Total assets | 366,838,266 | |
Liabilities | ||
Payable for investments purchased | $ 9,157,660 | |
Payable for fund shares redeemed | 609,326 | |
Accrued management fee | 167,266 | |
Distribution fees payable | 177,818 | |
Other affiliated payables | 100,898 | |
Other payables and accrued expenses | 70,182 | |
Collateral on securities loaned, at value | 1,294,425 | |
Total liabilities | 11,577,575 | |
Net Assets | $ 355,260,691 | |
Net Assets consist of: | ||
Paid in capital | $ 289,836,735 | |
Accumulated net investment loss | (82,794) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (10,895,112) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 76,401,862 | |
Net Assets | $ 355,260,691 | |
Calculation of Maximum | $ 29.12 | |
Maximum offering price per share (100/94.25 of $29.12) | $ 30.90 | |
Class T: | $ 29.52 | |
Maximum offering price per share (100/96.50 of $29.52) | $ 30.59 | |
Class B: | $ 28.54 | |
Class C: | $ 28.68 | |
Institutional Class: | $ 29.64 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 4,599,259 | |
Interest | 95,168 | |
Security lending | 41,881 | |
Total income | 4,736,308 | |
Expenses | ||
Management fee | $ 1,741,552 | |
Transfer agent fees | 967,493 | |
Distribution fees | 1,860,886 | |
Accounting and security lending fees | 120,302 | |
Non-interested trustees' compensation | 1,595 | |
Custodian fees and expenses | 15,133 | |
Registration fees | 71,036 | |
Audit | 38,898 | |
Legal | 1,014 | |
Miscellaneous | 48,544 | |
Total expenses before reductions | 4,866,453 | |
Expense reductions | (39,000) | 4,827,453 |
Net investment income (loss) | (91,145) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 23,851,679 | |
Foreign currency transactions | 7,472 | |
Total net realized gain (loss) | 23,859,151 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 63,349,385 | |
Assets and liabilities in foreign currencies | 301 | |
Total change in net unrealized appreciation (depreciation) | 63,349,686 | |
Net gain (loss) | 87,208,837 | |
Net increase (decrease) in net assets resulting from operations | $ 87,117,692 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Natural Resources Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (91,145) | $ 921,486 |
Net realized gain (loss) | 23,859,151 | (8,227,381) |
Change in net unrealized appreciation (depreciation) | 63,349,686 | 23,378,509 |
Net increase (decrease) in net assets resulting from operations | 87,117,692 | 16,072,614 |
Distributions to shareholders from net investment income | (681,969) | (648,436) |
Share transactions - net increase (decrease) | 16,197,507 | (47,333,823) |
Redemption fees | 51,991 | 26,765 |
Total increase (decrease) in net assets | 102,685,221 | (31,882,880) |
Net Assets | ||
Beginning of period | 252,575,470 | 284,458,350 |
End of period (including accumulated net investment loss of $82,794 and undistributed net investment income of $481,755, respectively) | $ 355,260,691 | $ 252,575,470 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.65 | $ 20.33 | $ 26.42 | $ 24.07 | $ 21.98 |
Income from Investment Operations | |||||
Net investment income (loss) C | .07 | .13 | .15 | .19 | .10 |
Net realized and unrealized gain (loss) | 7.50 | 1.30 | (4.36) | 2.34 | 2.06 |
Total from investment operations | 7.57 | 1.43 | (4.21) | 2.53 | 2.16 |
Distributions from net investment income | (.10) | (.11) | (.18) | (.19) | (.08) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | (.10) | (.11) | (1.88) | (.19) | (.08) |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 29.12 | $ 21.65 | $ 20.33 | $ 26.42 | $ 24.07 |
Total Return A, B | 35.08% | 7.07% | (16.92)% | 10.56% | 9.92% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.30% | 1.36% | 1.28% | 1.23% | 1.26% |
Expenses net of voluntary waivers, if any | 1.30% | 1.36% | 1.28% | 1.23% | 1.26% |
Expenses net of all reductions | 1.29% | 1.32% | 1.24% | 1.18% | 1.21% |
Net investment income (loss) | .28% | .63% | .64% | .69% | .43% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 44,315 | $ 21,798 | $ 21,993 | $ 21,849 | $ 10,381 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Natural Resources
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.97 | $ 20.61 | $ 26.73 | $ 24.35 | $ 22.21 |
Income from Investment Operations | |||||
Net investment income (loss) C | .03 | .10 | .11 | .14 | .06 |
Net realized and unrealized gain (loss) | 7.60 | 1.32 | (4.42) | 2.36 | 2.08 |
Total from investment operations | 7.63 | 1.42 | (4.31) | 2.50 | 2.14 |
Distributions from net investment income | (.08) | (.06) | (.11) | (.13) | (.01) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | (.08) | (.06) | (1.81) | (.13) | (.01) |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 29.52 | $ 21.97 | $ 20.61 | $ 26.73 | $ 24.35 |
Total Return A, B | 34.82% | 6.91% | (17.07)% | 10.32% | 9.69% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.48% | 1.50% | 1.45% | 1.41% | 1.41% |
Expenses net of voluntary waivers, if any | 1.48% | 1.50% | 1.45% | 1.41% | 1.41% |
Expenses net of all reductions | 1.47% | 1.47% | 1.41% | 1.37% | 1.37% |
Net investment income (loss) | .10% | .48% | .47% | .51% | .27% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 201,187 | $ 155,249 | $ 174,670 | $ 253,062 | $ 245,995 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.28 | $ 20.02 | $ 26.04 | $ 23.77 | $ 21.78 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.01) | (.02) | (.01) | (.06) |
Net realized and unrealized gain (loss) | 7.37 | 1.27 | (4.29) | 2.31 | 2.04 |
Total from investment operations | 7.26 | 1.26 | (4.31) | 2.30 | 1.98 |
Distributions from net investment income | - | - | (.01) | (.04) | - |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | - | - | (1.71) | (.04) | - |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 28.54 | $ 21.28 | $ 20.02 | $ 26.04 | $ 23.77 |
Total Return A, B | 34.12% | 6.29% | (17.51)% | 9.72% | 9.14% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.02% | 2.06% | 2.00% | 1.95% | 1.96% |
Expenses net of voluntary waivers, if any | 2.02% | 2.06% | 2.00% | 1.95% | 1.96% |
Expenses net of all reductions | 2.01% | 2.02% | 1.95% | 1.91% | 1.92% |
Net investment income (loss) | (.44)% | (.07)% | (.07)% | (.03)% | (.28)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 68,347 | $ 50,833 | $ 58,656 | $ 83,243 | $ 50,685 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.38 | $ 20.10 | $ 26.15 | $ 23.88 | $ 21.92 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.10) | - E | (.01) | -E | (.05) |
Net realized and unrealized gain (loss) | 7.40 | 1.28 | (4.32) | 2.32 | 2.04 |
Total from investment operations | 7.30 | 1.28 | (4.33) | 2.32 | 1.99 |
Distributions from net investment income | - | - | (.02) | (.06) | (.04) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | - | - | (1.72) | (.06) | (.04) |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 28.68 | $ 21.38 | $ 20.10 | $ 26.15 | $ 23.88 |
Total Return A, B | 34.14% | 6.37% | (17.52)% | 9.76% | 9.15% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.99% | 2.01% | 1.96% | 1.92% | 1.91% |
Expenses net of voluntary waivers, if any | 1.99% | 2.01% | 1.96% | 1.92% | 1.91% |
Expenses net of all reductions | 1.97% | 1.97% | 1.92% | 1.87% | 1.87% |
Net investment income (loss) | (.41)% | (.02)% | (.03)% | - | (.23)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 37,206 | $ 22,044 | $ 24,201 | $ 29,699 | $ 13,741 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokrage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.03 | $ 20.67 | $ 26.82 | $ 24.43 | $ 22.28 |
Income from Investment Operations | |||||
Net investment income (loss) B | .18 | .22 | .23 | .28 | .19 |
Net realized and unrealized gain (loss) | 7.62 | 1.32 | (4.43) | 2.37 | 2.07 |
Total from investment operations | 7.80 | 1.54 | (4.20) | 2.65 | 2.26 |
Distributions from net investment income | (.19) | (.18) | (.25) | (.27) | (.13) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | (.19) | (.18) | (1.95) | (.27) | (.13) |
Redemption fees added to paid in capital B | - D | - D | - D | .01 | .02 |
Net asset value, end of period | $ 29.64 | $ 22.03 | $ 20.67 | $ 26.82 | $ 24.43 |
Total Return A | 35.60% | 7.51% | (16.64)% | 10.90% | 10.31% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | .90% | .95% | .93% | .88% | .86% |
Expenses net of voluntary waivers, if any | .90% | .95% | .93% | .88% | .86% |
Expenses net of all reductions | .89% | .91% | .89% | .84% | .82% |
Net investment income (loss) | .68% | 1.04% | .99% | 1.04% | .82% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 4,206 | $ 2,652 | $ 4,938 | $ 6,960 | $ 3,470 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Natural Resources
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Natural Resources Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 77,085,929 | | |
Unrealized depreciation | (2,244,282) | |
Net unrealized appreciation (depreciation) | 74,841,647 | |
Capital loss carryforward | (9,416,999) | |
Cost for federal income tax purposes | $ 281,030,658 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 681,969 | $ 648,436 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $121,914,625 and $117,231,117, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 76,920 | $ 48 |
Class T | .25% | .25% | 897,022 | 11,122 |
Class B | .75% | .25% | 611,696 | 458,773 |
Class C | .75% | .25% | 275,248 | 52,636 |
$ 1,860,886 | $ 522,579 |
Natural Resources
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 43,377 | |
Class T | 21,176 | |
Class B* | 144,590 | |
Class C* | 4,128 | |
$ 213,271 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 116,089 | .38 |
Class T | 544,563 | .30 |
Class B | 213,786 | .35 |
Class C | 85,714 | .31 |
Institutional Class | 7,341 | .22 |
$ 967,493 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $95,144 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $1,710 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $39,000 for the period.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2004 | 2003 | |
From net investment income | ||
Class A | $ 99,224 | $ 122,749 |
Class T | 560,230 | 484,682 |
Institutional Class | 22,515 | 41,005 |
Total | $ 681,969 | $ 648,436 |
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 879,939 | 345,235 | $ 23,517,820 | $ 6,972,414 |
Reinvestment of distributions | 3,715 | 5,188 | 87,332 | 105,443 |
Shares redeemed | (368,575) | (425,490) | (9,483,597) | (8,681,223) |
Net increase (decrease) | 515,079 | (75,067) | $ 14,121,555 | $ (1,603,366) |
Class T | ||||
Shares sold | 1,119,622 | 554,155 | $ 29,514,297 | $ 11,575,295 |
Reinvestment of distributions | 22,018 | 21,538 | 522,475 | 445,500 |
Shares redeemed | (1,393,256) | (1,983,967) | (36,120,583) | (40,997,580) |
Net increase (decrease) | (251,616) | (1,408,274) | $ (6,083,811) | $ (28,976,785) |
Class B | ||||
Shares sold | 634,362 | 269,444 | $ 16,119,361 | $ 5,459,915 |
Shares redeemed | (627,931) | (811,138) | (16,075,114) | (16,148,876) |
Net increase (decrease) | 6,431 | (541,694) | $ 44,247 | $ (10,688,961) |
Class C | ||||
Shares sold | 581,963 | 187,479 | $ 15,409,819 | $ 3,795,065 |
Shares redeemed | (315,706) | (360,375) | (7,916,650) | (7,275,416) |
Net increase (decrease) | 266,257 | (172,896) | $ 7,493,169 | $ (3,480,351) |
Institutional Class | ||||
Shares sold | 62,791 | 34,404 | $ 1,688,343 | $ 712,141 |
Reinvestment of distributions | 613 | 1,446 | 14,771 | 29,777 |
Shares redeemed | (41,908) | (154,352) | (1,080,767) | (3,326,278) |
Net increase (decrease) | 21,496 | (118,502) | $ 622,347 | $ (2,584,360) |
Natural Resources
Advisor Technology Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of | |
Institutional Class | 5.22% | -8.74% | 7.61% |
A From September 3, 1996.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Technology Fund - Institutional Class on September 3, 1996, when the fund started. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Technology Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Sonu Kalra, Portfolio Manager of Fidelity® Advisor Technology Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months ending July 31, 2004, the fund's Institutional Class shares returned 5.22%, trailing both the 9.15% return of the Goldman Sachs ® Technology Index and the Standard & Poor's 500 Index. Versus the Goldman Sachs index, the fund was particularly hurt by an overweighting and unfavorable stock picking in semiconductors. Agere Systems, a maker of chips for handsets and computer disk drives, was the fund's largest detractor in absolute terms and relative to its sector index. Also detracting from absolute performance was the fund's second-largest holding, Intel, which encountered some problems migrating to its new 90-nanometer semiconductor production technology. On the other hand, my picks in computer hardware and an overweighting in wireless telecommunication equipment aided performance compared with the Goldman Sachs index. Wireless handset maker Motorola was the fund's largest contributor, as a number of the company's handset products logged healthy sales during the period. Another contributor was wireless infrastructure stock LM Ericsson, which benefited from increasing competition among wireless service providers to improve their network quality.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 840.60 | $ 6.68 |
Hypothetical A | $ 1,000.00 | $ 1,017.65 | $ 7.35 |
Class T | |||
Actual | $ 1,000.00 | $ 840.00 | $ 7.55 |
Hypothetical A | $ 1,000.00 | $ 1,016.69 | $ 8.31 |
Class B | |||
Actual | $ 1,000.00 | $ 837.50 | $ 10.14 |
Hypothetical A | $ 1,000.00 | $ 1,013.82 | $ 11.18 |
Class C | |||
Actual | $ 1,000.00 | $ 838.20 | $ 9.83 |
Hypothetical A | $ 1,000.00 | $ 1,014.18 | $ 10.82 |
Institutional | |||
Actual | $ 1,000.00 | $ 843.30 | $ 4.40 |
Hypothetical A | $ 1,000.00 | $ 1,020.17 | $ 4.83 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.46% |
Class T | 1.65% |
Class B | 2.22% |
Class C | 2.15% |
Institutional | .96% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Microsoft Corp. | 10.3 |
Intel Corp. | 9.1 |
Cisco Systems, Inc. | 8.8 |
Dell, Inc. | 7.4 |
EMC Corp. | 4.7 |
Micron Technology, Inc. | 2.5 |
National Semiconductor Corp. | 2.5 |
Analog Devices, Inc. | 2.2 |
Applied Materials, Inc. | 2.1 |
QUALCOMM, Inc. | 2.0 |
51.6 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Semiconductors & Semiconductor Equipment | 32.2% | |
| Communications Equipment | 20.1% | |
| Computers & Peripherals | 18.8% | |
| Software | 18.5% | |
| Internet Software & Services | 3.2% | |
| All Others * | 7.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 98.2% | |||
Shares | Value (Note 1) | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Monster Worldwide, Inc. (a) | 147,600 | $ 3,260,484 | |
COMMUNICATIONS EQUIPMENT - 20.1% | |||
ADC Telecommunications, Inc. (a) | 1,004,500 | 2,410,800 | |
Alcatel SA sponsored ADR (a) | 811,500 | 10,500,810 | |
Avaya, Inc. (a) | 718,500 | 10,526,025 | |
Brocade Communications Systems, Inc. (a) | 140,800 | 678,656 | |
CIENA Corp. (a) | 1,040,500 | 2,934,210 | |
Cisco Systems, Inc. (a) | 4,119,700 | 85,936,942 | |
Comverse Technology, Inc. (a) | 237,000 | 4,043,220 | |
Corning, Inc. (a) | 385,000 | 4,758,600 | |
Emulex Corp. (a) | 330,500 | 3,566,095 | |
Enterasys Networks, Inc. (a) | 966,100 | 1,623,048 | |
Extreme Networks, Inc. (a) | 453,700 | 2,459,054 | |
F5 Networks, Inc. (a) | 57,100 | 1,495,449 | |
Foundry Networks, Inc. (a) | 120,500 | 1,236,330 | |
ITF Optical Technologies, Inc. Series A (d) | 34,084 | 42,605 | |
Juniper Networks, Inc. (a) | 85,646 | 1,966,432 | |
Marconi Corp. PLC (a) | 434,833 | 4,949,079 | |
McDATA Corp. Class A (a) | 631,000 | 3,249,650 | |
Motorola, Inc. | 782,300 | 12,462,039 | |
Nortel Networks Corp. (a) | 236,300 | 864,859 | |
Oplink Communications, Inc. (a) | 459,100 | 821,789 | |
OZ Optics Ltd. unit (d) | 68,000 | 1,003,000 | |
Plantronics, Inc. (a) | 25,200 | 974,736 | |
Powerwave Technologies, Inc. (a) | 411,300 | 2,278,602 | |
QLogic Corp. (a) | 64,900 | 1,586,805 | |
QUALCOMM, Inc. | 290,600 | 20,074,648 | |
Research in Motion Ltd. (a) | 61,800 | 3,821,674 | |
Scientific-Atlanta, Inc. | 180,400 | 5,547,300 | |
SiRF Technology Holdings, Inc. | 700 | 7,833 | |
Sonus Networks, Inc. (a) | 43,500 | 221,415 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 128,300 | 3,426,893 | |
WJ Communications, Inc. (a) | 604,100 | 1,576,701 | |
TOTAL COMMUNICATIONS EQUIPMENT | 197,045,299 | ||
COMPUTERS & PERIPHERALS - 18.8% | |||
Apple Computer, Inc. (a) | 384,000 | 12,418,560 | |
Compal Electronics, Inc. | 1,804,000 | 1,799,223 | |
Dell, Inc. (a) | 2,057,100 | 72,965,337 | |
Dot Hill Systems Corp. (a) | 493,000 | 4,091,900 | |
EMC Corp. (a) | 4,190,072 | 45,965,090 | |
Gateway, Inc. (a) | 219,700 | 988,650 | |
Hutchinson Technology, Inc. (a) | 18,500 | 411,995 | |
International Business Machines Corp. | 164,700 | 14,340,429 | |
Lexmark International, Inc. Class A (a) | 81,600 | 7,221,600 | |
Network Appliance, Inc. (a) | 108,900 | 2,102,859 | |
PalmOne, Inc. (a) | 139,868 | 5,625,491 | |
Quanta Computer, Inc. | 1,738,237 | 2,812,681 | |
Storage Technology Corp. (a) | 81,600 | 2,035,920 | |
Sun Microsystems, Inc. (a) | 1,613,000 | 6,371,350 | |
Shares | Value (Note 1) | ||
Synaptics, Inc. (a) | 78,000 | $ 1,153,620 | |
Western Digital Corp. (a) | 536,300 | 3,759,463 | |
TOTAL COMPUTERS & PERIPHERALS | 184,064,168 | ||
ELECTRICAL EQUIPMENT - 0.2% | |||
BYD Co. Ltd. (H Shares) | 623,000 | 1,781,152 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.6% | |||
Arrow Electronics, Inc. (a) | 104,200 | 2,465,372 | |
Avnet, Inc. (a) | 119,500 | 2,320,690 | |
Benchmark Electronics, Inc. (a) | 81,400 | 2,326,412 | |
Flextronics International Ltd. (a) | 216,300 | 2,718,891 | |
Hon Hai Precision Industries Co. Ltd. | 1,038,665 | 3,743,350 | |
Phoenix Precision Technology Corp. (a) | 787 | 364 | |
Photon Dynamics, Inc. (a) | 58,600 | 1,610,914 | |
Symbol Technologies, Inc. | 350,500 | 4,588,045 | |
Vishay Intertechnology, Inc. (a) | 267,300 | 4,143,150 | |
Xyratex Ltd. | 120,000 | 1,098,000 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 25,015,188 | ||
HOUSEHOLD DURABLES - 0.4% | |||
Harman International Industries, Inc. | 22,300 | 1,911,779 | |
ReignCom Ltd. | 24,592 | 435,340 | |
Sony Corp. sponsored ADR | 39,200 | 1,358,280 | |
TOTAL HOUSEHOLD DURABLES | 3,705,399 | ||
INTERNET & CATALOG RETAIL - 0.6% | |||
Amazon.com, Inc. (a) | 92,500 | 3,600,100 | |
eBay, Inc. (a) | 22,200 | 1,738,926 | |
Netflix, Inc. (a) | 48,500 | 994,250 | |
TOTAL INTERNET & CATALOG RETAIL | 6,333,276 | ||
INTERNET SOFTWARE & SERVICES - 3.2% | |||
Akamai Technologies, Inc. (a) | 148,700 | 2,220,091 | |
EarthLink, Inc. (a) | 212,900 | 2,101,323 | |
Openwave Systems, Inc. (a) | 205,466 | 2,336,148 | |
United Online, Inc. (a) | 306,650 | 4,783,740 | |
Yahoo!, Inc. (a) | 631,800 | 19,459,440 | |
TOTAL INTERNET SOFTWARE & SERVICES | 30,900,742 | ||
IT SERVICES - 0.5% | |||
Ceridian Corp. (a) | 118,200 | 2,127,600 | |
Infosys Technologies Ltd. sponsored ADR | 46,200 | 2,321,550 | |
Kanbay International, Inc. | 6,500 | 100,815 | |
TOTAL IT SERVICES | 4,549,965 | ||
OFFICE ELECTRONICS - 0.2% | |||
Canon, Inc. | 45,000 | 2,205,000 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 32.2% | |||
Altera Corp. (a) | 217,400 | 4,526,268 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Analog Devices, Inc. | 548,600 | $ 21,779,420 | |
Applied Materials, Inc. (a) | 1,203,700 | 20,426,789 | |
ATI Technologies, Inc. (a) | 67,200 | 1,074,290 | |
ATMI, Inc. (a) | 171,700 | 3,495,812 | |
Axcelis Technologies, Inc. (a) | 94,600 | 882,618 | |
Broadcom Corp. Class A (a) | 68,500 | 2,422,160 | |
Conexant Systems, Inc. (a) | 1,332,742 | 2,119,060 | |
Cypress Semiconductor Corp. (a) | 321,200 | 3,642,408 | |
Fairchild Semiconductor International, Inc. (a) | 342,600 | 5,032,794 | |
FormFactor, Inc. | 105,500 | 2,118,440 | |
Freescale Semiconductor, Inc. Class A | 189,900 | 2,668,095 | |
Infineon Technologies AG sponsored ADR (a) | 209,600 | 2,297,216 | |
Integrated Circuit Systems, Inc. (a) | 676,100 | 16,172,312 | |
Integrated Device Technology, Inc. (a) | 459,700 | 5,254,371 | |
Intel Corp. | 3,657,400 | 89,167,412 | |
International Rectifier Corp. (a) | 122,800 | 4,813,760 | |
Intersil Corp. Class A | 343,500 | 6,310,095 | |
KLA-Tencor Corp. (a) | 413,000 | 17,019,730 | |
Lam Research Corp. (a) | 90,200 | 2,151,270 | |
Lattice Semiconductor Corp. (a) | 312,400 | 1,530,760 | |
Linear Technology Corp. | 37,100 | 1,450,610 | |
LSI Logic Corp. (a) | 74,900 | 381,241 | |
Micron Technology, Inc. (a) | 1,839,300 | 24,885,729 | |
National Semiconductor Corp. (a) | 1,438,700 | 24,673,705 | |
Omnivision Technologies, Inc. (a) | 237,500 | 2,797,750 | |
ON Semiconductor Corp. (a) | 471,800 | 1,887,200 | |
PMC-Sierra, Inc. (a) | 69,800 | 829,224 | |
Samsung Electronics Co. Ltd. | 12,341 | 4,411,655 | |
Silicon Image, Inc. (a) | 294,000 | 3,525,060 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 725,591 | 915,794 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 920,069 | 6,550,891 | |
Teradyne, Inc. (a) | 662,600 | 11,330,460 | |
Texas Instruments, Inc. | 234,700 | 5,006,151 | |
Tower Semicondutor Ltd. (a) | 90,500 | 352,950 | |
United Microelectronics Corp. sponsored ADR (a) | 1,345,627 | 4,978,820 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 32,700 | 976,749 | |
Xilinx, Inc. | 206,000 | 6,062,580 | |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 315,921,649 | ||
SOFTWARE - 18.5% | |||
Amdocs Ltd. (a) | 210,100 | 4,559,170 | |
Cadence Design Systems, Inc. (a) | 474,700 | 6,394,209 | |
Lawson Software, Inc. (a) | 149,200 | 1,059,320 | |
Microsoft Corp. | 3,534,300 | 100,586,179 | |
Oracle Corp. (a) | 1,801,800 | 18,936,918 | |
Quest Software, Inc. (a) | 675,600 | 8,147,736 | |
Shares | Value (Note 1) | ||
RADWARE Ltd. (a) | 83,400 | $ 1,491,192 | |
Red Hat, Inc. (a) | 609,100 | 10,427,792 | |
Salesforce.com, Inc. | 700 | 9,107 | |
SAP AG sponsored ADR | 62,200 | 2,488,622 | |
Siebel Systems, Inc. (a) | 469,700 | 3,785,782 | |
Symantec Corp. (a) | 99,500 | 4,652,620 | |
Synopsys, Inc. (a) | 257,800 | 6,519,762 | |
THQ, Inc. (a) | 104,500 | 1,990,725 | |
VERITAS Software Corp. (a) | 523,900 | 9,985,534 | |
TOTAL SOFTWARE | 181,034,668 | ||
SPECIALTY RETAIL - 0.2% | |||
Best Buy Co., Inc. | 47,500 | 2,287,600 | |
WIRELESS TELECOMMUNICATION SERVICES - 0.4% | |||
American Tower Corp. Class A (a) | 88,700 | 1,282,602 | |
Nextel Communications, Inc. Class A (a) | 95,700 | 2,178,132 | |
TOTAL WIRELESS TELECOMMUNICATION SERVICES | 3,460,734 | ||
TOTAL COMMON STOCKS (Cost $1,004,951,202) | 961,565,324 | ||
Convertible Preferred Stocks - 0.0% | |||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
Chorum Technologies, Inc. Series E (a)(d) | 17,200 | 7,224 | |
Procket Networks, Inc. Series C (d) | 276,000 | 3 | |
TOTAL COMMUNICATIONS EQUIPMENT | 7,227 | ||
SOFTWARE - 0.0% | |||
Monterey Design Systems Series E (d) | 342,000 | 171,000 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $4,786,591) | 178,227 | ||
Money Market Funds - 2.9% | |||
Fidelity Cash Central Fund, 1.33% (b) | 18,822,396 | 18,822,396 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 9,361,175 | 9,361,175 | |
TOTAL MONEY MARKET FUNDS (Cost $28,183,571) | 28,183,571 | ||
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $1,037,921,364) | 989,927,122 | ||
NET OTHER ASSETS - (1.1)% | (10,301,811) | ||
NET ASSETS - 100% | $ 979,625,311 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
(d) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $1,223,832 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Chorum Technologies, Inc. Series E | 9/19/00 | $ 296,528 |
ITF Optical Technologies, Inc. Series A | 10/11/00 | $ 1,711,500 |
Monterey Design Systems Series E | 11/1/00 | $ 1,795,500 |
OZ Optics Ltd. unit | 8/18/00 | $ 1,003,680 |
Procket Networks, Inc. Series C | 11/15/00 - 12/26/00 | $ 2,725,776 |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $1,724,899,000 of which $1,225,092,000 and $499,807,000 will expire on July 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,904,160) (cost $1,037,921,364) - See accompanying schedule | $ 989,927,122 | |
Foreign currency held at value | 2,363,062 | |
Receivable for investments sold | 7,010,999 | |
Receivable for fund shares sold | 421,748 | |
Dividends receivable | 140,002 | |
Interest receivable | 11,555 | |
Prepaid expenses | 1,983 | |
Other affiliated receivables | 1,179 | |
Other receivables | 164,394 | |
Total assets | 1,000,042,044 | |
Liabilities | ||
Payable for investments purchased | $ 5,478,287 | |
Payable for fund shares redeemed | 3,671,594 | |
Accrued management fee | 480,078 | |
Distribution fees payable | 592,617 | |
Other affiliated payables | 484,519 | |
Other payables and accrued expenses | 348,463 | |
Collateral on securities loaned, at value | 9,361,175 | |
Total liabilities | 20,416,733 | |
Net Assets | $ 979,625,311 | |
Net Assets consist of: | ||
Paid in capital | $ 2,740,365,048 | |
Accumulated net investment loss | (843) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,712,721,019) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (48,017,875) | |
Net Assets | $ 979,625,311 | |
Calculation of Maximum | $ 13.98 | |
Maximum offering price per share (100/94.25 of $13.98) | $ 14.83 | |
Class T: | $ 13.76 | |
Maximum offering price per share (100/96.50 of $13.76) | $ 14.26 | |
Class B: | $ 13.25 | |
Class C: | $ 13.31 | |
Institutional: | $ 14.32 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 2,757,608 | |
Interest | 146,034 | |
Security lending | 127,089 | |
3,030,731 | ||
Less foreign taxes withheld | (188,972) | |
Total income | 2,841,759 | |
Expenses | ||
Management fee | $ 6,644,571 | |
Transfer agent fees | 5,805,763 | |
Distribution fees | 8,245,958 | |
Accounting and security lending fees | 353,493 | |
Non-interested trustees' compensation | 6,380 | |
Custodian fees and expenses | 72,278 | |
Registration fees | 76,192 | |
Audit | 44,891 | |
Legal | 4,247 | |
Miscellaneous | 365,028 | |
Total expenses before reductions | 21,618,801 | |
Expense reductions | (1,076,398) | 20,542,403 |
Net investment income (loss) | (17,700,644) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 172,501,785 | |
Foreign currency transactions | (15,278) | |
Total net realized gain (loss) | 172,486,507 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (101,929,036) | |
Assets and liabilities in foreign currencies | (22,485) | |
Total change in net unrealized appreciation (depreciation) | (101,951,521) | |
Net gain (loss) | 70,534,986 | |
Net increase (decrease) in net assets resulting from operations | $ 52,834,342 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Technology Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (17,700,644) | $ (12,623,914) |
Net realized gain (loss) | 172,486,507 | (113,015,425) |
Change in net unrealized appreciation (depreciation) | (101,951,521) | 376,634,726 |
Net increase (decrease) in net assets resulting from operations | 52,834,342 | 250,995,387 |
Share transactions - net increase (decrease) | (107,215,077) | (93,098,351) |
Redemption fees | 148,216 | 149,242 |
Total increase (decrease) in net assets | (54,232,519) | 158,046,278 |
Net Assets | ||
Beginning of period | 1,033,857,830 | 875,811,552 |
End of period (including accumulated net investment loss of $843 and $0, respectively) | $ 979,625,311 | $ 1,033,857,830 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.36 | $ 10.03 | $ 17.76 | $ 36.23 | $ 24.95 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.17) | (.11) | (.15) | (.17) | (.19) |
Net realized and unrealized gain (loss) | .79 | 3.44 | (7.58) | (16.67) | 13.04 |
Total from investment operations | .62 | 3.33 | (7.73) | (16.84) | 12.85 |
Distributions from net realized gain | - | - | - | (1.63) | (1.58) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.98 | $ 13.36 | $ 10.03 | $ 17.76 | $ 36.23 |
Total Return A, B | 4.64% | 33.20% | (43.52)% | (48.83)% | 53.76% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.44% | 1.70% | 1.53% | 1.23% | 1.16% |
Expenses net of voluntary waivers, if any | 1.44% | 1.59% | 1.51% | 1.23% | 1.16% |
Expenses net of all reductions | 1.35% | 1.38% | 1.43% | 1.21% | 1.15% |
Net investment income (loss) | (1.10)% | (1.03)% | (1.07)% | (.68)% | (.55)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 123,389 | $ 123,604 | $ 101,649 | $ 211,429 | $ 388,756 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.17 | $ 9.91 | $ 17.59 | $ 35.95 | $ 24.76 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.19) | (.14) | (.18) | (.22) | (.27) |
Net realized and unrealized gain (loss) | .78 | 3.40 | (7.50) | (16.55) | 12.96 |
Total from investment operations | .59 | 3.26 | (7.68) | (16.77) | 12.69 |
Distributions from net realized gain | - | - | - | (1.59) | (1.51) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.76 | $ 13.17 | $ 9.91 | $ 17.59 | $ 35.95 |
Total Return A, B | 4.48% | 32.90% | (43.66)% | (48.96)% | 53.41% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.62% | 1.85% | 1.70% | 1.43% | 1.38% |
Expenses net of voluntary waivers, if any | 1.62% | 1.83% | 1.70% | 1.43% | 1.38% |
Expenses net of all reductions | 1.53% | 1.63% | 1.62% | 1.41% | 1.37% |
Net investment income (loss) | (1.28)% | (1.28)% | (1.26)% | (.88)% | (.77)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 363,399 | $ 367,257 | $ 302,657 | $ 645,015 | $ 1,286,376 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 12.76 | $ 9.64 | $ 17.21 | $ 35.33 | $ 24.44 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.27) | (.17) | (.25) | (.35) | (.45) |
Net realized and unrealized gain (loss) | .76 | 3.29 | (7.32) | (16.27) | 12.78 |
Total from investment operations | .49 | 3.12 | (7.57) | (16.62) | 12.33 |
Distributions from net realized gain | - | - | - | (1.50) | (1.45) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.25 | $ 12.76 | $ 9.64 | $ 17.21 | $ 35.33 |
Total Return A, B | 3.84% | 32.37% | (43.99)% | (49.28)% | 52.57% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.21% | 2.38% | 2.28% | 1.98% | 1.91% |
Expenses net of voluntary waivers, if any | 2.21% | 2.25% | 2.25% | 1.98% | 1.91% |
Expenses net of all reductions | 2.12% | 2.05% | 2.18% | 1.96% | 1.91% |
Net investment income (loss) | (1.87)% | (1.69)% | (1.81)% | (1.43)% | (1.30)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 355,927 | $ 391,832 | $ 337,976 | $ 729,518 | $ 1,372,523 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 12.80 | $ 9.67 | $ 17.25 | $ 35.39 | $ 24.49 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.26) | (.17) | (.24) | (.33) | (.44) |
Net realized and unrealized gain (loss) | .77 | 3.30 | (7.34) | (16.30) | 12.80 |
Total from investment operations | .51 | 3.13 | (7.58) | (16.63) | 12.36 |
Distributions from net realized gain | - | - | - | (1.51) | (1.47) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.31 | $ 12.80 | $ 9.67 | $ 17.25 | $ 35.39 |
Total Return A, B | 3.98% | 32.37% | (43.94)% | (49.24)% | 52.60% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.13% | 2.28% | 2.18% | 1.94% | 1.89% |
Expenses net of voluntary waivers, if any | 2.13% | 2.25% | 2.18% | 1.94% | 1.89% |
Expenses net of all reductions | 2.04% | 2.05% | 2.11% | 1.91% | 1.89% |
Net investment income (loss) | (1.79)% | (1.69)% | (1.74)% | (1.38)% | (1.28)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 125,926 | $ 139,654 | $ 123,034 | $ 269,563 | $ 472,462 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.61 | $ 10.15 | $ 17.90 | $ 36.43 | $ 25.05 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.09) | (.05) | (.08) | (.08) | (.09) |
Net realized and unrealized gain (loss) | .80 | 3.51 | (7.67) | (16.78) | 13.08 |
Total from investment operations | .71 | 3.46 | (7.75) | (16.86) | 12.99 |
Distributions from net realized gain | - | - | - | (1.67) | (1.62) |
Redemption fees added to paid in capital B | - D | - D | - D | - D | .01 |
Net asset value, end of period | $ 14.32 | $ 13.61 | $ 10.15 | $ 17.90 | $ 36.43 |
Total Return A | 5.22% | 34.09% | (43.30)% | (48.67)% | 54.16% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | .93% | .99% | 1.00% | .86% | .87% |
Expenses net of voluntary waivers, if any | .93% | .99% | 1.00% | .86% | .87% |
Expenses net of all reductions | .84% | .79% | .92% | .84% | .87% |
Net investment income (loss) | (.59)% | (.43)% | (.56)% | (.31)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 10,984 | $ 11,511 | $ 10,495 | $ 24,084 | $ 63,957 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Technology
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Technology Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 96,960,320 | |
Unrealized depreciation | (132,800,206) | |
Net unrealized appreciation (depreciation) | (35,839,886) | |
Capital loss carryforward | (1,724,899,006) | |
Cost for federal income tax purposes | $ 1,025,767,008 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the fund's Schedule of Investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $1,176,959,390 and $1,288,618,867, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 350,489 | $ 829 |
Class T | .25% | .25% | 2,098,398 | 520 |
Class B | .75% | .25% | 4,273,239 | 3,205,356 |
Class C | .75% | .25% | 1,523,832 | 133,584 |
$ 8,245,958 | $ 3,340,289 |
Technology
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 64,357 | |
Class T | 54,391 | |
Class B* | 1,047,655 | |
Class C* | 21,340 | |
$ 1,187,743 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 747,300 | .53 |
Class T | 1,937,409 | .46 |
Class B | 2,363,931 | .55 |
Class C | 721,604 | .47 |
Institutional Class | 35,519 | .28 |
$ 5,805,763 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $141,803 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $432,300 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned
Annual Report
Notes to Financial Statements - continued
6. Security Lending - continued
because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $1,075,980 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $418.
8. Other Information.
At the end of the period, one otherwise unaffiliated shareholder was the owner of record of 12% of the total outstanding shares of the fund.
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 1,949,432 | 1,802,585 | $ 30,174,313 | $ 19,778,045 |
Shares redeemed | (2,376,787) | (2,687,789) | (36,367,643) | (28,008,624) |
Net increase (decrease) | (427,355) | (885,204) | $ (6,193,330) | $ (8,230,579) |
Class T | ||||
Shares sold | 6,284,281 | 6,499,652 | $ 95,617,905 | $ 69,995,024 |
Shares redeemed | (7,757,438) | (9,153,206) | (117,704,082) | (94,351,747) |
Net increase (decrease) | (1,473,157) | (2,653,554) | $ (22,086,177) | $ (24,356,723) |
Class B | ||||
Shares sold | 1,611,188 | 2,551,777 | $ 23,596,499 | $ 26,996,352 |
Shares redeemed | (5,460,468) | (6,904,437) | (80,101,949) | (68,882,635) |
Net increase (decrease) | (3,849,280) | (4,352,660) | $ (56,505,450) | $ (41,886,283) |
Class C | ||||
Shares sold | 1,207,664 | 1,584,472 | $ 17,854,754 | $ 17,036,571 |
Shares redeemed | (2,652,498) | (3,396,214) | (39,082,309) | (33,826,918) |
Net increase (decrease) | (1,444,834) | (1,811,742) | $ (21,227,555) | $ (16,790,347) |
Institutional Class | ||||
Shares sold | 171,199 | 212,132 | $ 2,734,772 | $ 2,356,185 |
Shares redeemed | (249,741) | (400,084) | (3,937,337) | (4,190,604) |
Net increase (decrease) | (78,542) | (187,952) | $ (1,202,565) | $ (1,834,419) |
Technology
Advisor Telecommunications & Utilities Growth Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of | |
Institutional Class | 18.14% | -7.42% | 6.85% |
A From September 3, 1996.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Telecommunications & Utilities Growth Fund - Institutional Class on September 3, 1996, when the fund started. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Telecommunications & Utilities Growth Fund - Institutional Class
Management's Discussion of Fund Performance
Comments from Brian Younger, Portfolio Manager of Fidelity® Advisor Telecommunications & Utilities Growth Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months that ended July 31, 2004, the fund's Institutional Class shares returned 18.14%. These returns were in line with the Goldman Sachs® Utilities Index, which gained 18.08%, and ahead of the S&P 500. Utilities benefited as investors grew more risk averse and moved into safer-haven sectors. Strong stock selection within electric utilities and wireline telecommunications aided relative performance, while disappointing stock picks in broadcasting and wireless telecom hurt. The fund's best performers were TXU, a regulated utility with better-than-expected financial results, and AES, an electric wholesaler benefiting from debt reductions and turnarounds in its Latin American markets. Regional Bell Operating Companies such as Verizon Communications were strong absolute performers, but modest relative detractors because of the fund's overweighting in them early in the period when they were not performing as well. The fund suffered from investing in EchoStar Communications, a satellite television stock that fell as investors worried about increased cable competition. The fund also was hurt by not owning enough of AT&T Wireless, which rallied strongly after Cingular's acquisition announcement.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,040.40 | $ 7.61 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 1,039.70 | $ 8.87 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,036.80 | $ 11.39 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 1,037.70 | $ 10.89 |
HypotheticalA | $ 1,000.00 | $ 1,014.18 | $ 10.82 |
Institutional | |||
Actual | $ 1,000.00 | $ 1,042.70 | $ 5.43 |
HypotheticalA | $ 1,000.00 | $ 1,019.61 | $ 5.39 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.15% |
Institutional | 1.07% |
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Verizon Communications, Inc. | 10.9 |
SBC Communications, Inc. | 10.3 |
BellSouth Corp. | 9.5 |
TXU Corp. | 7.1 |
Nextel Communications, Inc. Class A | 6.3 |
EchoStar Communications Corp. Class A | 5.5 |
AT&T Wireless Services, Inc. | 4.9 |
Citizens Communications Co. | 4.7 |
FirstEnergy Corp. | 4.5 |
Dominion Resources, Inc. | 4.0 |
67.7 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Diversified Telecommunication Services | 39.5% | |
| Electric Utilities | 23.4% | |
| Wireless Telecommunication Services | 19.5% | |
| Media | 7.9% | |
| Multi-Utilities & Unregulated Power | 7.6% | |
| All Others* | 2.1% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value (Note 1) | ||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
SiRF Technology Holdings, Inc. | 200 | $ 2,238 | |
CONSTRUCTION & ENGINEERING - 0.6% | |||
Dycom Industries, Inc. (a) | 41,200 | 1,109,928 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 39.5% | |||
ALLTEL Corp. | 20,700 | 1,076,400 | |
BellSouth Corp. | 689,300 | 18,673,137 | |
Citizens Communications Co. (a) | 645,300 | 9,292,320 | |
Covad Communications Group, Inc. (a) | 400 | 760 | |
Qwest Communications International, Inc. (a) | 1,149,000 | 4,469,610 | |
SBC Communications, Inc. | 801,600 | 20,312,544 | |
Sprint Corp. - FON Group | 135,200 | 2,525,536 | |
Verizon Communications, Inc. | 558,000 | 21,505,320 | |
TOTAL DIVERSIFIED TELECOMMUNICATION | 77,855,627 | ||
ELECTRIC UTILITIES - 23.4% | |||
Black Hills Corp. | 6,500 | 179,530 | |
Entergy Corp. | 89,800 | 5,163,500 | |
Exelon Corp. | 40,800 | 1,423,920 | |
FirstEnergy Corp. | 229,500 | 8,973,450 | |
PG&E Corp. (a) | 266,400 | 7,603,056 | |
PPL Corp. | 75,300 | 3,490,155 | |
TXU Corp. | 353,500 | 14,019,810 | |
Westar Energy, Inc. | 14,700 | 296,499 | |
Wisconsin Energy Corp. | 159,600 | 5,131,140 | |
TOTAL ELECTRIC UTILITIES | 46,281,060 | ||
GAS UTILITIES - 0.7% | |||
KeySpan Corp. | 33,900 | 1,220,061 | |
UGI Corp. | 6,200 | 200,818 | |
TOTAL GAS UTILITIES | 1,420,879 | ||
INDUSTRIAL CONGLOMERATES - 0.1% | |||
Allete, Inc. | 5,900 | 163,548 | |
MEDIA - 7.9% | |||
EchoStar Communications Corp. | 393,800 | 10,916,136 | |
The DIRECTV Group, Inc. (a) | 268,924 | 4,359,258 | |
XM Satellite Radio Holdings, Inc. | 13,900 | 366,821 | |
TOTAL MEDIA | 15,642,215 | ||
MULTI-UTILITIES & UNREGULATED POWER - 7.6% | |||
AES Corp. (a) | 81,700 | 788,405 | |
Constellation Energy Group, Inc. | 65,400 | 2,521,170 | |
Dominion Resources, Inc. | 125,800 | 7,983,268 | |
Energen Corp. | 3,500 | 165,725 | |
Shares | Value (Note 1) | ||
Equitable Resources, Inc. | 12,000 | $ 615,360 | |
SCANA Corp. | 36,900 | 1,351,278 | |
Sierra Pacific Resources (a) | 203,400 | 1,671,948 | |
TOTAL MULTI-UTILITIES & UNREGULATED POWER | 15,097,154 | ||
WATER UTILITIES - 0.2% | |||
Aqua America, Inc. | 17,194 | 334,423 | |
WIRELESS TELECOMMUNICATION SERVICES - 19.5% | |||
American Tower Corp. Class A (a) | 361,600 | 5,228,736 | |
AT&T Wireless Services, Inc. (a) | 669,900 | 9,673,356 | |
Crown Castle International Corp. (a) | 154,800 | 2,185,776 | |
Nextel Communications, Inc. Class A (a) | 550,100 | 12,520,276 | |
Nextel Partners, Inc. Class A (a) | 165,400 | 2,657,978 | |
NII Holdings, Inc. (a) | 76,200 | 2,897,124 | |
SpectraSite, Inc. (a) | 38,400 | 1,651,200 | |
Western Wireless Corp. Class A (a) | 63,740 | 1,682,099 | |
TOTAL WIRELESS TELECOMMUNICATION | 38,496,545 | ||
TOTAL COMMON STOCKS (Cost $176,879,589) | 196,403,617 | ||
Money Market Funds - 1.0% | |||
Fidelity Cash Central Fund, 1.33% (b) | 553,962 | 553,962 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 1,377,000 | 1,377,000 | |
TOTAL MONEY MARKET FUNDS (Cost $1,930,962) | 1,930,962 | ||
TOTAL INVESTMENT PORTFOLIO - 100.5% (Cost $178,810,551) | 198,334,579 | ||
NET OTHER ASSETS - (0.5)% | (1,058,604) | ||
NET ASSETS - 100% | $ 197,275,975 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $352,944,000 of which $57,788,000, $140,743,000 and $154,413,000 will expire on July 31, 2009, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,331,640) (cost $178,810,551) - See accompanying schedule | $ 198,334,579 | |
Receivable for investments sold | 1,898,313 | |
Receivable for fund shares sold | 61,128 | |
Dividends receivable | 704,188 | |
Interest receivable | 286 | |
Prepaid expenses | 386 | |
Receivable from investment adviser for expense reductions | 16,503 | |
Other affiliated receivables | 114 | |
Other receivables | 8,811 | |
Total assets | 201,024,308 | |
Liabilities | ||
Payable for investments purchased | $ 1,476,579 | |
Payable for fund shares redeemed | 486,938 | |
Accrued management fee | 94,111 | |
Distribution fees payable | 126,114 | |
Other affiliated payables | 92,049 | |
Other payables and accrued expenses | 95,542 | |
Collateral on securities loaned, at value | 1,377,000 | |
Total liabilities | 3,748,333 | |
Net Assets | $ 197,275,975 | |
Net Assets consist of: | ||
Paid in capital | $ 534,363,422 | |
Undistributed net investment income | 473,223 | |
Accumulated undistributed net realized gain (loss) on investments | (357,084,698) | |
Net unrealized appreciation (depreciation) on investments | 19,524,028 | |
Net Assets | $ 197,275,975 | |
Calculation of Maximum Offering Price | $ 12.09 | |
Maximum offering price per share (100/94.25 of $12.09) | $ 12.83 | |
Class T: | $ 12.04 | |
Maximum offering price per share (100/96.50 of $12.04) | $ 12.48 | |
Class B: | $ 11.82 | |
Class C: | $ 11.84 | |
Institutional: | $ 12.20 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 4,749,598 | |
Interest | 15,608 | |
Security lending | 8,983 | |
Total income | 4,774,189 | |
Expenses | ||
Management fee | $ 1,184,937 | |
Transfer agent fees | 1,117,302 | |
Distribution fees | 1,586,037 | |
Accounting and security lending fees | 81,211 | |
Non-interested trustees' compensation | 1,138 | |
Custodian fees and expenses | 5,376 | |
Registration fees | 57,519 | |
Audit | 37,259 | |
Legal | 1,032 | |
Miscellaneous | 78,050 | |
Total expenses before reductions | 4,149,861 | |
Expense reductions | (133,214) | 4,016,647 |
Net investment income (loss) | 757,542 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on investment securities | 26,016,597 | |
Change in net unrealized appreciation (depreciation) on investment securities | 5,705,831 | |
Net gain (loss) | 31,722,428 | |
Net increase (decrease) in net assets resulting from operations | $ 32,479,970 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 757,542 | $ 2,004,042 |
Net realized gain (loss) | 26,016,597 | (28,721,331) |
Change in net unrealized appreciation (depreciation) | 5,705,831 | 63,352,175 |
Net increase (decrease) in net assets resulting from operations | 32,479,970 | 36,634,886 |
Distributions to shareholders from net investment income | (1,058,918) | (2,317,127) |
Share transactions - net increase (decrease) | (39,718,704) | (46,408,827) |
Redemption fees | 13,588 | 16,304 |
Total increase (decrease) in net assets | (8,284,064) | (12,074,764) |
Net Assets | ||
Beginning of period | 205,560,039 | 217,634,803 |
End of period (including undistributed net investment income of $473,223 and undistributed net investment | $ 197,275,975 | $ 205,560,039 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.37 | $ 8.74 | $ 15.18 | $ 21.08 | $ 20.31 |
Income from Investment Operations | |||||
Net investment income (loss)C | .10 | .13 | .10 | .05 | .53D |
Net realized and unrealized gain (loss) | 1.72 | 1.69 | (6.54) | (5.41) | 1.29 |
Total from investment operations | 1.82 | 1.82 | (6.44) | (5.36) | 1.82 |
Distributions from net investment income | (.10) | (.19) | - | (.28) | (.05) |
Distributions from net realized gain | - | - | - | (.26) | (1.01) |
Total distributions | (.10) | (.19) | - | (.54) | (1.06) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 12.09 | $ 10.37 | $ 8.74 | $ 15.18 | $ 21.08 |
Total ReturnA,B | 17.67% | 21.22% | (42.42)% | (26.09)% | 9.59% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 1.51% | 1.67% | 1.45% | 1.25% | 1.20% |
Expenses net of voluntary waivers, if any | 1.50% | 1.58% | 1.45% | 1.25% | 1.20% |
Expenses net of all reductions | 1.45% | 1.47% | 1.36% | 1.20% | 1.17% |
Net investment income (loss) | .87% | 1.46% | .79% | .32% | 2.39% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 21,987 | $ 21,761 | $ 22,377 | $ 54,265 | $ 61,610 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Telecommunications & Utilities Growth
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.33 | $ 8.68 | $ 15.11 | $ 21.01 | $ 20.23 |
Income from Investment Operations | |||||
Net investment income (loss)C | .07 | .11 | .07 | .01 | .47D |
Net realized and unrealized gain (loss) | 1.72 | 1.68 | (6.50) | (5.40) | 1.31 |
Total from investment operations | 1.79 | 1.79 | (6.43) | (5.39) | 1.78 |
Distributions from net investment income | (.08) | (.14) | - | (.25) | (.01) |
Distributions from net realized gain | - | - | - | (.26) | (1.00) |
Total distributions | (.08) | (.14) | - | (.51) | (1.01) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 12.04 | $ 10.33 | $ 8.68 | $ 15.11 | $ 21.01 |
Total ReturnA,B | 17.42% | 20.91% | (42.55)% | (26.29)% | 9.41% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 1.79% | 1.94% | 1.71% | 1.49% | 1.44% |
Expenses net of voluntary waivers, if any | 1.75% | 1.83% | 1.71% | 1.49% | 1.44% |
Expenses net of all reductions | 1.70% | 1.72% | 1.62% | 1.44% | 1.41% |
Net investment income (loss) | .62% | 1.21% | .53% | .08% | 2.16% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 53,255 | $ 55,510 | $ 59,306 | $ 149,618 | $ 225,415 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.15 | $ 8.49 | $ 14.85 | $ 20.72 | $ 20.02 |
Income from Investment Operations | |||||
Net investment income (loss)C | .01 | .07 | .01 | (.07) | .35D |
Net realized and unrealized gain (loss) | 1.69 | 1.65 | (6.37) | (5.33) | 1.29 |
Total from investment operations | 1.70 | 1.72 | (6.36) | (5.40) | 1.64 |
Distributions from net investment income | (.03) | (.06) | - | (.21) | - |
Distributions from net realized gain | - | - | - | (.26) | (.95) |
Total distributions | (.03) | (.06) | - | (.47) | (.95) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 11.82 | $ 10.15 | $ 8.49 | $ 14.85 | $ 20.72 |
Total ReturnA,B | 16.79% | 20.37% | (42.83)% | (26.66)% | 8.77% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 2.25% | 2.32% | 2.20% | 2.01% | 1.96% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.20% | 2.01% | 1.96% |
Expenses net of all reductions | 2.20% | 2.13% | 2.11% | 1.96% | 1.93% |
Net investment income (loss) | .12% | .79% | .04% | (.44)% | 1.63% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 84,742 | $ 87,868 | $ 91,517 | $ 213,767 | $ 242,888 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.16 | $ 8.50 | $ 14.85 | $ 20.71 | $ 20.01 |
Income from Investment Operations | |||||
Net investment income (loss)C | .02 | .07 | .02 | (.06) | .36D |
Net realized and unrealized gain (loss) | 1.70 | 1.65 | (6.37) | (5.33) | 1.29 |
Total from investment operations | 1.72 | 1.72 | (6.35) | (5.39) | 1.65 |
Distributions from net investment income | (.04) | (.06) | - | (.21) | - |
Distributions from net realized gain | - | - | - | (.26) | (.96) |
Total distributions | (.04) | (.06) | - | (.47) | (.96) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 11.84 | $ 10.16 | $ 8.50 | $ 14.85 | $ 20.71 |
Total ReturnA,B | 16.98% | 20.35% | (42.76)% | (26.62)% | 8.84% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 2.17% | 2.23% | 2.11% | 1.96% | 1.93% |
Expenses net of voluntary waivers, if any | 2.17% | 2.23% | 2.11% | 1.96% | 1.93% |
Expenses net of all reductions | 2.12% | 2.12% | 2.02% | 1.91% | 1.90% |
Net investment income (loss) | .21% | .80% | .13% | (.39)% | 1.66% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 35,038 | $ 37,530 | $ 41,496 | $ 104,628 | $ 107,332 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.47 | $ 8.86 | $ 15.31 | $ 21.19 | $ 20.38 |
Income from Investment Operations | |||||
Net investment income (loss)B | .15 | .18 | .16 | .12 | .60C |
Net realized and unrealized gain (loss) | 1.73 | 1.71 | (6.61) | (5.44) | 1.29 |
Total from investment operations | 1.88 | 1.89 | (6.45) | (5.32) | 1.89 |
Distributions from net investment income | (.15) | (.28) | - | (.30) | (.08) |
Distributions from net realized gain | - | - | - | (.26) | (1.01) |
Total distributions | (.15) | (.28) | - | (.56) | (1.09) |
Redemption fees added to paid in capitalB | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 12.20 | $ 10.47 | $ 8.86 | $ 15.31 | $ 21.19 |
Total ReturnA | 18.14% | 21.94% | (42.13)% | (25.78)% | 9.93% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.09% | 1.06% | .96% | .85% | .88% |
Expenses net of voluntary waivers, if any | 1.09% | 1.06% | .96% | .85% | .88% |
Expenses net of all reductions | 1.04% | .94% | .87% | .80% | .85% |
Net investment income (loss) | 1.29% | 1.98% | 1.28% | .72% | 2.71% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 2,254 | $ 2,891 | $ 2,939 | $ 8,945 | $ 19,064 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Investment income per share reflects a special dividend which amounted to $.52 per share. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Telecommunications & Utilities Growth
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Telecommunications & Utilities Growth Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 29,272,536 | | |
Unrealized depreciation | (13,888,963) | |
Net unrealized appreciation (depreciation) | 15,383,573 | |
Undistributed ordinary income | 473,370 | |
Capital loss carryforward | (352,944,244) | |
Cost for federal income tax purposes | $ 182,951,006 |
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 1,058,918 | $ 2,317,127 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $77,061,731 and $114,498,743, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 54,965 | $ 41 |
Class T | .25% | .25% | 278,174 | 614 |
Class B | .75% | .25% | 883,804 | 662,855 |
Class C | .75% | .25% | 369,094 | 20,186 |
$ 1,586,037 | $ 683,696 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 11,628 | |
Class T | 8,677 | |
Class B* | 293,259 | |
Class C* | 1,363 | |
$ 314,927 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Telecommunications & Utilities Growth
4. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 123,211 | .56 |
Class T | 326,914 | .59 |
Class B | 486,196 | .55 |
Class C | 170,976 | .46 |
Institutional Class | 10,005 | .38 |
$ 1,117,302 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $15,592 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $5,697 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 3,243 |
Class T | 1.75% | 22,650 |
Class B | 2.25% | 2,733 |
$ 28,626 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $104,588 for the period.
Annual Report
Notes to Financial Statements - continued
8. Other Information.
At the end of the period, one otherwise unaffiliated shareholder was the owner of record of 10% of the total outstanding shares of the fund.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
From net investment income | 2004 | 2003 |
Class A | $ 201,967 | $ 464,762 |
Class T | 417,451 | 900,722 |
Class B | 256,606 | 594,921 |
Class C | 143,592 | 272,875 |
Institutional Class | 39,302 | 83,847 |
Total | $ 1,058,918 | $ 2,317,127 |
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 298,298 | 276,709 | $ 3,438,753 | $ 2,506,688 |
Reinvestment of distributions | 17,065 | 47,515 | 183,774 | 418,463 |
Shares redeemed | (595,057) | (786,112) | (6,759,275) | (7,112,889) |
Net increase (decrease) | (279,694) | (461,888) | $ (3,136,748) | $ (4,187,738) |
Class T | ||||
Shares sold | 494,942 | 687,303 | $ 5,575,654 | $ 6,362,754 |
Reinvestment of distributions | 36,573 | 94,963 | 392,232 | 835,527 |
Shares redeemed | (1,480,100) | (2,241,515) | (16,736,309) | (20,155,205) |
Net increase (decrease) | (948,585) | (1,459,249) | $ (10,768,423) | $ (12,956,924) |
Class B | ||||
Shares sold | 312,692 | 485,244 | $ 3,435,209 | $ 4,462,261 |
Reinvestment of distributions | 21,061 | 56,917 | 219,667 | 497,557 |
Shares redeemed | (1,821,311) | (2,669,897) | (20,266,895) | (23,339,570) |
Net increase (decrease) | (1,487,558) | (2,127,736) | $ (16,612,019) | $ (18,379,752) |
Class C | ||||
Shares sold | 267,567 | 516,658 | $ 2,967,003 | $ 4,655,427 |
Reinvestment of distributions | 10,338 | 23,481 | 108,777 | 205,553 |
Shares redeemed | (1,009,938) | (1,732,363) | (11,224,441) | (15,285,051) |
Net increase (decrease) | (732,033) | (1,192,224) | $ (8,148,661) | $ (10,424,071) |
Institutional Class | ||||
Shares sold | 23,573 | 46,922 | $ 273,182 | $ 453,326 |
Reinvestment of distributions | 2,128 | 4,314 | 22,996 | 38,181 |
Shares redeemed | (117,098) | (106,668) | (1,349,031) | (951,849) |
Net increase (decrease) | (91,397) | (55,432) | $ (1,052,853) | $ (460,342) |
Telecommunications & Utilities Growth
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Advisor Series VII and Shareholders of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor Developing Communications Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Natural Resources Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Telecommunications & Utilities Growth Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor Developing Communications Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Natural Resources Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Telecommunications & Utilities Growth Fund, (collectively, the "Funds"), including the portfolios of investments, as of July 31, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2004, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor Developing Communications Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Natural Resources Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Telecommunications & Utilities Growth Fund, as of July 31, 2004, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 21, 2004
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for William O. McCoy, each of the Trustees oversees 295 funds advised by FMR or an affiliate. Mr. McCoy oversees 297 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests 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; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. In any event, each non-interested Trustee shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (74)** | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, 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 Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc. | |
Abigail P. Johnson (42)** | |
Year of Election or Appointment: 2001 Senior Vice President of Advisor Biotechnology (2001), Advisor Consumer Industries (2001), Advisor Cyclical Industries (2001), Advisor Developing Communications (2001), Advisor Electronics (2001), Advisor Financial Services (2001), Advisor Health Care (2001), Advisor Natural Resources (2001), Advisor Technology (2001), and Advisor Telecommunications & Utilities Growth (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds. | |
Laura B. Cronin (50) | |
Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002). | |
Robert L. Reynolds (52) | |
Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000). | |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.
Annual Report
Trustees and Officers - continued
Non-Interested Trustees:
Correspondence intended for each non-interested Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
J. Michael Cook (61) | |
Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/ consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), The Dow Chemical Company (2000), and Northrop Grumman Corporation (global defense technology, 2003). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Council of the Public Company Accounting Oversight Board (PCAOB), Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater. | |
Ralph F. Cox (72) | |
Year of Election or Appointment: 1991 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin. | |
Robert M. Gates (60) | |
Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001), and Brinker International (restaurant management, 2003). He also serves as a member of the Advisory Board of VoteHere.net (secure Internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy. | |
George H. Heilmeier (68) | |
Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), and Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002). | |
Donald J. Kirk (71) | |
Year of Election or Appointment: 1987 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. (leadership education for arts and culture). Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations). | |
Marie L. Knowles (57) | |
Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. | |
Ned C. Lautenbach (60) | |
Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Co-Chairman and a Director of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations. | |
Marvin L. Mann (71) | |
Year of Election or Appointment: 1993 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals), where he served as CEO until April 1998, retired as Chairman May 1999, and remains a member of the Board. 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. He is a member of the Executive Committee of the Independent Director's Council of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama. | |
William O. McCoy (70) | |
Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998). | |
William S. Stavropoulos (65) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman of the Board (2000), CEO (2002), a position he previously held from 1995-2000, Chairman of the Executive Committee (2000), and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. | |
Annual Report
Trustees and Officers - continued
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Dirks and Ms. Small may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Dennis J. Dirks (56) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). | |
Peter S. Lynch (61) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity Magellan Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston. | |
Cornelia M. Small (60) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1998). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
Eric D. Roiter (55) | |
Year of Election or Appointment: 1998 or 2000 Secretary of Advisor Biotechnology (2000), Advisor Consumer Industries (1998), Advisor Cyclical Industries (1998), Advisor Developing Communications (2000), Advisor Electronics (2000), Advisor Financial Services (1998), Advisor Health Care (1998), Advisor Natural Resources (1998), Advisor Technology (1998), and Advisor Telecommunications & Utilities Growth (1998). He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management, Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003). | |
Stuart Fross (44) | |
Year of Election or Appointment: 2003 Assistant Secretary of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR. | |
Christine Reynolds (45) | |
Year of Election or Appointment: 2004 President, Treasurer, and Anti-Money Laundering (AML) officer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Ms. Reynolds also serves as President, Treasurer, and AML officer of other Fidelity funds (2004) and is a Vice President (2003) and an employee (2002) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was most recently an audit partner with PwC's investment management practice. | |
Timothy F. Hayes (53) | |
Year of Election or Appointment: 2002 Chief Financial Officer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998). | |
Kenneth A. Rathgeber (57) | |
Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004) and Executive Vice President of Risk Oversight for Fidelity Investments (2002). Previously, he served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). | |
John R. Hebble (46) | |
Year of Election or Appointment: 2003 Deputy Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003). | |
Kimberley H. Monasterio (40) | |
Year of Election or Appointment: 2004 Deputy Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). | |
John H. Costello (57) | |
Year of Election or Appointment: 1987, 1996, or 2000 Assistant Treasurer of Advisor Biotechnology (2000), Advisor Consumer Industries (1996), Advisor Cyclical Industries (1996), Advisor Developing Communications (2000), Advisor Electronics (2000), Advisor Financial Services (1996), Advisor Health Care (1996), Advisor Natural Resources (1987), Advisor Technology (1996), and Advisor Telecommunications & Utilities Growth (1996). Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR. | |
Francis V. Knox, Jr. (57) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002). | |
Peter L. Lydecker (50) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. | |
Mark Osterheld (49) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR. | |
Kenneth B. Robins (34) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). | |
Thomas J. Simpson (46) | |
Year of Election or Appointment: 2000 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995). | |
Annual Report
Distributions
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
Institutional Class | Pay Date | Record Date | Dividends | Capital Gains |
Consumer Industries | 09/13/04 | 09/10/04 | - | $.53 |
Cyclical Industries | 09/13/04 | 09/10/04 | - | $.65 |
Financial Services | 09/13/04 | 09/10/04 | - | $1.48 |
Telecommunications & Utilities Growth | 09/13/04 | 09/10/04 | $.10 | - |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
Institutional Class | |
Financial Services | 100% |
Natural Resources | 100% |
Telecommunications & Utilities Growth | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for the purposes of the maximum rate under section 1 (h)(11) of the Internal Revenue Code:
Institutional Class | ||||
Financial Services | 100% | |||
Natural Resources | 100% | |||
Telecommunications & Utilities Growth | 100% |
The funds will notify shareholders in January 2005 of amounts for use in preparing 2004 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 19, 2004. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To amend the Declaration of Trust to allow the Board of Trustees, if permitted by applicable law, to authorize fund mergers without shareholder approval.* | ||
# of | % of | |
Affirmative | 1,258,992,294.05 | 67.854 |
Against | 285,112,169.59 | 15.366 |
Abstain | 81,809,335.63 | 4.409 |
Broker | 229,530,071.74 | 12.371 |
TOTAL | 1,855,443,871.01 | 100.000 |
PROPOSAL 2 | ||
To elect a Board of Trustees.* | ||
# of | % of | |
J. Michael Cook | ||
Affirmative | 1,764,542,479.15 | 95.101 |
Withheld | 90,901,391.86 | 4.899 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ralph F. Cox | ||
Affirmative | 1,762,691,678.51 | 95.001 |
Withheld | 92,752,192.50 | 4.999 |
TOTAL | 1,855,443,871.01 | 100.000 |
Laura B. Cronin | ||
Affirmative | 1,764,743,077.37 | 95.112 |
Withheld | 90,700,793.64 | 4.888 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert M. Gates | ||
Affirmative | 1,763,804,232.45 | 95.061 |
Withheld | 91,639,638.56 | 4.939 |
TOTAL | 1,855,443,871.01 | 100.000 |
George H. Heilmeier | ||
Affirmative | 1,764,595,044.83 | 95.104 |
Withheld | 90,848,826.18 | 4.896 |
TOTAL | 1,855,443,871.01 | 100.000 |
Abigail P. Johnson | ||
Affirmative | 1,762,763,373.33 | 95.005 |
Withheld | 92,680,497.68 | 4.995 |
TOTAL | 1,855,443,871.01 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 1,762,006,438.92 | 94.964 |
Withheld | 93,437,432.09 | 5.036 |
TOTAL | 1,855,443,871.01 | 100.000 |
Donald J. Kirk | ||
Affirmative | 1,763,115,160.88 | 95.024 |
Withheld | 92,328,710.13 | 4.976 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marie L. Knowles | ||
Affirmative | 1,764,877,372.29 | 95.119 |
Withheld | 90,566,498.72 | 4.881 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 1,765,030,930.72 | 95.127 |
Withheld | 90,412,940.29 | 4.873 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marvin L. Mann | ||
Affirmative | 1,763,707,568.69 | 95.056 |
Withheld | 91,736,302.32 | 4.944 |
TOTAL | 1,855,443,871.01 | 100.000 |
William O. McCoy | ||
Affirmative | 1,763,731,348.95 | 95.057 |
Withheld | 91,712,522.06 | 4.943 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 1,764,938,615.07 | 95.122 |
Withheld | 90,505,255.94 | 4.878 |
TOTAL | 1,855,443,871.01 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 1,764,361,513.28 | 95.091 |
Withheld | 91,082,357.73 | 4.909 |
TOTAL | 1,855,443,871.01 | 100.000 |
* Denotes trust-wide proposals and voting results. | ||
Annual Report
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Far East) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Custodians
JPMorgan Chase Bank
New York, NY
Brown Brothers Harriman & Co. (dagger)
Boston, MA
State Street Bank and Trust (dagger)(dagger)
Quincy, MA
* Custodian for Fidelity Advisor Natural Resources Fund only.
(dagger)(dagger) Custodian for Fidelity Advisor Biotechnology Fund, Fidelity Advisor Developing Communications Fund, and Fidelity Advisor Electronics Fund only.
Fidelity Advisor Aggressive Growth Fund |
Fidelity Advisor Asset Allocation Fund |
Fidelity Advisor Balanced Fund |
Fidelity Advisor Biotechnology Fund |
Fidelity Advisor California Municipal |
Fidelity Advisor Consumer |
Fidelity Advisor Cyclical Industries Fund |
Fidelity Advisor Developing |
Fidelity Advisor Diversified |
Fidelity Advisor Dividend Growth Fund |
Fidelity Advisor Dynamic |
Fidelity Advisor Electronics Fund |
Fidelity Advisor Emerging Asia Fund |
Fidelity Advisor Emerging Markets |
Fidelity Advisor Equity Growth Fund |
Fidelity Advisor Equity Income Fund |
Fidelity Advisor Equity Value Fund |
Fidelity Advisor Europe |
Fidelity Advisor Fifty Fund |
Fidelity Advisor Financial Services Fund |
Fidelity Advisor Floating Rate |
Fidelity Advisor Freedom Income, 2005, 2010, |
Fidelity Advisor Global Equity Fund |
Fidelity Advisor Government |
Fidelity Advisor Growth & Income Fund |
Fidelity Advisor |
Fidelity Advisor Health Care Fund |
Fidelity Advisor High Income Advantage Fund |
Fidelity Advisor High Income Fund |
Fidelity Advisor Inflation-Protected |
Fidelity Advisor Intermediate |
Fidelity Advisor International Capital |
Fidelity Advisor International |
Fidelity Advisor Investment Grade |
Fidelity Advisor Japan Fund |
Fidelity Advisor Korea Fund |
Fidelity Advisor Large Cap Fund |
Fidelity Advisor Latin America Fund |
Fidelity Advisor Leveraged Company Stock Fund |
Fidelity Advisor Mid Cap Fund |
Fidelity Advisor Mid Cap II Fund |
Fidelity Advisor Mortgage Securities Fund |
Fidelity Advisor Municipal Income Fund |
Fidelity Advisor Natural Resources Fund |
Fidelity Advisor New Insights Fund |
Fidelity Advisor New York Municipal Income Fund |
Fidelity Advisor Overseas Fund |
Fidelity Advisor Real Estate Fund |
Fidelity Advisor Short Fixed-Income Fund |
Fidelity Advisor Short Intermediate Municipal |
Fidelity Advisor Small Cap Fund |
Fidelity Advisor Strategic Growth Fund |
Fidelity Advisor Strategic Income Fund |
Fidelity Advisor Tax Managed Stock Fund |
Fidelity Advisor Technology Fund |
Fidelity Advisor Telecommunications & Utilities Growth Fund |
Fidelity Advisor Total Bond Fund |
Fidelity Advisor Ultra-Short Bond Fund |
Fidelity Advisor Value Fund |
Fidelity Advisor Value Leaders Fund |
Fidelity Advisor Value Strategies Fund |
Prime Fund |
Tax-Exempt Fund |
Treasury Fund |
Printed on Recycled Paper
AFOCI-UANNPRO-0904
1.789242.101
Fidelity Advisor
Focus Funds®
Class A, Class T, Class B and Class C
Biotechnology
Consumer Industries
Cyclical Industries
Developing Communications
Electronics
Financial Services
Health Care
Natural Resources
Technology
Telecommunications &
Utilities Growth
Annual Report
July 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Biotechnology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Consumer Industries | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Cyclical Industries | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Developing Communications | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Electronics | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Financial Services | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Health Care | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Natural Resources | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Technology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Telecommunications & | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Summary | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Report of Independent Registered Public Accounting Firm | ||
Trustees and Officers | ||
Distributions | ||
Proxy Voting Results | ||
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
(Recycle logo)This report is printed on recycled paper using soy-based inks.
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.
Commencing with the fiscal quarter ending October 31, 2004, each fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. Each fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of each fund's portfolio holdings, view each fund's most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board, or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the funds nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.
Annual Report
Advisor Biotechnology Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of | |
Class A (incl. 5.75% sales charge) | -4.80% | -14.66% | |
Class T (incl. 3.50% sales charge) | -2.68% | -14.30% | |
Class B (incl. contingent deferred sales charge) B | -4.66% | -14.62% | |
Class C (incl. contingent deferred sales charge) C | -0.66% | -13.90% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 5% and 3%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 1% and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Biotechnology Fund - Class T on December 27, 2000, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Biotechnology Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Andraz Razen, Portfolio Manager of Fidelity® Advisor Biotechnology Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
Fidelity Advisor Biotechnology Fund underperformed its benchmark indexes, with the fund's Class A, Class T, Class B and Class C shares returning 1.01%, 0.85%, 0.34% and 0.34%, respectively. In comparison, the Goldman Sachs® Health Care Index returned 4.22%, while the S&P 500 gained 13.17%. Biotechnology stocks generally underperformed the broader market as well as pharmaceutical stocks, which are included in the Goldman Sachs index. Disappointing new product sales hurt several stocks, including MedImmune, Millennium Pharmaceuticals, Trimeris and Gilead Sciences. CV Therapeutics detracted because the Food and Drug Administration required further clinical trials of its Angina drug, Ranexa. I sold both Trimeris and CV Therapeutics before the end of the period. On the other hand, several large holdings performed well, including Genentech, which makes a treatment for colon cancer, and Sepracor, which saw continued strength in its asthma drug, Xopenex. Biogen Idec and Elan, which combined to develop a successful treatment for Crohn's disease, also had solid returns.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 975.60 | $ 7.37 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 975.40 | $ 8.60 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 973.30 | $ 11.04 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 973.30 | $ 11.04 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 979.00 | $ 5.41 |
HypotheticalA | $ 1,000.00 | $ 1,019.46 | $ 5.54 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.25% |
Institutional Class | 1.10% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Biogen Idec, Inc. | 10.8 |
Genentech, Inc. | 10.0 |
Celgene Corp. | 6.8 |
Gilead Sciences, Inc. | 5.7 |
Cephalon, Inc. | 5.6 |
ImClone Systems, Inc. | 5.5 |
Elan Corp. PLC sponsored ADR | 5.3 |
Genzyme Corp. - General Division | 5.2 |
MedImmune, Inc. | 5.1 |
Millennium Pharmaceuticals, Inc. | 4.5 |
64.5 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Biotechnology | 83.1% | |
| Pharmaceuticals | 13.5% | |
| Health Care Equipment | 0.1% | |
| All Others * | 3.3% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 96.7% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 83.1% | |||
Actelion Ltd. (Reg.) (a) | 15,710 | $ 1,499,256 | |
Affymetrix, Inc. (a) | 42,200 | 1,139,822 | |
Alkermes, Inc. (a) | 67,140 | 724,441 | |
Amgen, Inc. (a) | 9,910 | 563,681 | |
Amylin Pharmaceuticals, Inc. (a) | 7,600 | 156,560 | |
Biogen Idec, Inc. (a) | 98,334 | 5,900,038 | |
Celgene Corp. (a) | 69,520 | 3,707,502 | |
Cephalon, Inc. (a) | 61,099 | 3,086,721 | |
Dendreon Corp. (a) | 37,300 | 343,533 | |
Dyax Corp. (a) | 4,200 | 32,298 | |
Enzon Pharmaceuticals, Inc. (a) | 24,000 | 297,840 | |
Genentech, Inc. (a) | 112,600 | 5,481,368 | |
Genta, Inc. (a) | 13,700 | 23,564 | |
Genzyme Corp. - General Division (a) | 55,820 | 2,862,450 | |
Gilead Sciences, Inc. (a) | 48,600 | 3,141,504 | |
Harvard Bioscience, Inc. (a) | 300 | 1,144 | |
ICOS Corp. (a) | 26,900 | 647,214 | |
ImClone Systems, Inc. (a) | 50,864 | 2,996,907 | |
ImmunoGen, Inc. (a) | 56,300 | 302,331 | |
Immunomedics, Inc. (a) | 8,600 | 34,400 | |
Invitrogen Corp. (a) | 30,650 | 1,608,512 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 44,700 | 617,307 | |
Medarex, Inc. (a) | 25,290 | 155,281 | |
MedImmune, Inc. (a) | 120,300 | 2,771,712 | |
Millennium Pharmaceuticals, Inc. (a) | 219,871 | 2,444,966 | |
Neurocrine Biosciences, Inc. (a) | 21,400 | 996,598 | |
NPS Pharmaceuticals, Inc. (a) | 12,000 | 223,800 | |
OSI Pharmaceuticals, Inc. (a) | 2,600 | 156,260 | |
Pharmion Corp. | 13,904 | 624,012 | |
Protein Design Labs, Inc. (a) | 41,900 | 678,780 | |
Regeneron Pharmaceuticals, Inc. (a) | 19,822 | 169,676 | |
Seattle Genetics, Inc. (a) | 22,000 | 131,560 | |
Serologicals Corp. (a) | 27,500 | 539,000 | |
Tanox, Inc. (a) | 10,700 | 167,669 | |
Techne Corp. (a) | 18,410 | 732,718 | |
Telik, Inc. (a) | 8,900 | 175,864 | |
Transkaryotic Therapies, Inc. (a) | 11,640 | 173,552 | |
XOMA Ltd. (a) | 49,300 | 179,452 | |
TOTAL BIOTECHNOLOGY | 45,489,293 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% | |||
Cyberonics, Inc. (a) | 1,300 | 36,374 | |
Epix Medical, Inc. (a) | 3,100 | 55,955 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 92,329 | ||
PHARMACEUTICALS - 13.5% | |||
Cypress Bioscience, Inc. (a) | 2,600 | 25,974 | |
Elan Corp. PLC sponsored ADR (a) | 141,100 | 2,899,605 | |
Guilford Pharmaceuticals, Inc. (a) | 29,300 | 121,595 | |
Medicines Co. (a) | 18,800 | 497,448 | |
Merck KGaA | 15,926 | 893,092 | |
Shares | Value (Note 1) | ||
MGI Pharma, Inc. (a) | 36,200 | $ 1,013,962 | |
Sepracor, Inc. (a) | 40,996 | 1,884,586 | |
SkyePharma PLC (a) | 39,123 | 39,719 | |
TOTAL PHARMACEUTICALS | 7,375,981 | ||
TOTAL COMMON STOCKS (Cost $50,319,142) | 52,957,603 | ||
Money Market Funds - 17.1% | |||
Fidelity Cash Central Fund, 1.33% (b)(c) | 9,337,928 | 9,337,928 | |
TOTAL INVESTMENT PORTFOLIO - 113.8% (Cost $59,657,070) | 62,295,531 | ||
NET OTHER ASSETS - (13.8)% | (7,552,540) | ||
NET ASSETS - 100% | $ 54,742,991 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $12,285,000 all of which will expire on July 31, 2011. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,795,550) (cost $59,657,070) - See accompanying schedule | $ 62,295,531 | |
Receivable for investments sold | 1,069,222 | |
Receivable for fund shares sold | 322,834 | |
Interest receivable | 7,861 | |
Prepaid expenses | 80 | |
Receivable from investment adviser for expense reductions | 12,181 | |
Other affiliated receivables | 347 | |
Other receivables | 2,547 | |
Total assets | 63,710,603 | |
Liabilities | ||
Payable to custodian bank | $ 25,085 | |
Payable for fund shares redeemed | 345,479 | |
Accrued management fee | 27,416 | |
Distribution fees payable | 34,265 | |
Other affiliated payables | 28,089 | |
Other payables and accrued expenses | 52,153 | |
Collateral on securities loaned, at value | 8,455,125 | |
Total liabilities | 8,967,612 | |
Net Assets | $ 54,742,991 | |
Net Assets consist of: | ||
Paid in capital | $ 64,950,896 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (12,846,366) | |
Net unrealized appreciation (depreciation) on investments | 2,638,461 | |
Net Assets | $ 54,742,991 | |
Calculation of Maximum Offering Price | $ 6.00 | |
Maximum offering price per share (100/94.25 of $6.00) | $ 6.37 | |
Class T: | $ 5.95 | |
Maximum offering price per share (100/96.50 of $5.95) | $ 6.17 | |
Class B: | $ 5.84 | |
Class C: | $ 5.84 | |
Institutional Class: | $ 6.06 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 11,637 | |
Interest | 29,644 | |
Security lending | 10,862 | |
Total income | 52,143 | |
Expenses | ||
Management fee | $ 296,962 | |
Transfer agent fees | 282,027 | |
Distribution fees | 375,751 | |
Accounting and security lending fees | 46,078 | |
Non-interested trustees' compensation | 237 | |
Custodian fees and expenses | 8,837 | |
Registration fees | 55,140 | |
Audit | 36,203 | |
Legal | 192 | |
Miscellaneous | 19,757 | |
Total expenses before reductions | 1,121,184 | |
Expense reductions | (114,772) | 1,006,412 |
Net investment income (loss) | (954,269) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 2,868,648 | |
Foreign currency transactions | (1,461) | |
Total net realized gain (loss) | 2,867,187 | |
Change in net unrealized appreciation (depreciation) on investment securities | (2,278,403) | |
Net gain (loss) | 588,784 | |
Net increase (decrease) in net assets resulting from operations | $ (365,485) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Biotechnology Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (954,269) | $ (526,064) |
Net realized gain (loss) | 2,867,187 | (2,908,047) |
Change in net unrealized appreciation (depreciation) | (2,278,403) | 13,954,492 |
Net increase (decrease) in net assets resulting from operations | (365,485) | 10,520,381 |
Share transactions - net increase (decrease) | 10,289,718 | 3,458,182 |
Redemption fees | 18,272 | 25,473 |
Total increase (decrease) in net assets | 9,942,505 | 14,004,036 |
Net Assets | ||
Beginning of period | 44,800,486 | 30,796,450 |
End of period (including undistributed net investment income of $0 and $2,379, respectively) | $ 54,742,991 | $ 44,800,486 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.94 | $ 4.39 | $ 7.09 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.09) | (.05) | (.07) | (.04) |
Net realized and unrealized gain (loss) | .15 | 1.60 | (2.64) | (2.88) |
Total from investment operations | .06 | 1.55 | (2.71) | (2.92) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 6.00 | $ 5.94 | $ 4.39 | $ 7.09 |
Total Return B, C, D | 1.01% | 35.31% | (38.08)% | (29.10)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 1.68% | 2.04% | 1.99% | 3.07% A |
Expenses net of voluntary waivers, if any | 1.50% | 1.50% | 1.50% | 1.50% A |
Expenses net of all reductions | 1.48% | 1.47% | 1.46% | 1.49% A |
Net investment income (loss) | (1.38)% | (1.11)% | (1.19)% | (.94)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 10,197 | $ 7,718 | $ 4,657 | $ 4,232 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.90 | $ 4.37 | $ 7.07 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.10) | (.06) | (.09) | (.05) |
Net realized and unrealized gain (loss) | .15 | 1.59 | (2.62) | (2.89) |
Total from investment operations | .05 | 1.53 | (2.71) | (2.94) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 5.95 | $ 5.90 | $ 4.37 | $ 7.07 |
Total ReturnB,C,D | .85% | 35.01% | (38.19)% | (29.30)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 2.10% | 2.39% | 2.27% | 3.29% A |
Expenses net of voluntary waivers, if any | 1.75% | 1.75% | 1.75% | 1.75% A |
Expenses net of all reductions | 1.73% | 1.72% | 1.72% | 1.74% A |
Net investment income (loss) | (1.63)% | (1.36)% | (1.45)% | (1.19)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 13,367 | $ 10,281 | $ 6,861 | $ 7,721 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.82 | $ 4.33 | $ 7.05 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.13) | (.09) | (.12) | (.07) |
Net realized and unrealized gain (loss) | .15 | 1.58 | (2.61) | (2.89) |
Total from investment operations | .02 | 1.49 | (2.73) | (2.96) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 5.84 | $ 5.82 | $ 4.33 | $ 7.05 |
Total Return B, C, D | .34% | 34.41% | (38.58)% | (29.50)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.46% | 2.78% | 2.74% | 3.83% A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.22% | 2.22% | 2.22% | 2.24% A |
Net investment income (loss) | (2.12)% | (1.86)% | (1.95)% | (1.69)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 16,819 | $ 15,154 | $ 10,218 | $ 8,875 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.82 | $ 4.33 | $ 7.05 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.13) | (.09) | (.12) | (.07) |
Net realized and unrealized gain (loss) | .15 | 1.58 | (2.61) | (2.89) |
Total from investment operations | .02 | 1.49 | (2.73) | (2.96) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 5.84 | $ 5.82 | $ 4.33 | $ 7.05 |
Total Return B, C, D | .34% | 34.41% | (38.58)% | (29.50)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.31% | 2.58% | 2.57% | 3.73% A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.23% | 2.22% | 2.22% | 2.24% A |
Net investment income (loss) | (2.13)% | (1.86)% | (1.95)% | (1.69)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 13,215 | $ 10,493 | $ 8,204 | $ 6,321 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period December 27, 2000 (commencement of operations) to July 31, 2001. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H Amount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 E |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.97 | $ 4.40 | $ 7.09 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | (.06) | (.04) | (.06) | (.03) |
Net realized and unrealized gain (loss) | .15 | 1.61 | (2.64) | (2.89) |
Total from investment operations | .09 | 1.57 | (2.70) | (2.92) |
Redemption fees added to paid in capital D | - G | - G | .01 | .01 |
Net asset value, end of period | $ 6.06 | $ 5.97 | $ 4.40 | $ 7.09 |
Total Return B, C | 1.51% | 35.68% | (37.94)% | (29.10)% |
Ratios to Average Net Assets F | ||||
Expenses before expense reductions | 1.16% | 1.37% | 1.41% | 2.58% A |
Expenses net of voluntary waivers, if any | 1.16% | 1.25% | 1.25% | 1.25% A |
Expenses net of all reductions | 1.14% | 1.22% | 1.22% | 1.24% A |
Net investment income (loss) | (1.04)% | (.86)% | (.94)% | (.69)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 1,146 | $ 1,153 | $ 857 | $ 911 |
Portfolio turnover rate | 50% | 71% | 113% | 64% A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E For the period December 27, 2000 (commencement of operations) to July 31, 2001. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Biotechnology Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 8,168,906 | | |
Unrealized depreciation | (6,092,072) | |
Net unrealized appreciation (depreciation) | 2,076,834 | |
Capital loss carryforward | (12,284,743) | |
Cost for federal income tax purposes | $ 60,218,697 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $38,821,556 and $24,431,685, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 22,710 | $ - |
Class T | .25% | .25% | 60,890 | - |
Class B | .75% | .25% | 168,580 | 126,436 |
Class C | .75% | .25% | 123,571 | 32,723 |
$ 375,751 | $ 159,159 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Biotechnology
4. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 21,240 | |
Class T | 10,577 | |
Class B* | 62,296 | |
Class C* | 3,124 | |
$ 97,237 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 48,526 | .53 |
Class T | 85,260 | .70 |
Class B | 94,797 | .56 |
Class C | 50,706 | .41 |
Institutional Class | 2,738 | .26 |
$ 282,027 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $40,870 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $765 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 16,637 |
Class T | 1.75% | 42,438 |
Class B | 2.25% | 36,252 |
Class C | 2.25% | 7,595 |
$ 102,922 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $11,763 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $87.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 878,734 | 680,076 | $ 5,475,076 | $ 3,440,096 |
Shares redeemed | (480,064) | (441,219) | (2,905,863) | (2,151,060) |
Net increase (decrease) | 398,670 | 238,857 | $ 2,569,213 | $ 1,289,036 |
Class T | ||||
Shares sold | 1,105,179 | 780,971 | $ 6,864,105 | $ 3,727,715 |
Shares redeemed | (601,131) | (607,382) | (3,678,218) | (2,754,456) |
Net increase (decrease) | 504,048 | 173,589 | $ 3,185,887 | $ 973,259 |
Class B | ||||
Shares sold | 951,709 | 1,029,065 | $ 5,766,243 | $ 4,968,448 |
Shares redeemed | (675,608) | (781,932) | (4,063,659) | (3,620,850) |
Net increase (decrease) | 276,101 | 247,133 | $ 1,702,584 | $ 1,347,598 |
Class C | ||||
Shares sold | 962,707 | 755,361 | $ 5,865,287 | $ 3,589,348 |
Shares redeemed | (502,895) | (844,807) | (3,048,910) | (3,793,398) |
Net increase (decrease) | 459,812 | (89,446) | $ 2,816,377 | $ (204,050) |
Institutional Class | ||||
Shares sold | 64,860 | 85,342 | $ 427,262 | $ 466,184 |
Shares redeemed | (68,780) | (86,741) | (411,605) | (413,845) |
Net increase (decrease) | (3,920) | (1,399) | $ 15,657 | $ 52,339 |
Biotechnology
Advisor Consumer Industries Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of | |
Class A (incl. 5.75% sales charge) | -0.25% | -2.30% | 7.31% | |
Class T (incl. 3.50% sales charge) | 1.93% | -2.06% | 7.34% | |
Class B (incl. contingent deferred sales charge) B,C | 0.12% | -2.24% | 7.35% | |
Class C (incl. contingent deferred sales charge) D,E | 4.11% | -1.86% | 7.32% | |
A From September 3, 1996.
B Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on March 3, 1997. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
C Class B shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 5%, 2% and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns between March 3, 1997 and November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
E Class C shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 1%, 0% and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Industries Fund - Class T on September 3, 1996, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Consumer Industries Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from John Roth, who became Portfolio Manager of Fidelity® Advisor Consumer Industries Fund on June 14, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12-month period ending July 31, 2004, the fund's Class A, Class T, Class B and Class C shares returned 5.84%, 5.63%, 5.12% and 5.11%, respectively, underperforming the Goldman Sachs ® Consumer Industries Index, which gained 10.73%, and the S&P 500 index. The fund's heavy weighting in media companies involved with radio hurt its relative performance, because most discretionary ad spending went to other media, most notably Internet advertising. Additionally, the S&P® and Goldman Sachs indexes both held a broader range of stocks than the fund, and were helped by their larger weightings in better-performing consumer staples stocks during the period. Internet portal Yahoo!, the fund's No. 1 absolute and relative contributor, was a big beneficiary of the shift in ad dollars to the Internet. Also helping was Procter & Gamble, the diversified consumer products giant, which executed its business strategy extremely well and saw its earnings estimates move up consistently. Detractors included Viacom, which owns Infinity Broadcasting, and radio operator Clear Channel Communications. During the period, radio advertising lagged while other forms of advertising picked up, causing these companies' earnings growth to come in lower than expected. Elsewhere, doughnut franchiser Krispy Kreme was not able to sustain the strong growth rate it previously achieved following its initial public offering, which disappointed investors and hurt its stock price.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Consumer Industries Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 950.20 | $ 7.27 |
Hypothetical A | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 948.80 | $ 8.48 |
Hypothetical A | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 947.00 | $ 10.89 |
Hypothetical A | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 947.00 | $ 10.84 |
Hypothetical A | $ 1,000.00 | $ 1,013.72 | $ 11.28 |
Institutional | |||
Actual | $ 1,000.00 | $ 951.80 | $ 6.07 |
Hypothetical A | $ 1,000.00 | $ 1,018.71 | $ 6.29 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.24% |
Institutional | 1.25% |
Annual Report
Advisor Consumer Industries Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Viacom, Inc. Class B (non-vtg.) | 6.7 |
Fox Entertainment Group, Inc. Class A | 5.3 |
Wal-Mart Stores, Inc. | 4.0 |
Home Depot, Inc. | 3.4 |
McDonald's Corp. | 2.9 |
News Corp. Ltd. sponsored ADR | 2.7 |
Univision Communications, Inc. Class A | 2.2 |
Procter & Gamble Co. | 2.0 |
Yahoo!, Inc. | 1.8 |
Target Corp. | 1.7 |
32.7 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Media | 31.9% | |
| Hotels, Restaurants & Leisure | 15.7% | |
| Specialty Retail | 11.2% | |
| Food & Staples Retailing | 6.0% | |
| Internet Software & Services | 4.4% | |
| All Others * | 30.8% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Consumer Industries Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value (Note 1) | ||
AUTOMOBILES - 2.2% | |||
Harley-Davidson, Inc. | 12,800 | $ 766,336 | |
Thor Industries, Inc. | 12,900 | 403,899 | |
TOTAL AUTOMOBILES | 1,170,235 | ||
BEVERAGES - 2.3% | |||
Anheuser-Busch Companies, Inc. | 10,000 | 519,000 | |
PepsiCo, Inc. | 9,700 | 485,000 | |
The Coca-Cola Co. | 5,200 | 228,072 | |
TOTAL BEVERAGES | 1,232,072 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.8% | |||
Bright Horizons Family Solutions, Inc. (a) | 4,877 | 247,508 | |
Cendant Corp. | 38,200 | 874,016 | |
R.R. Donnelley & Sons Co. | 4,200 | 133,308 | |
Strayer Education, Inc. | 2,300 | 224,066 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,478,898 | ||
FOOD & STAPLES RETAILING - 6.0% | |||
Costco Wholesale Corp. | 14,500 | 589,570 | |
CVS Corp. | 8,500 | 355,895 | |
Sysco Corp. | 200 | 6,890 | |
Wal-Mart Stores, Inc. | 39,880 | 2,114,039 | |
Whole Foods Market, Inc. | 900 | 74,088 | |
TOTAL FOOD & STAPLES RETAILING | 3,140,482 | ||
FOOD PRODUCTS - 3.7% | |||
Bunge Ltd. | 7,100 | 284,923 | |
Dean Foods Co. (a) | 14,050 | 519,569 | |
Fresh Del Monte Produce, Inc. | 9,500 | 252,225 | |
Hershey Foods Corp. | 200 | 9,688 | |
Smithfield Foods, Inc. (a) | 22,500 | 637,650 | |
SunOpta, Inc. (a) | 7,900 | 58,125 | |
The J.M. Smucker Co. | 4,000 | 167,240 | |
TOTAL FOOD PRODUCTS | 1,929,420 | ||
HOTELS, RESTAURANTS & LEISURE - 15.7% | |||
Boyd Gaming Corp. | 200 | 5,258 | |
Brinker International, Inc. (a) | 9,900 | 354,519 | |
Caesars Entertainment, Inc. (a) | 10,100 | 148,773 | |
Carnival Corp. unit | 17,600 | 820,336 | |
CBRL Group, Inc. | 3,700 | 122,914 | |
Hilton Hotels Corp. | 21,700 | 386,911 | |
International Game Technology | 8,300 | 268,422 | |
Kerzner International Ltd. (a) | 3,000 | 140,730 | |
Krispy Kreme Doughnuts, Inc. (a) | 21,500 | 338,410 | |
McDonald's Corp. | 54,700 | 1,504,250 | |
MGM MIRAGE (a) | 12,500 | 551,875 | |
Outback Steakhouse, Inc. | 13,700 | 556,357 | |
Royal Caribbean Cruises Ltd. | 20,700 | 884,925 | |
Shares | Value (Note 1) | ||
Starbucks Corp. (a) | 2,900 | $ 136,184 | |
Starwood Hotels & Resorts Worldwide, Inc. unit | 16,400 | 738,000 | |
Wendy's International, Inc. | 14,640 | 523,673 | |
Wyndham International, Inc. Class A (a) | 262,500 | 257,250 | |
Yum! Brands, Inc. | 14,100 | 541,299 | |
TOTAL HOTELS, RESTAURANTS & LEISURE | 8,280,086 | ||
HOUSEHOLD PRODUCTS - 3.7% | |||
Colgate-Palmolive Co. | 13,400 | 712,880 | |
Kimberly-Clark Corp. | 3,100 | 198,617 | |
Procter & Gamble Co. | 19,970 | 1,041,436 | |
TOTAL HOUSEHOLD PRODUCTS | 1,952,933 | ||
INDUSTRIAL CONGLOMERATES - 0.5% | |||
3M Co. | 3,200 | 263,552 | |
INTERNET & CATALOG RETAIL - 0.7% | |||
Amazon.com, Inc. (a) | 5,700 | 221,844 | |
eBay, Inc. (a) | 1,700 | 133,161 | |
TOTAL INTERNET & CATALOG RETAIL | 355,005 | ||
INTERNET SOFTWARE & SERVICES - 4.4% | |||
iVillage, Inc. (a) | 48,000 | 248,160 | |
Sina Corp. (a) | 20,500 | 581,175 | |
Sohu.com, Inc. (a) | 25,300 | 524,216 | |
Yahoo!, Inc. (a) | 31,870 | 981,596 | |
TOTAL INTERNET SOFTWARE & SERVICES | 2,335,147 | ||
LEISURE EQUIPMENT & PRODUCTS - 3.6% | |||
Brunswick Corp. | 21,000 | 819,630 | |
MarineMax, Inc. (a) | 11,200 | 275,408 | |
Polaris Industries, Inc. | 11,400 | 544,920 | |
SCP Pool Corp. | 5,900 | 243,257 | |
TOTAL LEISURE EQUIPMENT & PRODUCTS | 1,883,215 | ||
MEDIA - 31.9% | |||
ADVO, Inc. | 6,000 | 185,940 | |
Clear Channel Communications, Inc. | 14,549 | 519,399 | |
Comcast Corp.: | |||
Class A (a) | 10,500 | 287,700 | |
Class A (special) (a) | 9,480 | 254,064 | |
E.W. Scripps Co. Class A | 5,200 | 532,584 | |
EchoStar Communications Corp. | 14,200 | 393,624 | |
Fox Entertainment Group, Inc. Class A (a) | 103,200 | 2,789,496 | |
Gannett Co., Inc. | 5,680 | 472,235 | |
Harte-Hanks, Inc. | 4,400 | 106,304 | |
JC Decaux SA (a) | 15,500 | 329,492 | |
Lamar Advertising Co. Class A (a) | 13,220 | 531,576 | |
Liberty Media Corp. Class A (a) | 56,800 | 481,664 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
MEDIA - CONTINUED | |||
Liberty Media International, Inc.: | |||
Class A (a) | 5,240 | $ 163,383 | |
Class A rights 8/23/04 (a) | 1,048 | 6,298 | |
News Corp. Ltd. sponsored ADR | 45,300 | 1,439,181 | |
Omnicom Group, Inc. | 8,600 | 619,372 | |
Radio One, Inc. Class D (non-vtg.) (a) | 36,600 | 556,686 | |
Reuters Group PLC sponsored ADR | 3,800 | 134,406 | |
SBS Broadcasting SA (a) | 100 | 3,631 | |
Spanish Broadcasting System, Inc. | 14,140 | 121,463 | |
Time Warner, Inc. (a) | 44,600 | 742,590 | |
Tribune Co. | 12,500 | 530,625 | |
Univision Communications, Inc. | 40,200 | 1,164,594 | |
Viacom, Inc.: | |||
Class A | 18,700 | 636,735 | |
Class B (non-vtg.) | 104,397 | 3,506,694 | |
Washington Post Co. Class B | 200 | 173,580 | |
Westwood One, Inc. (a) | 4,500 | 107,100 | |
TOTAL MEDIA | 16,790,416 | ||
MULTILINE RETAIL - 4.1% | |||
Big Lots, Inc. (a) | 8,700 | 106,488 | |
Family Dollar Stores, Inc. | 9,000 | 250,740 | |
Federated Department Stores, Inc. | 5,400 | 258,768 | |
JCPenney Co., Inc. | 7,400 | 296,000 | |
Neiman Marcus Group, Inc. Class A | 1,900 | 103,645 | |
Nordstrom, Inc. | 4,500 | 197,550 | |
Saks, Inc. | 3,200 | 41,760 | |
Target Corp. | 21,000 | 915,600 | |
TOTAL MULTILINE RETAIL | 2,170,551 | ||
PERSONAL PRODUCTS - 2.6% | |||
Alberto-Culver Co. | 5,500 | 256,410 | |
Avon Products, Inc. | 20,300 | 873,103 | |
Gillette Co. | 6,400 | 249,472 | |
TOTAL PERSONAL PRODUCTS | 1,378,985 | ||
REAL ESTATE - 0.3% | |||
MeriStar Hospitality Corp. (a) | 24,700 | 143,260 | |
SPECIALTY RETAIL - 11.2% | |||
Aeropostale, Inc. (a) | 4,400 | 134,112 | |
American Eagle Outfitters, Inc. (a) | 25,700 | 842,189 | |
Best Buy Co., Inc. | 4,300 | 207,088 | |
Chico's FAS, Inc. (a) | 5,900 | 247,033 | |
Foot Locker, Inc. | 16,400 | 369,000 | |
Gap, Inc. | 5,600 | 127,120 | |
Home Depot, Inc. | 53,590 | 1,807,055 | |
Hot Topic, Inc. (a) | 4,350 | 69,252 | |
Shares | Value (Note 1) | ||
Limited Brands, Inc. | 8,100 | $ 165,564 | |
Lowe's Companies, Inc. | 10,300 | 501,816 | |
Office Depot, Inc. (a) | 15,900 | 260,760 | |
PETsMART, Inc. | 4,500 | 139,545 | |
Staples, Inc. | 15,500 | 447,640 | |
Steiner Leisure Ltd. (a) | 11,272 | 269,514 | |
Toys 'R' Us, Inc. (a) | 9,200 | 151,432 | |
West Marine, Inc. (a) | 6,100 | 126,026 | |
TOTAL SPECIALTY RETAIL | 5,865,146 | ||
TEXTILES APPAREL & LUXURY GOODS - 3.1% | |||
Coach, Inc. (a) | 2,800 | 119,812 | |
Kenneth Cole Productions, Inc. Class A | 3,200 | 102,688 | |
Liz Claiborne, Inc. | 10,500 | 379,995 | |
NIKE, Inc. Class B | 7,200 | 523,512 | |
Phoenix Footwear Group, Inc. (a) | 10,900 | 119,246 | |
Polo Ralph Lauren Corp. Class A | 7,600 | 250,496 | |
Quiksilver, Inc. (a) | 4,900 | 105,644 | |
TOTAL TEXTILES APPAREL & LUXURY GOODS | 1,601,393 | ||
TOTAL COMMON STOCKS (Cost $51,131,306) | 51,970,796 | ||
Money Market Funds - 3.3% | |||
Fidelity Cash Central Fund, 1.33% (b) | 1,310,661 | 1,310,661 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 412,050 | 412,050 | |
TOTAL MONEY MARKET FUNDS (Cost $1,722,711) | 1,722,711 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $52,854,017) | 53,693,507 | ||
NET OTHER ASSETS - (2.1)% | (1,081,742) | ||
NET ASSETS - 100% | $ 52,611,765 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
The fund hereby designates approximately $184,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
Consumer Industries
Advisor Consumer Industries Fund
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $416,472) (cost $52,854,017) - See accompanying schedule | $ 53,693,507 | |
Cash | 11,805 | |
Receivable for fund shares sold | 167,173 | |
Dividends receivable | 17,666 | |
Interest receivable | 3,380 | |
Prepaid expenses | 87 | |
Receivable from investment adviser for expense reductions | 6,199 | |
Other affiliated receivables | 9 | |
Other receivables | 4,363 | |
Total assets | 53,904,189 | |
Liabilities | ||
Payable for investments purchased | $ 666,408 | |
Payable for fund shares redeemed | 98,403 | |
Accrued management fee | 25,388 | |
Distribution fees payable | 29,411 | |
Other affiliated payables | 21,947 | |
Other payables and accrued expenses | 38,817 | |
Collateral on securities loaned, at value | 412,050 | |
Total liabilities | 1,292,424 | |
Net Assets | $ 52,611,765 | |
Net Assets consist of: | ||
Paid in capital | $ 49,776,131 | |
Accumulated net investment loss | (36) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,996,180 | |
Net unrealized appreciation (depreciation) on investments | 839,490 | |
Net Assets | $ 52,611,765 | |
Calculation of Maximum Offering Price | $ 14.51 | |
Maximum offering price per share (100/94.25 of $14.51) | $ 15.40 | |
Class T: | $ 14.27 | |
Maximum offering price per share (100/96.50 of $14.27) | $ 14.79 | |
Class B: | $ 13.75 | |
Class C: | $ 13.77 | |
Institutional: | $ 14.81 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 482,242 | |
Interest | 18,130 | |
Security lending | 2,470 | |
Total income | 502,842 | |
Expenses | ||
Management fee | $ 304,315 | |
Transfer agent fees | 221,774 | |
Distribution fees | 354,599 | |
Accounting and security lending fees | 44,395 | |
Non-interested trustees' compensation | 286 | |
Custodian fees and expenses | 6,819 | |
Registration fees | 56,012 | |
Audit | 36,600 | |
Legal | 220 | |
Miscellaneous | 12,981 | |
Total expenses before reductions | 1,038,001 | |
Expense reductions | (51,311) | 986,690 |
Net investment income (loss) | (483,848) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 5,966,359 | |
Foreign currency transactions | (254) | |
Total net realized gain (loss) | 5,966,105 | |
Change in net unrealized appreciation (depreciation) on investment securities | (3,103,656) | |
Net gain (loss) | 2,862,449 | |
Net increase (decrease) in net assets resulting from operations | $ 2,378,601 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Industries Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (483,848) | $ (323,122) |
Net realized gain (loss) | 5,966,105 | (2,493,545) |
Change in net unrealized appreciation (depreciation) | (3,103,656) | 5,783,611 |
Net increase (decrease) in net assets resulting from operations | 2,378,601 | 2,966,944 |
Share transactions - net increase (decrease) | 3,962,592 | 3,526,707 |
Redemption fees | 7,430 | 16,225 |
Total increase (decrease) in net assets | 6,348,623 | 6,509,876 |
Net Assets | ||
Beginning of period | 46,263,142 | 39,753,266 |
End of period (including accumulated net investment loss of $36 and $0, respectively) | $ 52,611,765 | $ 46,263,142 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.71 | $ 12.71 | $ 15.20 | $ 15.04 | $ 16.01 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.07) | (.04) | (.05) | .01 | (.04) |
Net realized and unrealized gain (loss) | .87 | 1.04 | (2.09) | .15 | (.68) |
Total from investment operations | .80 | 1.00 | (2.14) | .16 | (.72) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 14.51 | $ 13.71 | $ 12.71 | $ 15.20 | $ 15.04 |
Total Return A, B | 5.84% | 7.87% | (14.30)% | 1.06% | (4.48)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.55% | 1.70% | 1.69% | 1.71% | 1.62% |
Expenses net of voluntary waivers, if any | 1.50% | 1.53% | 1.50% | 1.50% | 1.50% |
Expenses net of all reductions | 1.45% | 1.48% | 1.47% | 1.49% | 1.49% |
Net investment income (loss) | (.50)% | (.33)% | (.36)% | .08% | (.24)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 11,856 | $ 9,101 | $ 7,209 | $ 4,648 | $ 3,609 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Industries
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.51 | $ 12.57 | $ 15.06 | $ 14.93 | $ 15.93 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.07) | (.09) | (.02) | (.08) |
Net realized and unrealized gain (loss) | .87 | 1.01 | (2.05) | .15 | (.67) |
Total from investment operations | .76 | .94 | (2.14) | .13 | (.75) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 14.27 | $ 13.51 | $ 12.57 | $ 15.06 | $ 14.93 |
Total ReturnA,B | 5.63% | 7.48% | (14.44)% | .87% | (4.69)% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.81% | 1.87% | 1.89% | 1.98% | 1.85% |
Expenses net of voluntary waivers, if any | 1.75% | 1.78% | 1.75% | 1.75% | 1.75% |
Expenses net of all reductions | 1.70% | 1.73% | 1.72% | 1.73% | 1.73% |
Net investment income (loss) | (.74)% | (.58)% | (.61)% | (.17)% | (.49)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 15,555 | $ 13,693 | $ 12,132 | $ 12,899 | $ 13,275 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.08 | $ 12.22 | $ 14.73 | $ 14.69 | $ 15.76 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.18) | (.13) | (.15) | (.10) | (.15) |
Net realized and unrealized gain (loss) | .85 | .99 | (2.01) | .14 | (.67) |
Total from investment operations | .67 | .86 | (2.16) | .04 | (.82) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital C | - E | - E | -E | -E | .01 |
Net asset value, end of period | $ 13.75 | $ 13.08 | $ 12.22 | $ 14.73 | $ 14.69 |
Total Return A,B | 5.12% | 7.04% | (14.91)% | .27% | (5.19)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.29% | 2.37% | 2.39% | 2.51% | 2.41% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.20% | 2.19% | 2.22% | 2.24% | 2.24% |
Net investment income (loss) | (1.25)% | (1.05)% | (1.11)% | (.67)% | (.99)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 17,302 | $ 15,944 | $ 13,807 | $ 13,483 | $ 9,021 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.10 | $ 12.24 | $ 14.75 | $ 14.71 | $ 15.78 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.18) | (.13) | (.15) | (.10) | (.15) |
Net realized and unrealized gain (loss) | .85 | .99 | (2.01) | .14 | (.67) |
Total from investment operations | .67 | .86 | (2.16) | .04 | (.82) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.77 | $ 13.10 | $ 12.24 | $ 14.75 | $ 14.71 |
Total Return A,B | 5.11% | 7.03% | (14.89)% | .27% | (5.19)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.24% | 2.33% | 2.35% | 2.49% | 2.42% |
Expenses net of voluntary waivers, if any | 2.24% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.19% | 2.19% | 2.22% | 2.24% | 2.24% |
Net investment income (loss) | (1.24)% | (1.05)% | (1.11)% | (.67)% | (.99)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 6,992 | $ 6,759 | $ 5,391 | $ 5,504 | $ 3,048 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.95 | $ 12.91 | $ 15.38 | $ 15.18 | $ 16.11 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.04) | (.01) | (.02) | .05 | - D |
Net realized and unrealized gain (loss) | .90 | 1.05 | (2.10) | .15 | (.69) |
Total from investment operations | .86 | 1.04 | (2.12) | .20 | (.69) |
Distributions from net realized gain | - | - | (.35) | - | (.20) |
Distributions in excess of net realized gain | - | - | - | - | (.06) |
Total distributions | - | - | (.35) | - | (.26) |
Redemption fees added to paid in capital B | - D | - D | - D | - D | .02 |
Net asset value, end of period | $ 14.81 | $ 13.95 | $ 12.91 | $ 15.38 | $ 15.18 |
Total Return A | 6.16% | 8.06% | (14.00)% | 1.32% | (4.20)% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | 1.34% | 1.49% | 1.39% | 1.57% | 1.31% |
Expenses net of voluntary waivers, if any | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% |
Expenses net of all reductions | 1.20% | 1.19% | 1.22% | 1.24% | 1.24% |
Net investment income (loss) | (.25)% | (.05)% | (.11)% | .33% | .01% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 907 | $ 766 | $ 1,215 | $ 1,249 | $ 1,449 |
Portfolio turnover rate | 152% | 88% | 136% | 77% | 69% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. BCalculated based on average shares outstanding during the period. CExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. DAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Industries
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Consumer Industries Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Distributions are recorded on the ex-dividend date.
Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as a distribution from realized gain for income tax purposes. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period. Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 4,079,576 | | |
Unrealized depreciation | (3,318,225) | |
Net unrealized appreciation (depreciation) | 761,351 | |
Undistributed long-term capital gain | 1,928,104 | |
Cost for federal income tax purposes | $ 52,932,156 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $80,991,514 and $77,699,133, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 27,921 | $ - |
Class T | .25% | .25% | 80,665 | 57 |
Class B | .75% | .25% | 178,570 | 133,929 |
Class C | .75% | .25% | 67,443 | 11,582 |
$ 354,599 | $ 145,568 |
Consumer Industries
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 19,384 | |
Class T | 3,826 | |
Class B* | 46,893 | |
Class C* | 637 | |
$ 70,740 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 47,522 | .43 |
Class T | 70,920 | .44 |
Class B | 74,503 | .42 |
Class C | 24,663 | .37 |
Institutional Class | 4,166 | .47 |
$ 221,774 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $18,096 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $6,947 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 5,213 |
Class T | 1.75% | 10,536 |
Class B | 2.25% | 7,489 |
Institutional Class | 1.25% | 835 |
$ 24,073 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $27,238 for the period.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 362,299 | 377,980 | $ 5,424,551 | $ 4,774,106 |
Shares redeemed | (209,272) | (281,020) | (3,099,528) | (3,483,682) |
Net increase (decrease) | 153,027 | 96,960 | $ 2,325,023 | $ 1,290,424 |
Class T | ||||
Shares sold | 372,905 | 363,773 | $ 5,380,121 | $ 4,562,911 |
Shares redeemed | (296,211) | (315,873) | (4,343,994) | (3,918,341) |
Net increase (decrease) | 76,694 | 47,900 | $ 1,036,127 | $ 644,570 |
Class B | ||||
Shares sold | 317,001 | 479,966 | $ 4,519,412 | $ 5,825,118 |
Shares redeemed | (277,375) | (390,683) | (3,946,551) | (4,652,792) |
Net increase (decrease) | 39,626 | 89,283 | $ 572,861 | $ 1,172,326 |
Class C | ||||
Shares sold | 145,559 | 207,444 | $ 2,089,237 | $ 2,509,927 |
Shares redeemed | (153,637) | (131,925) | (2,161,430) | (1,592,035) |
Net increase (decrease) | (8,078) | 75,519 | $ (72,193) | $ 917,892 |
Institutional Class | ||||
Shares sold | 20,688 | 21,067 | $ 317,524 | $ 270,692 |
Shares redeemed | (14,366) | (60,319) | (216,750) | (769,197) |
Net increase (decrease) | 6,322 | (39,252) | $ 100,774 | $ (498,505) |
Consumer Industries
Advisor Cyclical Industries Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 20.56% | 4.94% | 9.70% |
Class T (incl. 3.50% sales charge) | 23.21% | 5.19% | 9.78% |
Class B (incl. contingent deferred sales charge) B, C | 21.89% | 5.06% | 9.79% |
Class C (incl. contingent deferred sales charge) D, E | 25.99% | 5.40% | 9.73% |
A From September 3, 1996.
B Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on March 3, 1997. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
C Class B shares contingent deferred sales charges included in the past one year, five year and life of fund total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns between March 3, 1997 and November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
E Class C shares' contingent deferred sales charges included in the past one year, five year and life of fund total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Cyclical Industries Fund - Class T on September 3, 1996, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Cyclical Industries Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Matthew Friedman, who became Portfolio Manager of Fidelity ® Advisor Cyclical Industries Fund on May 3, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
While the broad market reversed course during the 12-month period, cyclical stocks thrived throughout the time frame. The fund's Class A, Class T, Class B and Class C shares returned 27.92%, 27.67%, 26.89% and 26.99%, respectively, easily outdistancing the S&P 500 and the Goldman Sachs ® Cyclical Industries Index, which increased 24.72% for the 12 months. After beginning the period with an overweighting in early-cycle companies - those that see increased profits early in an economic recovery - we reversed our overweighting to late-cycle stocks, which typically profit later when orders for their products increase faster than their expenses. This weighting shift worked in the fund's favor, as late-cycle companies in aerospace and chemicals outperformed. Conglomerates Tyco International and General Electric were among the top contributors to both absolute and relative performance. Tyco emerged strongly from its accounting problems and GE benefited from late-cycle products. Elsewhere, Boeing and Honeywell benefited from new plane orders. Chemical company Solutia, which filed for bankruptcy in December, and Continental Airlines, which was caught in a spiral of higher fuel prices and competition from discount airlines, dragged on performance.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Cyclical Industries Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,067.20 | $ 7.71 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 1,066.10 | $ 8.99 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,062.80 | $ 11.54 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 1,063.10 | $ 11.54 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Institutional | |||
Actual | $ 1,000.00 | $ 1,068.20 | $ 6.43 |
HypotheticalA | $ 1,000.00 | $ 1,018.71 | $ 6.29 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.25% |
Institutional | 1.25% |
Annual Report
Advisor Cyclical Industries Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
General Electric Co. | 7.0 |
Tyco International Ltd. | 6.2 |
3M Co. | 5.3 |
Honeywell International, Inc. | 5.0 |
The Boeing Co. | 3.3 |
Dow Chemical Co. | 3.1 |
Lockheed Martin Corp. | 2.8 |
FedEx Corp. | 2.1 |
Lyondell Chemical Co. | 2.0 |
ITT Industries, Inc. | 1.8 |
38.6 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Industrial Conglomerates | 18.7% | |
| Aerospace & Defense | 17.5% | |
| Chemicals | 14.2% | |
| Machinery | 10.1% | |
| Air Freight & Logistics | 7.5% | |
| All Others * | 32.0% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Cyclical Industries Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 94.7% | |||
Shares | Value (Note 1) | ||
AEROSPACE & DEFENSE - 17.5% | |||
Bombardier, Inc. Class B (sub. vtg.) | 1,600 | $ 4,020 | |
DRS Technologies, Inc. (a) | 6,600 | 235,752 | |
EADS NV | 4,579 | 126,077 | |
EDO Corp. | 4,040 | 95,667 | |
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR | 2,800 | 80,080 | |
General Dynamics Corp. | 100 | 9,882 | |
Goodrich Corp. | 10,900 | 352,397 | |
Honeywell International, Inc. | 68,500 | 2,576,285 | |
L-3 Communications Holdings, Inc. | 2,000 | 122,300 | |
Lockheed Martin Corp. | 27,414 | 1,452,668 | |
Northrop Grumman Corp. | 13,354 | 702,420 | |
Precision Castparts Corp. | 8,300 | 467,539 | |
Raytheon Co. | 6,700 | 224,785 | |
Rockwell Collins, Inc. | 5,840 | 199,845 | |
The Boeing Co. | 33,300 | 1,689,975 | |
United Defense Industries, Inc. (a) | 19,100 | 661,815 | |
TOTAL AEROSPACE & DEFENSE | 9,001,507 | ||
AIR FREIGHT & LOGISTICS - 7.5% | |||
C.H. Robinson Worldwide, Inc. | 1,900 | 83,087 | |
CNF, Inc. | 10,200 | 420,852 | |
Dynamex, Inc. (a) | 15,740 | 244,757 | |
EGL, Inc. (a) | 18,000 | 457,380 | |
FedEx Corp. | 13,000 | 1,064,440 | |
J.B. Hunt Transport Services, Inc. | 3,700 | 142,117 | |
Ryder System, Inc. | 3,300 | 141,570 | |
United Parcel Service, Inc. Class B | 10,400 | 748,384 | |
UTI Worldwide, Inc. | 10,580 | 544,764 | |
TOTAL AIR FREIGHT & LOGISTICS | 3,847,351 | ||
AIRLINES - 2.3% | |||
AirTran Holdings, Inc. (a) | 9,800 | 109,270 | |
Alaska Air Group, Inc. (a) | 2,300 | 47,909 | |
AMR Corp. (a) | 31,000 | 261,330 | |
Continental Airlines, Inc. Class B (a) | 33,400 | 300,266 | |
Frontier Airlines, Inc. (a) | 80 | 630 | |
Southwest Airlines Co. | 33,100 | 478,957 | |
TOTAL AIRLINES | 1,198,362 | ||
AUTO COMPONENTS - 1.7% | |||
American Axle & Manufacturing Holdings, Inc. | 2,100 | 72,135 | |
Autoliv, Inc. | 100 | 4,209 | |
BorgWarner, Inc. | 1,800 | 84,942 | |
Delphi Corp. | 100 | 951 | |
Gentex Corp. | 7,300 | 261,340 | |
Goodyear Tire & Rubber Co. (a) | 200 | 2,190 | |
Shares | Value (Note 1) | ||
Johnson Controls, Inc. | 8,000 | $ 451,600 | |
Lear Corp. | 100 | 5,513 | |
TOTAL AUTO COMPONENTS | 882,880 | ||
AUTOMOBILES - 0.5% | |||
Bayerische Motoren Werke AG (BMW) | 4,400 | 195,319 | |
Ford Motor Co. | 100 | 1,472 | |
Hyundai Motor Co. Ltd. | 1,150 | 42,786 | |
TOTAL AUTOMOBILES | 239,577 | ||
BUILDING PRODUCTS - 1.4% | |||
American Standard Companies, Inc. (a) | 10,700 | 405,423 | |
Masco Corp. | 10,800 | 326,592 | |
TOTAL BUILDING PRODUCTS | 732,015 | ||
CHEMICALS - 14.2% | |||
Air Products & Chemicals, Inc. | 16,100 | 833,175 | |
Airgas, Inc. | 8,500 | 184,875 | |
Cytec Industries, Inc. | 6,000 | 279,600 | |
Dow Chemical Co. | 39,700 | 1,583,633 | |
Eastman Chemical Co. | 3,740 | 167,103 | |
Ecolab, Inc. | 8,100 | 247,050 | |
Ferro Corp. | 8,300 | 165,253 | |
Georgia Gulf Corp. | 3,600 | 127,980 | |
Hercules, Inc. (a) | 18,700 | 220,847 | |
Lyondell Chemical Co. | 57,223 | 1,040,314 | |
Millennium Chemicals, Inc. | 27,700 | 488,905 | |
Minerals Technologies, Inc. | 400 | 22,348 | |
Monsanto Co. | 8,500 | 308,210 | |
Olin Corp. | 12,000 | 207,360 | |
PolyOne Corp. (a) | 20,700 | 149,661 | |
Potash Corp. of Saskatchewan | 1,600 | 154,337 | |
PPG Industries, Inc. | 4,200 | 247,590 | |
Praxair, Inc. | 21,500 | 848,175 | |
Rohm & Haas Co. | 300 | 11,760 | |
Spartech Corp. | 100 | 2,390 | |
TOTAL CHEMICALS | 7,290,566 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.5% | |||
Allied Waste Industries, Inc. (a) | 14,400 | 133,056 | |
Central Parking Corp. | 6,700 | 106,731 | |
Herman Miller, Inc. | 11,600 | 310,880 | |
HNI Corp. | 1,300 | 52,585 | |
Republic Services, Inc. | 2,600 | 74,360 | |
Waste Connections, Inc. (a) | 5,550 | 160,173 | |
Waste Management, Inc. | 16,900 | 475,566 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,313,351 | ||
CONSTRUCTION & ENGINEERING - 2.5% | |||
Dycom Industries, Inc. (a) | 25,700 | 692,358 | |
EMCOR Group, Inc. (a) | 2,600 | 112,502 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSTRUCTION & ENGINEERING - CONTINUED | |||
Fluor Corp. | 4,400 | $ 200,420 | |
Granite Construction, Inc. | 10,700 | 190,353 | |
Jacobs Engineering Group, Inc. (a) | 1,700 | 67,966 | |
TOTAL CONSTRUCTION & ENGINEERING | 1,263,599 | ||
CONSTRUCTION MATERIALS - 0.4% | |||
Eagle Materials, Inc. | 40 | 2,639 | |
Martin Marietta Materials, Inc. | 64 | 2,800 | |
Texas Industries, Inc. | 4,700 | 201,301 | |
TOTAL CONSTRUCTION MATERIALS | 206,740 | ||
CONTAINERS & PACKAGING - 0.1% | |||
Owens-Illinois, Inc. (a) | 900 | 13,230 | |
Packaging Corp. of America | 1,800 | 42,048 | |
TOTAL CONTAINERS & PACKAGING | 55,278 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.1% | |||
GATX Corp. | 2,500 | 63,700 | |
ELECTRICAL EQUIPMENT - 1.0% | |||
Baldor Electric Co. | 100 | 2,288 | |
Cooper Industries Ltd. Class A | 1,500 | 85,305 | |
Emerson Electric Co. | 3,600 | 218,520 | |
Roper Industries, Inc. | 3,700 | 207,200 | |
TOTAL ELECTRICAL EQUIPMENT | 513,313 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5% | |||
Cognex Corp. | 3,000 | 90,240 | |
Mettler-Toledo International, Inc. (a) | 1,500 | 62,550 | |
Molex, Inc. | 2,400 | 69,504 | |
Tech Data Corp. (a) | 1,300 | 48,698 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 270,992 | ||
ENERGY EQUIPMENT & SERVICES - 0.2% | |||
Cooper Cameron Corp. (a) | 2,100 | 107,289 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% | |||
Millipore Corp. (a) | 1,800 | 94,842 | |
Thermo Electron Corp. (a) | 3,500 | 90,020 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 184,862 | ||
HOUSEHOLD DURABLES - 3.9% | |||
D.R. Horton, Inc. | 17,100 | 472,473 | |
Harman International Industries, Inc. | 500 | 42,865 | |
Hovnanian Enterprises, Inc. Class A (a) | 100 | 3,103 | |
KB Home | 4,600 | 294,630 | |
Leggett & Platt, Inc. | 2,300 | 62,215 | |
Pulte Homes, Inc. | 7,800 | 426,114 | |
Ryland Group, Inc. | 5,000 | 387,100 | |
Shares | Value (Note 1) | ||
Standard Pacific Corp. | 100 | $ 4,641 | |
Toll Brothers, Inc. (a) | 7,600 | 302,024 | |
TOTAL HOUSEHOLD DURABLES | 1,995,165 | ||
INDUSTRIAL CONGLOMERATES - 18.7% | |||
3M Co. | 32,860 | 2,706,350 | |
Carlisle Companies, Inc. | 700 | 44,443 | |
General Electric Co. | 108,500 | 3,607,626 | |
Teleflex, Inc. | 700 | 31,115 | |
Tyco International Ltd. | 103,800 | 3,217,800 | |
TOTAL INDUSTRIAL CONGLOMERATES | 9,607,334 | ||
MACHINERY - 10.1% | |||
AGCO Corp. (a) | 19,500 | 407,940 | |
Astec Industries, Inc. (a) | 8,000 | 136,240 | |
Caterpillar, Inc. | 8,300 | 609,967 | |
Cummins, Inc. | 6,800 | 472,124 | |
Danaher Corp. | 2,300 | 116,495 | |
Dover Corp. | 7,600 | 301,568 | |
IDEX Corp. | 4,750 | 152,428 | |
Ingersoll-Rand Co. Ltd. Class A | 5,700 | 391,533 | |
ITT Industries, Inc. | 11,700 | 935,415 | |
Kennametal, Inc. | 873 | 38,412 | |
Manitowoc Co., Inc. | 16,600 | 562,906 | |
Navistar International Corp. (a) | 3,140 | 112,883 | |
Oshkosh Truck Co. | 600 | 31,782 | |
PACCAR, Inc. | 1,650 | 98,934 | |
Pall Corp. | 8,600 | 199,262 | |
Pentair, Inc. | 8,000 | 250,560 | |
SPX Corp. | 3,000 | 122,850 | |
Terex Corp. (a) | 1,500 | 58,365 | |
Timken Co. | 2,100 | 52,164 | |
Toro Co. | 1,200 | 78,600 | |
Wabash National Corp. (a) | 3,000 | 86,640 | |
TOTAL MACHINERY | 5,217,068 | ||
MEDIA - 0.4% | |||
EchoStar Communications Corp. | 7,300 | 202,356 | |
METALS & MINING - 1.8% | |||
Massey Energy Co. | 4,600 | 127,190 | |
Nucor Corp. | 9,600 | 803,040 | |
TOTAL METALS & MINING | 930,230 | ||
OFFICE ELECTRONICS - 0.0% | |||
Xerox Corp. (a) | 100 | 1,386 | |
OIL & GAS - 1.1% | |||
OMI Corp. | 10,500 | 152,775 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
OIL & GAS - CONTINUED | |||
Overseas Shipholding Group, Inc. | 4,000 | $ 179,640 | |
Teekay Shipping Corp. | 5,500 | 218,790 | |
TOTAL OIL & GAS | 551,205 | ||
ROAD & RAIL - 4.7% | |||
Canadian National Railway Co. | 10,450 | 468,707 | |
CSX Corp. | 27,750 | 868,575 | |
Landstar System, Inc. (a) | 3,825 | 190,523 | |
Marten Transport Ltd. (a) | 600 | 11,790 | |
Norfolk Southern Corp. | 6,300 | 168,147 | |
P.A.M. Transportation Services, Inc. (a) | 1,900 | 34,979 | |
Union Pacific Corp. | 11,700 | 659,178 | |
USF Corp. | 500 | 17,750 | |
TOTAL ROAD & RAIL | 2,419,649 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | |||
Cabot Microelectronics Corp. (a) | 800 | 28,392 | |
SPECIALTY RETAIL - 0.6% | |||
Advance Auto Parts, Inc. (a) | 7,800 | 289,536 | |
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Fastenal Co. | 2,100 | 130,998 | |
W.W. Grainger, Inc. | 2,840 | 150,378 | |
TOTAL TRADING COMPANIES & DISTRIBUTORS | 281,376 | ||
TOTAL COMMON STOCKS (Cost $42,658,296) | 48,695,079 | ||
Nonconvertible Preferred Stocks - 0.2% | |||
AUTOMOBILES - 0.2% | |||
Porsche AG (non-vtg.) | 148 | 95,674 | |
Money Market Funds - 6.7% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 3,151,374 | $ 3,151,374 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 285,000 | 285,000 | |
TOTAL MONEY MARKET FUNDS (Cost $3,436,374) | 3,436,374 | ||
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $46,191,217) | 52,227,127 | ||
NET OTHER ASSETS - (1.6)% | (807,475) | ||
NET ASSETS - 100% | $ 51,419,652 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
The fund hereby designates approximately $33,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Cyclical Industries Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $269,700) (cost $46,191,217) - See accompanying schedule | $ 52,227,127 | |
Cash | 687 | |
Receivable for investments sold | 7,327 | |
Receivable for fund shares sold | 251,155 | |
Dividends receivable | 16,439 | |
Interest receivable | 4,436 | |
Prepaid expenses | 47 | |
Receivable from investment adviser for expense reductions | 4,890 | |
Other receivables | 3,989 | |
Total assets | 52,516,097 | |
Liabilities | ||
Payable for investments purchased | $ 414,003 | |
Payable for fund shares redeemed | 292,503 | |
Accrued management fee | 24,231 | |
Distribution fees payable | 27,851 | |
Other affiliated payables | 16,569 | |
Other payables and accrued expenses | 36,288 | |
Collateral on securities loaned, at value | 285,000 | |
Total liabilities | 1,096,445 | |
Net Assets | $ 51,419,652 | |
Net Assets consist of: | ||
Paid in capital | $ 43,695,443 | |
Accumulated net investment loss | (20) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,688,317 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 6,035,912 | |
Net Assets | $ 51,419,652 | |
Calculation of Maximum Offering Price | $ 18.10 | |
Maximum offering price per share (100/94.25 of $18.10) | $ 19.20 | |
Class T: | $ 17.90 | |
Maximum offering price per share (100/96.50 of $17.90) | $ 18.55 | |
Class B: | $ 17.27 | |
Class C: | $ 17.36 | |
Institutional: | $ 18.48 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 490,281 | |
Interest | 17,164 | |
Security lending | 1,667 | |
Total income | 509,112 | |
Expenses | ||
Management fee | $ 216,642 | |
Transfer agent fees | 137,318 | |
Distribution fees | 263,248 | |
Accounting and security lending fees | 44,341 | |
Non-interested trustees' compensation | 191 | |
Custodian fees and expenses | 11,749 | |
Registration fees | 56,511 | |
Audit | 36,531 | |
Legal | 152 | |
Miscellaneous | 8,739 | |
Total expenses before reductions | 775,422 | |
Expense reductions | (54,000) | 721,422 |
Net investment income (loss) | (212,310) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 3,764,121 | |
Foreign currency transactions | (1,026) | |
Total net realized gain (loss) | 3,763,095 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 4,474,845 | |
Assets and liabilities in foreign currencies | (7) | |
Total change in net unrealized appreciation (depreciation) | 4,474,838 | |
Net gain (loss) | 8,237,933 | |
Net increase (decrease) in net assets resulting from operations | $ 8,025,623 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Cyclical Industries Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (212,310) | $ 5,720 |
Net realized gain (loss) | 3,763,095 | (481,261) |
Change in net unrealized appreciation (depreciation) | 4,474,838 | 2,738,197 |
Net increase (decrease) in net assets resulting from operations | 8,025,623 | 2,262,656 |
Distributions to shareholders from net investment income | - | (14,952) |
Share transactions - net increase (decrease) | 18,136,365 | (2,648,164) |
Redemption fees | 24,255 | 2,815 |
Total increase (decrease) in net assets | 26,186,243 | (397,645) |
Net Assets | ||
Beginning of period | 25,233,409 | 25,631,054 |
End of period (including accumulated net investment loss of $20 and $0, respectively) | $ 51,419,652 | $ 25,233,409 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.15 | $ 12.75 | $ 15.15 | $ 13.56 | $ 14.13 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.02) E | .06 | (.04) | .04 | .02 |
Net realized and unrealized gain (loss) | 3.96 | 1.36 | (2.37) | 1.98 | (.33) |
Total from investment operations | 3.94 | 1.42 | (2.41) | 2.02 | (.31) |
Distributions from net investment income | - | (.02) | - | (.04) | - |
Distributions from net realized gain | - | - | - | (.40) | (.27) |
Total distributions | - | (.02) | - | (.44) | (.27) |
Redemption fees added to paid in capital C | .01 | - E | .01 | .01 | .01 |
Net asset value, end of period | $ 18.10 | $ 14.15 | $ 12.75 | $ 15.15 | $ 13.56 |
Total Return A, B | 27.92% | 11.16% | (15.84)% | 15.27% | (2.13)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.65% | 1.99% | 1.83% | 2.59% | 2.87% |
Expenses net of voluntary waivers, if any | 1.50% | 1.53% | 1.50% | 1.50% | 1.50% |
Expenses net of all reductions | 1.47% | 1.46% | 1.49% | 1.49% | 1.49% |
Net investment income (loss) | (.12)% | .46% | (.25)% | .28% | .18% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,612 | $ 4,272 | $ 3,160 | $ 2,270 | $ 973 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Cyclical Industries
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.02 | $ 12.66 | $ 15.09 | $ 13.48 | $ 14.07 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.06) | .03 | (.07) | - E | (.01) |
Net realized and unrealized gain (loss) | 3.93 | 1.34 | (2.36) | 2.00 | (.34) |
Total from investment operations | 3.87 | 1.37 | (2.43) | 2.00 | (.35) |
Distributions from net investment income | - | (.01) | - | (.01) | - |
Distributions from net realized gain | - | - | - | (.39) | (.25) |
Total distributions | - | (.01) | - | (.40) | (.25) |
Redemption fees added to paid in capital C | .01 | - E | - E | .01 | .01 |
Net asset value, end of period | $ 17.90 | $ 14.02 | $ 12.66 | $ 15.09 | $ 13.48 |
Total Return A, B | 27.67% | 10.84% | (16.10)% | 15.18% | (2.43)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.90% | 2.25% | 2.07% | 2.85% | 3.12% |
Expenses net of voluntary waivers, if any | 1.75% | 1.78% | 1.75% | 1.75% | 1.75% |
Expenses net of all reductions | 1.72% | 1.71% | 1.74% | 1.74% | 1.74% |
Net investment income (loss) | (.36)% | .22% | (.50)% | .03% | (.07)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,089 | $ 5,493 | $ 6,216 | $ 5,654 | $ 3,885 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.61 | $ 12.33 | $ 14.77 | $ 13.25 | $ 13.89 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.03) | (.14) | (.07) | (.07) |
Net realized and unrealized gain (loss) | 3.79 | 1.31 | (2.30) | 1.95 | (.34) |
Total from investment operations | 3.65 | 1.28 | (2.44) | 1.88 | (.41) |
Distributions from net realized gain | - | - | - | (.37) | (.24) |
Redemption fees added to paid in capital C | .01 | - E | - E | .01 | .01 |
Net asset value, end of period | $ 17.27 | $ 13.61 | $ 12.33 | $ 14.77 | $ 13.25 |
Total Return A, B | 26.89% | 10.38% | (16.52)% | 14.51% | (2.90)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.37% | 2.68% | 2.58% | 3.39% | 3.64% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.22% | 2.18% | 2.24% | 2.24% | 2.24% |
Net investment income (loss) | (.87)% | (.26)% | (1.00)% | (.47)% | (.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 14,722 | $ 9,005 | $ 9,008 | $ 5,674 | $ 1,879 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.67 | $ 12.39 | $ 14.84 | $ 13.26 | $ 13.91 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.03) | (.14) | (.07) | (.08) |
Net realized and unrealized gain (loss) | 3.82 | 1.31 | (2.31) | 2.00 | (.36) |
Total from investment operations | 3.68 | 1.28 | (2.45) | 1.93 | (.44) |
Distributions from net realized gain | - | - | - | (.35) | (.22) |
Redemption fees added to paid in capital C | .01 | - E | - E | - E | .01 |
Net asset value, end of period | $ 17.36 | $ 13.67 | $ 12.39 | $ 14.84 | $ 13.26 |
Total Return A, B | 26.99% | 10.33% | (16.51)% | 14.78% | (3.11)% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.28% | 2.57% | 2.49% | 3.36% | 3.62% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
Expenses net of all reductions | 2.22% | 2.18% | 2.24% | 2.24% | 2.24% |
Net investment income (loss) | (.87)% | (.26)% | (1.00)% | (.47)% | (.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 9,507 | $ 5,307 | $ 5,143 | $ 2,847 | $ 625 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.41 | $ 12.96 | $ 15.37 | $ 13.70 | $ 14.28 |
Income from Investment Operations | |||||
Net investment income (loss) B | .02 | .09 | - D | .08 | .06 |
Net realized and unrealized gain (loss) | 4.04 | 1.39 | (2.41) | 2.05 | (.36) |
Total from investment operations | 4.06 | 1.48 | (2.41) | 2.13 | (.30) |
Distributions from net investment income | - | (.03) | - | (.07) | - |
Distributions from net realized gain | - | - | - | (.40) | (.29) |
Total distributions | - | (.03) | - | (.47) | (.29) |
Redemption fees added to paid in capital B | .01 | - D | - D | .01 | .01 |
Net asset value, end of period | $ 18.48 | $ 14.41 | $ 12.96 | $ 15.37 | $ 13.70 |
Total Return A | 28.24% | 11.46% | (15.68)% | 15.95% | (2.04)% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | 1.38% | 1.55% | 1.45% | 2.27% | 2.50% |
Expenses net of voluntary waivers, if any | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% |
Expenses net of all reductions | 1.22% | 1.18% | 1.24% | 1.24% | 1.24% |
Net investment income (loss) | .13% | .74% | - | .53% | .43% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 1,490 | $ 1,156 | $ 2,104 | $ 1,751 | $ 1,706 |
Portfolio turnover rate | 106% | 149% | 45% | 78% | 111% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Cyclical Industries
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Cyclical Industries Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Distributions are recorded on the ex-dividend date.
Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as a distribution from net investment income and realized gain for income tax purposes. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period. Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), net operating losses, capital loss carryforwards and losses deferred due to wash sales.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 6,915,811 | | |
Unrealized depreciation | (1,317,531) | |
Net unrealized appreciation (depreciation) | 5,598,280 | |
Undistributed ordinary income | 714,922 | |
Undistributed long-term capital gain | 1,342,472 | |
Cost for federal income tax purposes | $ 46,628,847 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ - | $ 14,952 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $53,901,173 and $38,156,857, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 19,471 | $ - |
Class T | .25% | .25% | 42,018 | - |
Class B | .75% | .25% | 121,958 | 91,469 |
Class C | .75% | .25% | 79,801 | 26,220 |
$ 263,248 | $ 117,689 |
Cyclical Industries
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 27,909 |
Class T | 3,899 |
Class B* | 29,896 |
Class C* | 2,911 |
$ 64,615 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 30,863 | .40 |
Class T | 33,895 | .40 |
Class B | 45,337 | .37 |
Class C | 22,581 | .28 |
Institutional Class | 4,642 | .38 |
$ 137,318 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $17,139 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $6,684 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 11,698 |
Class T | 1.75% | 13,264 |
Class B | 2.25% | 15,332 |
Class C | 2.25% | 2,838 |
Institutional Class | 1.25% | 1,604 |
$ 44,736 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $9,264 for the period.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2004 | 2003 | |
From net investment income | ||
Class A | $ - | $ 5,752 |
Class T | - | 4,663 |
Institutional Class | - | 4,537 |
Total | $ - | $ 14,952 |
Cyclical Industries
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 906,243 | 236,068 | $ 15,361,054 | $ 2,919,194 |
Reinvestment of distributions | - | 416 | - | 5,011 |
Shares redeemed | (511,353) | (182,486) | (8,642,465) | (2,231,044) |
Net increase (decrease) | 394,890 | 53,998 | $ 6,718,589 | $ 693,161 |
Class T | ||||
Shares sold | 524,204 | 99,527 | $ 8,942,910 | $ 1,210,658 |
Reinvestment of distributions | - | 347 | - | 4,150 |
Shares redeemed | (184,575) | (199,161) | (3,062,075) | (2,441,170) |
Net increase (decrease) | 339,629 | (99,287) | $ 5,880,835 | $ (1,226,362) |
Class B | ||||
Shares sold | 439,402 | 176,262 | $ 7,031,675 | $ 2,099,562 |
Shares redeemed | (249,000) | (245,144) | (4,000,080) | (2,926,892) |
Net increase (decrease) | 190,402 | (68,882) | $ 3,031,595 | $ (827,330) |
Class C | ||||
Shares sold | 350,466 | 106,747 | $ 5,537,878 | $ 1,304,843 |
Shares redeemed | (191,062) | (133,698) | (3,095,385) | (1,603,922) |
Net increase (decrease) | 159,404 | (26,951) | $ 2,442,493 | $ (299,079) |
Institutional Class | ||||
Shares sold | 56,561 | 18,786 | $ 991,073 | $ 240,107 |
Reinvestment of distributions | - | 308 | - | 3,771 |
Shares redeemed | (56,142) | (101,267) | (928,220) | (1,232,432) |
Net increase (decrease) | 419 | (82,173) | $ 62,853 | $ (988,554) |
Annual Report
Advisor Developing Communications Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of | |
Class A (incl. 5.75% sales charge) | 10.49% | -12.63% | |
Class T (incl. 3.50% sales charge) | 12.87% | -12.24% | |
Class B (incl. contingent deferred sales charge)B | 11.27% | -12.57% | |
Class C (incl. contingent deferred sales charge)C | 15.27% | -11.83% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 5% and 3%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 1% and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Developing Communications Fund - Class T on December 27, 2000, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Developing Communications Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Developing Communications Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months ending July 31, 2004, the fund's Class A, Class T, Class B and Class C shares returned 17.24%, 16.97%, 16.27% and 16.27%, respectively, beating both the 9.15% return of the Goldman Sachs ® Technology Index and the Standard & Poor's 500 Index. A sizable overweighting in wireless telecommunications equipment was the most important factor helping the fund's performance. The strongest contributor during the period was LM Ericsson, which was aided by an effective cost-cutting program and increased competition among wireless service providers to improve their networks. Wireless handset provider Motorola also turned in a strong performance, helped by a number of exciting new products. On the negative side, the fund's results suffered from unfavorable stock picking in semiconductors, computer storage and peripherals, and wireline telecom equipment. In the latter category, CIENA underperformed, as the company missed its earnings targets due in part to difficulties in integrating a recent acquisition. Enterasys Networks was one of the enterprise equipment stocks I bought that didn't live up to my expectations. Despite a relatively cheap valuation, the stock was hurt by cautious corporate spending resulting from doubts about the staying power of the U.S. economic recovery.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Developing Communications Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 805.20 | $ 6.73 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 804.00 | $ 7.85 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 802.00 | $ 10.08 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 802.00 | $ 10.08 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 806.80 | $ 5.62 |
HypotheticalA | $ 1,000.00 | $ 1,018.71 | $ 6.29 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.25% |
Institutional Class | 1.25% |
Annual Report
Advisor Developing Communications Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
QUALCOMM, Inc. | 8.0 |
Marconi Corp. PLC | 6.9 |
Alcatel SA sponsored ADR | 5.7 |
Comverse Technology, Inc. | 5.2 |
Telefonaktiebolaget LM Ericsson ADR | 3.3 |
Motorola, Inc. | 2.6 |
F5 Networks, Inc. | 2.6 |
Mindspeed Technologies, Inc. | 2.3 |
Powerwave Technologies, Inc. | 2.2 |
Extreme Networks, Inc. | 2.0 |
40.8 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Communications | 64.6% | |
| Semiconductors & | 13.9% | |
| Wireless | 4.4% | |
| Software | 3.4% | |
| Electronic Equipment & | 2.5% | |
| All Others* | 11.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Developing Communications Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 94.2% | |||
Shares | Value (Note 1) | ||
COMMUNICATIONS EQUIPMENT - 64.6% | |||
3Com Corp. (a) | 34,600 | $ 170,578 | |
Aastra Technologies Ltd. (a) | 3,300 | 45,928 | |
ADC Telecommunications, Inc. (a) | 38,105 | 91,452 | |
Adtran, Inc. | 3,100 | 82,801 | |
Adva AG Optical Networking (a) | 16,952 | 105,580 | |
Advanced Fibre Communications, Inc. (a) | 60 | 1,006 | |
Airspan Networks, Inc. (a) | 4,000 | 17,480 | |
Alcatel SA sponsored ADR (a) | 59,340 | 767,860 | |
Alvarion Ltd. (a) | 21,400 | 260,866 | |
Arris Group, Inc. (a) | 6,800 | 29,886 | |
AudioCodes Ltd. (a) | 3,800 | 40,280 | |
Avaya, Inc. (a) | 3,050 | 44,683 | |
Bookham Technology PLC sponsored ADR (a) | 5,700 | 5,187 | |
Brooktrout, Inc. (a) | 6,200 | 54,684 | |
C-COR.net Corp. (a) | 4,224 | 34,299 | |
Carrier Access Corp. (a) | 15,200 | 113,088 | |
CIENA Corp. (a) | 91,350 | 257,607 | |
Comverse Technology, Inc. (a) | 41,360 | 705,602 | |
Ditech Communications Corp. (a) | 3,350 | 68,977 | |
Emulex Corp. (a) | 2,120 | 22,875 | |
Endwave Corp. (a) | 500 | 5,260 | |
Enterasys Networks, Inc. (a) | 103,530 | 173,930 | |
Extreme Networks, Inc. (a) | 50,320 | 272,734 | |
F5 Networks, Inc. (a) | 13,200 | 345,708 | |
Foundry Networks, Inc. (a) | 23,080 | 236,801 | |
Harmonic, Inc. (a) | 11,300 | 73,563 | |
Ixia (a) | 3,200 | 24,960 | |
Juniper Networks, Inc. (a) | 2,950 | 67,732 | |
Marconi Corp. PLC (a) | 81,696 | 929,828 | |
Motorola, Inc. | 22,200 | 353,646 | |
Network Equipment Technologies, Inc. (a) | 4,500 | 32,040 | |
Nokia Corp. sponsored ADR | 14,800 | 171,976 | |
Nortel Networks Corp. (a) | 56,580 | 207,083 | |
Oplink Communications, Inc. (a) | 3,100 | 5,549 | |
Packeteer, Inc. (a) | 2,600 | 24,388 | |
Powerwave Technologies, Inc. (a) | 53,940 | 298,828 | |
QLogic Corp. (a) | 1,300 | 31,785 | |
QUALCOMM, Inc. | 15,700 | 1,084,551 | |
Redback Networks, Inc. (a) | 37,900 | 202,386 | |
REMEC, Inc. (a) | 30,100 | 140,868 | |
Research in Motion Ltd. (a) | 1,940 | 119,968 | |
Riverstone Networks, Inc. (a) | 113,800 | 142,250 | |
Scientific-Atlanta, Inc. | 6,140 | 188,805 | |
SpectraLink Corp. | 3,600 | 33,156 | |
Stratex Networks, Inc. (a) | 2,700 | 6,696 | |
Sycamore Networks, Inc. (a) | 18,700 | 69,938 | |
Tekelec (a) | 2,820 | 54,793 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 16,422 | 438,632 | |
Telson Electronics Co. Ltd. (a) | 16,942 | 799 | |
Shares | Value (Note 1) | ||
Vyyo, Inc. (a) | 4,500 | $ 24,300 | |
WJ Communications, Inc. (a) | 19,200 | 50,112 | |
TOTAL COMMUNICATIONS EQUIPMENT | 8,733,784 | ||
COMPUTERS & PERIPHERALS - 1.7% | |||
Compal Electronics, Inc. | 74,000 | 73,804 | |
Concurrent Computer Corp. (a) | 12,990 | 21,304 | |
Hutchinson Technology, Inc. (a) | 1,300 | 28,951 | |
NEC Corp. ADR | 90 | 567 | |
Seagate Technology | 6,280 | 72,032 | |
Synaptics, Inc. (a) | 700 | 10,353 | |
Western Digital Corp. (a) | 3,700 | 25,937 | |
TOTAL COMPUTERS & PERIPHERALS | 232,948 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.4% | |||
Philippine Long Distance Telephone Co. sponsored ADR (a) | 1,000 | 22,410 | |
PT Indosat Tbk sponsored ADR | 700 | 16,037 | |
PT Telkomunikasi Indonesia Tbk sponsored ADR | 1,000 | 17,010 | |
Verizon Communications, Inc. | 10 | 385 | |
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 55,842 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.5% | |||
Aeroflex, Inc. (a) | 6,000 | 66,540 | |
Anritsu Corp. | 7,000 | 40,856 | |
AU Optronics Corp. sponsored ADR | 8,975 | 105,456 | |
Ingram Micro, Inc. Class A (a) | 2,960 | 42,180 | |
Merix Corp. (a) | 3,100 | 31,806 | |
Richardson Electronics Ltd. | 1,500 | 14,025 | |
Sirenza Microdevices, Inc. (a) | 8,100 | 39,366 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 340,229 | ||
HOUSEHOLD DURABLES - 0.5% | |||
LG Electronics, Inc. | 1,580 | 65,963 | |
INTERNET SOFTWARE & SERVICES - 1.6% | |||
InfoSpace, Inc. (a) | 1,100 | 41,206 | |
Openwave Systems, Inc. (a) | 15,360 | 174,643 | |
TOTAL INTERNET SOFTWARE & SERVICES | 215,849 | ||
MEDIA - 1.2% | |||
EchoStar Communications Corp. | 5,300 | 146,916 | |
News Corp. Ltd. sponsored ADR | 267 | 8,483 | |
Viacom, Inc. Class B (non-vtg.) | 10 | 336 | |
TOTAL MEDIA | 155,735 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 13.9% | |||
Advanced Energy Industries, Inc. (a) | 9,300 | 91,698 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Agere Systems, Inc. Class B (a) | 103,650 | $ 117,125 | |
Amkor Technology, Inc. (a) | 3,200 | 12,960 | |
Analog Devices, Inc. | 6,800 | 269,960 | |
Applied Materials, Inc. (a) | 2,700 | 45,819 | |
Conexant Systems, Inc. (a) | 45,795 | 72,814 | |
Freescale Semiconductor, Inc. Class A | 3,700 | 51,985 | |
Helix Technology Corp. | 2,900 | 41,876 | |
Intel Corp. | 2,840 | 69,239 | |
Intersil Corp. Class A | 7,900 | 145,123 | |
KLA-Tencor Corp. (a) | 2,400 | 98,904 | |
LTX Corp. (a) | 4,500 | 36,585 | |
Marvell Technology Group Ltd. (a) | 1,600 | 37,152 | |
Mindspeed Technologies, Inc. (a) | 94,581 | 305,497 | |
National Semiconductor Corp. (a) | 3,800 | 65,170 | |
Novellus Systems, Inc. (a) | 1,500 | 40,500 | |
O2Micro International Ltd. (a) | 7,300 | 93,951 | |
PMC-Sierra, Inc. (a) | 3,670 | 43,600 | |
RF Micro Devices, Inc. (a) | 2,100 | 12,432 | |
Rohm Co. Ltd. | 800 | 85,759 | |
Silicon Laboratories, Inc. (a) | 800 | 28,232 | |
Teradyne, Inc. (a) | 1,200 | 20,520 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 2,100 | 62,727 | |
Vitesse Semiconductor Corp. (a) | 10,100 | 28,280 | |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 1,877,908 | ||
SOFTWARE - 3.4% | |||
Intervoice, Inc. (a) | 10,600 | 93,386 | |
RADWARE Ltd. (a) | 14,900 | 266,412 | |
Ulticom, Inc. (a) | 1,398 | 15,001 | |
Verint Systems, Inc. (a) | 20 | 634 | |
VERITAS Software Corp. (a) | 4,400 | 83,864 | |
TOTAL SOFTWARE | 459,297 | ||
WIRELESS TELECOMMUNICATION SERVICES - 4.4% | |||
Centennial Communications Corp. Class A (a) | 800 | 4,496 | |
KDDI Corp. | 1 | 5,117 | |
Nextel Communications, Inc. Class A (a) | 4,800 | 109,248 | |
Nextel Partners, Inc. Class A (a) | 6,500 | 104,455 | |
NII Holdings, Inc. (a) | 2,200 | 83,644 | |
Telesystem International Wireless, Inc. (a) | 14,020 | 148,506 | |
Western Wireless Corp. Class A (a) | 1,410 | 37,210 | |
Wireless Facilities, Inc. (a) | 14,370 | 107,488 | |
TOTAL WIRELESS TELECOMMUNICATION SERVICES | 600,164 | ||
TOTAL COMMON STOCKS (Cost $15,689,701) | 12,737,719 | ||
Money Market Funds - 1.8% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 243,430 | $ 243,430 | |
TOTAL INVESTMENT PORTFOLIO - 96.0% (Cost $15,933,131) | 12,981,149 | ||
NET OTHER ASSETS - 4.0% | 534,089 | ||
NET ASSETS - 100% | $ 13,515,238 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 69.3% |
United Kingdom | 6.9% |
France | 5.7% |
Israel | 4.2% |
Canada | 3.8% |
Sweden | 3.3% |
Taiwan | 1.3% |
Finland | 1.3% |
Cayman Islands | 1.2% |
Others (individually less than 1%) | 3.0% |
100.0% |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $480,000 all of which will expire on July 31, 2011. |
See accompanying notes which are an integral part of the financial statements.
Developing Communications
Advisor Developing Communications Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (cost $15,933,131) - See accompanying schedule | $ 12,981,149 | |
Cash | 7,049 | |
Foreign currency held at value (cost $74,209) | 74,110 | |
Receivable for investments sold | 930,959 | |
Receivable for fund shares sold | 43,105 | |
Dividends receivable | 927 | |
Interest receivable | 405 | |
Prepaid expenses | 12 | |
Receivable from investment adviser for expense reductions | 10,326 | |
Other affiliated receivables | 24 | |
Other receivables | 8,630 | |
Total assets | 14,056,696 | |
Liabilities | ||
Payable for investments purchased | $ 327,230 | |
Payable for fund shares redeemed | 155,078 | |
Accrued management fee | 6,909 | |
Distribution fees payable | 7,656 | |
Other affiliated payables | 9,271 | |
Other payables and accrued expenses | 35,314 | |
Total liabilities | 541,458 | |
Net Assets | $ 13,515,238 | |
Net Assets consist of: | ||
Paid in capital | $ 17,426,699 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (959,380) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (2,952,081) | |
Net Assets | $ 13,515,238 | |
Calculation of Maximum Offering Price | $ 6.53 | |
Maximum offering price per share (100/94.25 of $6.53) | $ 6.93 | |
Class T: | $ 6.48 | |
Maximum offering price per share (100/96.50 of $6.48) | $ 6.72 | |
Class B: | $ 6.36 | |
Class C: | $ 6.36 | |
Institutional Class: | $ 6.60 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 18,937 | |
Interest | 6,681 | |
25,618 | ||
Less foreign taxes withheld | (2,092) | |
Total income | 23,526 | |
Expenses | ||
Management fee | $ 78,909 | |
Transfer agent fees | 68,179 | |
Distribution fees | 85,712 | |
Accounting fees and expenses | 44,256 | |
Non-interested trustees' compensation | 61 | |
Custodian fees and expenses | 26,016 | |
Registration fees | 54,283 | |
Audit | 36,683 | |
Legal | 73 | |
Miscellaneous | 4,824 | |
Total expenses before reductions | 398,996 | |
Expense reductions | (162,598) | 236,398 |
Net investment income (loss) | (212,872) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 3,028,098 | |
Investments not meeting investment restrictions | 103 | |
Foreign currency transactions | 3,516 | |
Total net realized gain (loss) | 3,031,717 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (3,435,175) | |
Assets and liabilities in foreign currencies | (100) | |
Total change in net unrealized appreciation (depreciation) | (3,435,275) | |
Net gain (loss) | (403,558) | |
Net increase (decrease) in net assets resulting from operations | $ (616,430) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Developing Communications Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (212,872) | $ (49,080) |
Net realized gain (loss) | 3,031,717 | (575,030) |
Change in net unrealized appreciation (depreciation) | (3,435,275) | 2,034,921 |
Net increase (decrease) in net assets resulting from operations | (616,430) | 1,410,811 |
Share transactions - net increase (decrease) | 8,358,921 | 1,213,427 |
Redemption fees | 70,726 | 1,900 |
Total increase (decrease) in net assets | 7,813,217 | 2,626,138 |
Net Assets | ||
Beginning of period | 5,702,021 | 3,075,883 |
End of period | $ 13,515,238 | $ 5,702,021 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.57 | $ 3.96 | $ 8.40 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)E | (.09) | (.04) | (.05) | (.04) |
Net realized and unrealized gain (loss) | 1.01 | 1.65 | (4.40) | (1.57) |
Total from investment operations | .92 | 1.61 | (4.45) | (1.61) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.53 | $ 5.57 | $ 3.96 | $ 8.40 |
Total ReturnB,C,D | 17.24% | 40.66% | (52.86)% | (16.00)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 2.38% | 6.13% | 4.97% | 6.46%A |
Expenses net of voluntary waivers, if any | 1.50% | 1.50% | 1.50% | 1.50%A |
Expenses net of all reductions | 1.35% | 1.36% | 1.40% | 1.45%A |
Net investment income (loss) | (1.18)% | (.82)% | (.85)% | (.74)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 3,480 | $ 970 | $ 371 | $ 934 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Developing Communications
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.54 | $ 3.95 | $ 8.40 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.10) | (.05) | (.07) | (.05) |
Net realized and unrealized gain (loss) | 1.00 | 1.64 | (4.39) | (1.56) |
Total from investment operations | .90 | 1.59 | (4.46) | (1.61) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.48 | $ 5.54 | $ 3.95 | $ 8.40 |
Total ReturnB,C,D | 16.97% | 40.25% | (52.98)% | (16.00)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 3.06% | 6.82% | 5.36% | 6.66%A |
Expenses net of voluntary waivers, if any | 1.75% | 1.75% | 1.75% | 1.75%A |
Expenses net of all reductions | 1.60% | 1.61% | 1.64% | 1.70%A |
Net investment income (loss) | (1.43)% | (1.07)% | (1.10)% | (.99)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 3,250 | $ 1,723 | $ 775 | $ 2,131 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.47 | $ 3.92 | $ 8.37 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)E | (.13) | (.07) | (.10) | (.07) |
Net realized and unrealized gain (loss) | .98 | 1.62 | (4.36) | (1.57) |
Total from investment operations | .85 | 1.55 | (4.46) | (1.64) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.36 | $ 5.47 | $ 3.92 | $ 8.37 |
Total ReturnB,C,D | 16.27% | 39.54% | (53.17)% | (16.30)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 3.48% | 6.88% | 5.62% | 7.21%A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25%A |
Expenses net of all reductions | 2.11% | 2.11% | 2.14% | 2.20%A |
Net investment income (loss) | (1.93)% | (1.56)% | (1.60)% | (1.49)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 2,998 | $ 1,846 | $ 1,162 | $ 2,236 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.47 | $ 3.92 | $ 8.37 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)E | (.14) | (.07) | (.10) | (.07) |
Net realized and unrealized gain (loss) | .99 | 1.62 | (4.36) | (1.57) |
Total from investment operations | .85 | 1.55 | (4.46) | (1.64) |
Redemption fees added to paid in capitalE | .04 | -H | .01 | .01 |
Net asset value, end of period | $ 6.36 | $ 5.47 | $ 3.92 | $ 8.37 |
Total ReturnB,C,D | 16.27% | 39.54% | (53.17)% | (16.30)% |
Ratios to Average Net AssetsG | ||||
Expenses before expense reductions | 3.19% | 6.81% | 5.49% | 7.09%A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25%A |
Expenses net of all reductions | 2.10% | 2.11% | 2.14% | 2.20%A |
Net investment income (loss) | (1.93)% | (1.57)% | (1.60)% | (1.49)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 3,180 | $ 1,009 | $ 667 | $ 1,566 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001E |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 5.61 | $ 3.98 | $ 8.42 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss)D | (.07) | (.03) | (.04) | (.03) |
Net realized and unrealized gain (loss) | 1.02 | 1.66 | (4.41) | (1.56) |
Total from investment operations | .95 | 1.63 | (4.45) | (1.59) |
Redemption fees added to paid in capitalD | .04 | -G | .01 | .01 |
Net asset value, end of period | $ 6.60 | $ 5.61 | $ 3.98 | $ 8.42 |
Total ReturnB,C | 17.65% | 40.95% | (52.73)% | (15.80)% |
Ratios to Average Net AssetsF | ||||
Expenses before expense reductions | 1.55% | 5.34% | 4.24% | 5.95%A |
Expenses net of voluntary waivers, if any | 1.25% | 1.25% | 1.25% | 1.25%A |
Expenses net of all reductions | 1.11% | 1.11% | 1.14% | 1.20%A |
Net investment income (loss) | (.93)% | (.57)% | (.60)% | (.49)%A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 607 | $ 154 | $ 100 | $ 283 |
Portfolio turnover rate | 306% | 167% | 305% | 644%A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFor the period December 27, 2000 (commencement of operations) to July 31, 2001. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Developing Communications
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Developing Communications Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 333,424 | | |
Unrealized depreciation | (3,765,046) | |
Net unrealized appreciation (depreciation) | (3,431,622) | |
Capital loss carryforward | (479,837) | |
Cost for federal income tax purposes | $ 16,412,771 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $46,261,610 and $38,364,478, respectively. The fund realized a gain on the sale of an investment not meeting the investment restrictions of the fund.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 7,992 | $ 301 |
Class T | .25% | .25% | 17,266 | 684 |
Class B | .75% | .25% | 33,471 | 25,429 |
Class C | .75% | .25% | 26,983 | 13,419 |
$ 85,712 | $ 39,833 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Developing Communications
4. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 15,017 | |
Class T | 4,574 | |
Class B* | 22,936 | |
Class C* | 4,566 | |
$ 47,093 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 13,363 | .42 |
Class T | 22,506 | .65 |
Class B | 18,672 | .56 |
Class C | 12,072 | .45 |
Institutional Class | 1,566 | .16 |
$ 68,179 |
Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The fee is based on the level of average net assets for the month.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $6,498 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $7,448 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 28,265 |
Class T | 1.75% | 45,111 |
Class B | 2.25% | 40,954 |
Class C | 2.25% | 25,422 |
Institutional Class | 1.25% | 2,869 |
$ 142,621 |
Annual Report
Notes to Financial Statements - continued
6. Expense Reductions - continued
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $19,977 for the period.
7. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 856,040 | 109,128 | $ 6,688,889 | $ 507,048 |
Shares redeemed | (497,414) | (28,681) | (3,670,051) | (128,278) |
Net increase (decrease) | 358,626 | 80,447 | $ 3,018,838 | $ 378,770 |
Class T | ||||
Shares sold | 608,342 | 172,249 | $ 4,433,681 | $ 779,171 |
Shares redeemed | (417,749) | (57,631) | (2,928,626) | (255,329) |
Net increase (decrease) | 190,593 | 114,618 | $ 1,505,055 | $ 523,842 |
Class B | ||||
Shares sold | 592,476 | 122,332 | $ 4,376,737 | $ 576,220 |
Shares redeemed | (458,816) | (81,826) | (3,282,550) | (356,626) |
Net increase (decrease) | 133,660 | 40,506 | $ 1,094,187 | $ 219,594 |
Class C | ||||
Shares sold | 580,072 | 80,758 | $ 4,396,643 | $ 363,207 |
Shares redeemed | (264,829) | (66,535) | (1,922,022) | (282,621) |
Net increase (decrease) | 315,243 | 14,223 | $ 2,474,621 | $ 80,586 |
Institutional Class | ||||
Shares sold | 609,795 | 5,027 | $ 4,639,769 | $ 23,470 |
Shares redeemed | (545,179) | (2,812) | (4,373,549) | (12,835) |
Net increase (decrease) | 64,616 | 2,215 | $ 266,220 | $ 10,635 |
Developing Communications
Advisor Electronics Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Life of |
Class A (incl. 5.75% sales charge) | -5.89% | -12.44% |
Class T (incl. 3.50% sales charge) | -3.94% | -12.05% |
Class B (incl. contingent deferred sales charge) B | -5.88% | -12.34% |
Class C (incl. contingent deferred sales charge) C | -1.92% | -11.64% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 5% and 3%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year and life of fund total return figures are 1% and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Electronics Fund - Class T on December 27, 2000, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Electronics Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Jim Morrow, Portfolio Manager of Fidelity ® Advisor Electronics Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
Fidelity Advisor Electronics Fund's Class A, Class T, Class B and Class C shares returned -0.15%, -0.46%, -0.93% and -0.93%, respectively, during the 12-month period, trailing the 9.15% return of the Goldman Sachs ® Technology Index and the 13.17% return of the Standard & Poor's 500 Index. The fund's overweighting in semiconductor industry stocks caused the bulk of its weakness relative to the Goldman Sachs index, as this was among the worst-performing industries within the tech sector. Among the fund's biggest detractors were semiconductor equipment manufacturing stocks such as KLA-Tencor and Applied Materials. Underweighting wireless telecommunications equipment manufacturer QUALCOMM relative to the sector benchmark also was disappointing, as the share price of the company rallied sharply. On the positive side of the ledger, overweighted holdings in Motorola and Texas Instruments, two suppliers of chips to the wireless communications industry, worked out well, and I eliminated the position in Motorola to lock in a profit. Elsewhere, testing and measurement instruments provider Tektronix performed well due in large part to positive quarterly earnings surprises throughout the period.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Electronics Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 768.70 | $ 6.60 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 767.30 | $ 7.69 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 765.20 | $ 9.87 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 765.80 | $ 9.83 |
HypotheticalA | $ 1,000.00 | $ 1,013.72 | $ 11.28 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 769.70 | $ 4.88 |
HypotheticalA | $ 1,000.00 | $ 1,019.41 | $ 5.59 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.24% |
Institutional Class | 1.11% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
National Semiconductor Corp. | 8.7 |
Micron Technology, Inc. | 8.6 |
Analog Devices, Inc. | 7.6 |
Intel Corp. | 6.6 |
Applied Materials, Inc. | 5.2 |
KLA-Tencor Corp. | 5.1 |
Flextronics International Ltd. | 3.7 |
Texas Instruments, Inc. | 3.5 |
Samsung Electronics Co. Ltd. | 2.7 |
Altera Corp. | 2.6 |
54.3 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Semiconductors & | 76.3% | |
| Electronic Equipment & | 12.0% | |
| Communications | 2.5% | |
| Computers & | 1.5% | |
| Software | 1.1% | |
| All Others * | 6.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 95.0% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 0.2% | |||
Affymetrix, Inc. (a) | 4,000 | $ 108,040 | |
CHEMICALS - 0.7% | |||
Nitto Denko Corp. | 7,700 | 322,694 | |
COMMUNICATIONS EQUIPMENT - 2.5% | |||
Corning, Inc. (a) | 36,200 | 447,432 | |
QLogic Corp. (a) | 9,200 | 224,940 | |
Scientific-Atlanta, Inc. | 14,900 | 458,175 | |
TOTAL COMMUNICATIONS EQUIPMENT | 1,130,547 | ||
COMPUTERS & PERIPHERALS - 1.5% | |||
Applied Films Corp. (a) | 4,500 | 83,925 | |
Hutchinson Technology, Inc. (a) | 11,600 | 258,332 | |
Quanta Computer, Inc. | 209,274 | 338,631 | |
TOTAL COMPUTERS & PERIPHERALS | 680,888 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 12.0% | |||
Amphenol Corp. Class A (a) | 12,760 | 401,047 | |
Arrow Electronics, Inc. (a) | 20,000 | 473,200 | |
AVX Corp. | 34,900 | 435,203 | |
Flextronics International Ltd. (a) | 134,300 | 1,688,151 | |
Hon Hai Precision Industries Co. Ltd. | 316,000 | 1,138,864 | |
Ingram Micro, Inc. Class A (a) | 43,200 | 615,600 | |
Solectron Corp. (a) | 58,800 | 323,400 | |
Staktek Holdings, Inc. | 51,100 | 254,478 | |
Veeco Instruments, Inc. (a) | 5,000 | 113,750 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 5,443,693 | ||
LEISURE EQUIPMENT & PRODUCTS - 0.1% | |||
Leapfrog Enterprises, Inc. Class A (a) | 1,200 | 23,760 | |
OFFICE ELECTRONICS - 0.6% | |||
Canon, Inc. ADR | 5,000 | 245,000 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 76.3% | |||
Altera Corp. (a) | 57,100 | 1,188,822 | |
Analog Devices, Inc. | 86,850 | 3,447,945 | |
Applied Materials, Inc. (a) | 138,460 | 2,349,666 | |
ASML Holding NV (NY Shares) (a) | 22,800 | 323,988 | |
ATMI, Inc. (a) | 22,613 | 460,401 | |
Axcelis Technologies, Inc. (a) | 64,700 | 603,651 | |
Cabot Microelectronics Corp. (a) | 2,100 | 74,529 | |
Cohu, Inc. | 29,700 | 562,370 | |
Credence Systems Corp. (a) | 10,800 | 96,768 | |
Cypress Semiconductor Corp. (a) | 19,900 | 225,666 | |
DSP Group, Inc. (a) | 45,300 | 892,863 | |
Fairchild Semiconductor International, Inc. (a) | 17,900 | 262,951 | |
FormFactor, Inc. | 16,000 | 321,280 | |
Integrated Circuit Systems, Inc. (a) | 35,000 | 837,200 | |
Intel Corp. | 122,390 | 2,983,868 | |
International Rectifier Corp. (a) | 10,600 | 415,520 | |
Shares | Value (Note 1) | ||
Intersil Corp. Class A | 6,700 | $ 123,079 | |
KLA-Tencor Corp. (a) | 56,690 | 2,336,195 | |
Lam Research Corp. (a) | 44,630 | 1,064,426 | |
Lattice Semiconductor Corp. (a) | 51,800 | 253,820 | |
Micron Technology, Inc. (a) | 286,860 | 3,881,216 | |
National Semiconductor Corp. (a) | 228,920 | 3,925,979 | |
Novellus Systems, Inc. (a) | 25,200 | 680,400 | |
O2Micro International Ltd. (a) | 34,700 | 446,589 | |
Photronics, Inc. (a) | 17,300 | 250,331 | |
PMC-Sierra, Inc. (a) | 10,300 | 122,364 | |
Samsung Electronics Co. Ltd. | 3,440 | 1,229,729 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 62,718 | 446,552 | |
Teradyne, Inc. (a) | 62,730 | 1,072,683 | |
Texas Instruments, Inc. | 74,380 | 1,586,525 | |
Trident Microsystems, Inc. (a) | 29,600 | 361,416 | |
United Microelectronics Corp. sponsored ADR (a) | 61,889 | 228,989 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 15,000 | 448,050 | |
Volterra Semiconductor Corp. | 400 | 3,236 | |
Xilinx, Inc. | 37,020 | 1,089,499 | |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 34,598,566 | ||
SOFTWARE - 1.1% | |||
Cadence Design Systems, Inc. (a) | 36,983 | 498,161 | |
TOTAL COMMON STOCKS (Cost $49,881,671) | 43,051,349 | ||
Money Market Funds - 9.5% | |||
Fidelity Cash Central Fund, 1.33% (b)(c) | 4,326,597 | 4,326,597 | |
TOTAL INVESTMENT PORTFOLIO - 104.5% (Cost $54,208,268) | 47,377,946 | ||
NET OTHER ASSETS - (4.5)% | (2,051,748) | ||
NET ASSETS - 100% | $ 45,326,198 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 85.9% |
Taiwan | 4.7% |
Singapore | 3.7% |
Korea (South) | 2.7% |
Japan | 1.3% |
Cayman Islands | 1.0% |
Others (individually less than 1%) | 0.7% |
100.0% |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $13,968,000 of which $5,873,000, $5,828,000 and $2,267,000 will expire on July 31, 2010, 2011 and 2012, respectively. |
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $2,067,384) (cost $54,208,268) - See accompanying schedule | $ 47,377,946 | |
Foreign currency held at value (cost $28,767) | 28,476 | |
Receivable for fund shares sold | 222,924 | |
Dividends receivable | 38,636 | |
Interest receivable | 3,322 | |
Prepaid expenses | 91 | |
Receivable from investment adviser for expense reductions | 10,948 | |
Other affiliated receivables | 10 | |
Other receivables | 11,271 | |
Total assets | 47,693,624 | |
Liabilities | ||
Payable for investments purchased | $ 34,226 | |
Payable for fund shares redeemed | 77,704 | |
Accrued management fee | 22,518 | |
Distribution fees payable | 26,388 | |
Other affiliated payables | 23,081 | |
Other payables and accrued expenses | 44,309 | |
Collateral on securities loaned, at value | 2,139,200 | |
Total liabilities | 2,367,426 | |
Net Assets | $ 45,326,198 | |
Net Assets consist of: | ||
Paid in capital | $ 67,148,867 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (14,991,820) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (6,830,849) | |
Net Assets | $ 45,326,198 | |
Calculation of Maximum Offering Price | $ 6.58 | |
Maximum offering price per share (100/94.25 of $6.58) | $ 6.98 | |
Class T: | $ 6.53 | |
Maximum offering price per share (100/96.50 of $6.53) | $ 6.77 | |
Class B: | $ 6.42 | |
Class C: | $ 6.41 | |
Institutional Class: | $ 6.65 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 182,556 | |
Interest | 15,273 | |
Security lending | 10,957 | |
208,786 | ||
Less foreign taxes withheld | (17,419) | |
Total income | 191,367 | |
Expenses | ||
Management fee | $ 333,989 | |
Transfer agent fees | 249,957 | |
Distribution fees | 401,627 | |
Accounting and security lending fees | 45,802 | |
Non-interested trustees' compensation | 271 | |
Custodian fees and expenses | 17,121 | |
Registration fees | 54,197 | |
Audit | 39,371 | |
Legal | 222 | |
Miscellaneous | 17,378 | |
Total expenses before reductions | 1,159,935 | |
Expense reductions | (54,385) | 1,105,550 |
Net investment income (loss) | (914,183) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 5,040,584 | |
Foreign currency transactions | (6,149) | |
Total net realized gain (loss) | 5,034,435 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (4,663,952) | |
Assets and liabilities in foreign currencies | (474) | |
Total change in net unrealized appreciation (depreciation) | (4,664,426) | |
Net gain (loss) | 370,009 | |
Net increase (decrease) in net assets resulting from operations | $ (544,174) | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Electronics Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (914,183) | $ (522,102) |
Net realized gain (loss) | 5,034,435 | (11,837,556) |
Change in net unrealized appreciation (depreciation) | (4,664,426) | 18,576,586 |
Net increase (decrease) in net assets resulting from operations | (544,174) | 6,216,928 |
Share transactions - net increase (decrease) | (1,655,023) | 5,255,566 |
Redemption fees | 26,533 | 32,181 |
Total increase (decrease) in net assets | (2,172,664) | 11,504,675 |
Net Assets | ||
Beginning of period | 47,498,862 | 35,994,187 |
End of period | $ 45,326,198 | $ 47,498,862 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.59 | $ 5.57 | $ 9.62 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.09) | (.06) | (.10) | (.04) |
Net realized and unrealized gain (loss) | .08 | 1.07 | (3.96) | (.35) |
Total from investment operations | (.01) | 1.01 | (4.06) | (.39) |
Redemption fees added to paid in capital E | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 6.58 | $ 6.59 | $ 5.57 | $ 9.62 |
Total Return B, C, D | (.15)% | 18.31% | (42.10)% | (3.80)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 1.55% | 1.89% | 1.68% | 2.57% A |
Expenses net of voluntary waivers, if any | 1.50% | 1.50% | 1.50% | 1.50% A |
Expenses net of all reductions | 1.48% | 1.46% | 1.49% | 1.49% A |
Net investment income (loss) | (1.15)% | (1.09)% | (1.14)% | (.77)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 8,374 | $ 8,116 | $ 4,912 | $ 3,400 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.56 | $ 5.55 | $ 9.62 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.11) | (.07) | (.12) | (.06) |
Net realized and unrealized gain (loss) | .08 | 1.07 | (3.96) | (.33) |
Total from investment operations | (.03) | 1.00 | (4.08) | (.39) |
Redemption fees added to paid in capital E | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 6.53 | $ 6.56 | $ 5.55 | $ 9.62 |
Total Return B, C, D | (.46)% | 18.20% | (42.31)% | (3.80)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 1.83% | 2.14% | 1.91% | 2.81% A |
Expenses net of voluntary waivers, if any | 1.75% | 1.75% | 1.75% | 1.75% A |
Expenses net of all reductions | 1.72% | 1.71% | 1.74% | 1.74% A |
Net investment income (loss) | (1.39)% | (1.33)% | (1.39)% | (1.02)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 15,445 | $ 14,362 | $ 11,615 | $ 11,493 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.48 | $ 5.52 | $ 9.60 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.14) | (.10) | (.16) | (.08) |
Net realized and unrealized gain (loss) | .08 | 1.06 | (3.93) | (.33) |
Total from investment operations | (.06) | .96 | (4.09) | (.41) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 6.42 | $ 6.48 | $ 5.52 | $ 9.60 |
Total Return B, C, D | (.93)% | 17.39% | (42.50)% | (4.00)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.41% | 2.76% | 2.43% | 3.34% A |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.23% | 2.21% | 2.24% | 2.24% A |
Net investment income (loss) | (1.90)% | (1.83)% | (1.89)% | (1.52)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 8,498 | $ 11,335 | $ 8,362 | $ 10,941 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 F |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.47 | $ 5.51 | $ 9.59 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | (.14) | (.10) | (.16) | (.09) |
Net realized and unrealized gain (loss) | .08 | 1.06 | (3.93) | (.33) |
Total from investment operations | (.06) | .96 | (4.09) | (.42) |
Redemption fees added to paid in capital E | - H | - H | .01 | .01 |
Net asset value, end of period | $ 6.41 | $ 6.47 | $ 5.51 | $ 9.59 |
Total Return B, C, D | (.93)% | 17.42% | (42.54)% | (4.10)% |
Ratios to Average Net Assets G | ||||
Expenses before expense reductions | 2.24% | 2.52% | 2.34% | 3.25% A |
Expenses net of voluntary waivers, if any | 2.24% | 2.25% | 2.25% | 2.25% A |
Expenses net of all reductions | 2.21% | 2.21% | 2.24% | 2.24% A |
Net investment income (loss) | (1.88)% | (1.83)% | (1.89)% | (1.52)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 12,322 | $ 13,061 | $ 9,921 | $ 10,782 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFor the period December 27, 2000 (commencement of operations) to July 31, 2001. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HAmount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 E |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 6.64 | $ 5.60 | $ 9.64 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | (.06) | (.04) | (.08) | (.03) |
Net realized and unrealized gain (loss) | .07 | 1.07 | (3.97) | (.34) |
Total from investment operations | .01 | 1.03 | (4.05) | (.37) |
Redemption fees added to paid in capital D | - G | .01 | .01 | .01 |
Net asset value, end of period | $ 6.65 | $ 6.64 | $ 5.60 | $ 9.64 |
Total Return B, C | .15% | 18.57% | (41.91)% | (3.60)% |
Ratios to Average Net Assets F | ||||
Expenses before expense reductions | 1.12% | 1.46% | 1.31% | 2.16% A |
Expenses net of voluntary waivers, if any | 1.12% | 1.25% | 1.25% | 1.25% A |
Expenses net of all reductions | 1.09% | 1.21% | 1.24% | 1.24% A |
Net investment income (loss) | (.76)% | (.84)% | (.89)% | (.52)% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 687 | $ 625 | $ 1,184 | $ 622 |
Portfolio turnover rate | 84% | 66% | 58% | 98% A |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFor the period December 27, 2000 (commencement of operations) to July 31, 2001. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Electronics
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Electronics Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,569,412 | | |
Unrealized depreciation | (9,423,833) | |
Net unrealized appreciation (depreciation) | (7,854,421) | |
Capital loss carryforward | (13,968,243) | |
Cost for federal income tax purposes | $ 55,232,367 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $46,680,952 and $47,801,653, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 28,058 | $ 84 |
Class T | .25% | .25% | 86,126 | - |
Class B | .75% | .25% | 124,924 | 93,708 |
Class C | .75% | .25% | 162,519 | 31,387 |
$ 401,627 | $ 125,179 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
Electronics
4. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 23,659 | |
Class T | 6,151 | |
Class B* | 36,813 | |
Class C* | 4,195 | |
$ 70,818 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 46,961 | .42 |
Class T | 78,020 | .45 |
Class B | 65,201 | .52 |
Class C | 58,026 | .36 |
Institutional Class | 1,749 | .24 |
$ 249,957 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $22,935 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $3,336 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 4,984 |
Class T | 1.75% | 14,667 |
Class B | 2.25% | 18,849 |
$ 38,500 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $15,885 for the period.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 1,163,033 | 890,305 | $ 9,193,928 | $ 4,733,982 |
Shares redeemed | (1,121,519) | (540,592) | (8,464,153) | (2,676,332) |
Net increase (decrease) | 41,514 | 349,713 | $ 729,775 | $ 2,057,650 |
Class T | ||||
Shares sold | 880,005 | 732,407 | $ 6,765,488 | $ 3,899,064 |
Shares redeemed | (704,477) | (633,473) | (5,391,404) | (3,094,794) |
Net increase (decrease) | 175,528 | 98,934 | $ 1,374,084 | $ 804,270 |
Class B | ||||
Shares sold | 538,613 | 983,554 | $ 4,191,366 | $ 5,591,186 |
Shares redeemed | (963,986) | (749,700) | (7,331,908) | (3,905,482) |
Net increase (decrease) | (425,373) | 233,854 | $ (3,140,542) | $ 1,685,704 |
Class C | ||||
Shares sold | 604,856 | 702,366 | $ 4,611,449 | $ 3,686,077 |
Shares redeemed | (701,380) | (484,780) | (5,302,803) | (2,418,447) |
Net increase (decrease) | (96,524) | 217,586 | $ (691,354) | $ 1,267,630 |
Institutional Class | ||||
Shares sold | 63,253 | 40,336 | $ 495,615 | $ 222,173 |
Shares redeemed | (54,003) | (157,790) | (422,601) | (781,861) |
Net increase (decrease) | 9,250 | (117,454) | $ 73,014 | $ (559,688) |
Electronics
Advisor Financial Services Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 5.33% | 4.33% | 11.58% |
Class T (incl. 3.50% sales charge) | 7.59% | 4.58% | 11.65% |
Class B (incl. contingent deferred sales charge) B,C | 5.96% | 4.45% | 11.66% |
Class C (incl. contingent deferred sales charge) D,E | 9.96% | 4.82% | 11.62% |
A From September 3, 1996.
B Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on March 3, 1997. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
C Class B shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 5%, 2% and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns between March 3, 1997 and November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
E Class C shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 1%, 0% and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Financial Services Fund - Class T on September 3, 1996, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Financial Services Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Matthew Fruhan, who became Portfolio Manager of Fidelity ® Advisor Financial Services Fund on April 1, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months that ended July 31, 2004, Fidelity Advisor Financial Services Fund's Class A, Class T, Class B and Class C shares had total returns of 11.76%, 11.49%, 10.96%, and 10.96% respectively. During the same period, the Goldman Sachs ® Financial Services Index rose 14.75%, while the Standard & Poor's 500 Index gained 13.17%. Financial stocks showed impressive performance during the first half of the 12-month period, but lost ground later on. Early on, banks had strong earnings gains, benefiting from improved loan quality and low funding costs. Investment banks and specialty lenders also were aided by the economic recovery. However, the environment changed during the second half of the period as interest rates began to rise and investors worried that banks and other financial institutions were vulnerable to rising rates. Contributing factors in the underperformance relative to the Goldman Sachs index included underweighting regional banks and real estate investment trusts, and stock selection in the consumer finance industry. Stocks that helped performance included National Bank of Canada, which rose from a low valuation after recording strong earnings improvements, and General Electric. GE gains about half its income from its GE Capital Unit, whose superior knowledge of specific industries gave it a competitive advantage over other lenders. Countrywide Financial also appreciated as investors recognized the benefits of management's decision to build up its mortgage servicing business as a hedge against a decline in the mortgage origination business. National Community Bancorp was a significant detractor. The market worried about the company's decision to use the proceeds from a stock offering to invest in mortgage-backed securities. Bank of New York and Northern Trust, two institutions heavily engaged in securities processing, also declined as asset growth slowed because of weak returns in the financial markets.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Financial Services Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 961.80 | $ 6.29 |
HypotheticalA | $ 1,000.00 | $ 1,018.51 | $ 6.49 |
Class T | |||
Actual | $ 1,000.00 | $ 960.40 | $ 7.41 |
HypotheticalA | $ 1,000.00 | $ 1,017.35 | $ 7.65 |
Class B | |||
Actual | $ 1,000.00 | $ 958.40 | $ 9.88 |
HypotheticalA | $ 1,000.00 | $ 1,014.78 | $ 10.22 |
Class C | |||
Actual | $ 1,000.00 | $ 958.40 | $ 9.64 |
HypotheticalA | $ 1,000.00 | $ 1,015.03 | $ 9.97 |
Institutional | |||
Actual | $ 1,000.00 | $ 963.40 | $ 4.34 |
HypotheticalA | $ 1,000.00 | $ 1,020.52 | $ 4.48 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.29% |
Class T | 1.52% |
Class B | 2.03% |
Class C | 1.98% |
Institutional | .89% |
Annual Report
Advisor Financial Services Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Bank of America Corp. | 8.4 |
American International Group, Inc. | 6.7 |
Citigroup, Inc. | 5.1 |
J.P. Morgan Chase & Co. | 4.2 |
Fannie Mae | 3.9 |
MBNA Corp. | 3.8 |
American Express Co. | 3.5 |
Wachovia Corp. | 3.4 |
Wells Fargo & Co. | 3.0 |
Morgan Stanley | 2.8 |
44.8 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Commercial Banks | 23.2% | |
| Insurance | 22.5% | |
| Capital Markets | 15.3% | |
| Diversified Financial Services | 11.0% | |
| Consumer Finance | 11.0% | |
| All Others* | 17.0% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 97.9% | |||
Shares | Value (Note 1) | ||
CAPITAL MARKETS - 15.3% | |||
American Capital Strategies Ltd. | 12,100 | $ 353,683 | |
Ameritrade Holding Corp. (a) | 734,800 | 8,148,932 | |
Bank of New York Co., Inc. | 142,160 | 4,084,257 | |
Bear Stearns Companies, Inc. | 21,500 | 1,793,530 | |
E*TRADE Financial Corp. (a) | 239,900 | 2,655,693 | |
Federated Investors, Inc. Class B (non-vtg.) | 20,200 | 567,822 | |
Franklin Resources, Inc. | 45,300 | 2,185,725 | |
Goldman Sachs Group, Inc. | 83,400 | 7,355,046 | |
Janus Capital Group, Inc. | 41,800 | 554,268 | |
LaBranche & Co., Inc. | 31,500 | 257,985 | |
Lehman Brothers Holdings, Inc. | 131,000 | 9,183,100 | |
Merrill Lynch & Co., Inc. | 221,900 | 11,032,868 | |
Morgan Stanley | 270,300 | 13,333,899 | |
Northern Trust Corp. | 155,200 | 6,228,176 | |
Piper Jaffray Companies (a) | 2,479 | 101,019 | |
State Street Corp. | 96,100 | 4,114,041 | |
TradeStation Group, Inc. (a) | 82,400 | 490,280 | |
Waddell & Reed Financial, Inc. Class A | 67,867 | 1,317,977 | |
TOTAL CAPITAL MARKETS | 73,758,301 | ||
COMMERCIAL BANKS - 23.2% | |||
Banco Popolare di Verona e Novara | 103,500 | 1,724,783 | |
Bank of America Corp. | 478,851 | 40,707,122 | |
Banknorth Group, Inc. | 28,700 | 915,817 | |
BB&T Corp. | 37,900 | 1,467,867 | |
Cathay General Bancorp | 31,070 | 2,082,001 | |
City National Corp. | 10,100 | 651,450 | |
East West Bancorp, Inc. | 48,677 | 1,641,388 | |
Hanmi Financial Corp. | 52,500 | 1,522,500 | |
HDFC Bank Ltd. sponsored ADR | 46,800 | 1,267,344 | |
M&T Bank Corp. | 21,500 | 2,004,445 | |
Mercantile Bankshares Corp. | 14,400 | 653,904 | |
Mitsubishi Tokyo Financial Group, Inc. (MTFG) sponsored ADR | 177,500 | 1,608,150 | |
National Bank of Canada | 69,400 | 2,336,915 | |
National Commerce Financial Corp. | 52,800 | 1,716,000 | |
North Fork Bancorp, Inc., New York | 31,800 | 1,241,790 | |
Royal Bank of Canada | 50,500 | 2,336,468 | |
Silicon Valley Bancshares (a) | 7,600 | 278,236 | |
SouthTrust Corp. | 31,300 | 1,214,127 | |
Synovus Financial Corp. | 1,100 | 28,017 | |
TCF Financial Corp. | 11,400 | 688,560 | |
U.S. Bancorp, Delaware | 351,200 | 9,938,960 | |
UCBH Holdings, Inc. | 85,000 | 3,322,650 | |
Valley National Bancorp | 245 | 6,096 | |
Wachovia Corp. | 370,420 | 16,413,310 | |
Wells Fargo & Co. | 253,000 | 14,524,730 | |
Zions Bancorp | 28,300 | 1,712,150 | |
TOTAL COMMERCIAL BANKS | 112,004,780 | ||
Shares | Value (Note 1) | ||
COMMERCIAL SERVICES & SUPPLIES - 1.0% | |||
Asset Acceptance Capital Corp. | 219,248 | $ 3,775,451 | |
Portfolio Recovery Associates, Inc. (a) | 40,400 | 1,069,388 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 4,844,839 | ||
CONSUMER FINANCE - 11.0% | |||
American Express Co. | 337,300 | 16,949,325 | |
AmeriCredit Corp. (a) | 146,800 | 2,803,880 | |
Capital One Financial Corp. | 134,700 | 9,337,404 | |
First Marblehead Corp. | 49,500 | 2,077,020 | |
MBNA Corp. | 747,075 | 18,445,282 | |
SLM Corp. | 84,300 | 3,196,656 | |
TOTAL CONSUMER FINANCE | 52,809,567 | ||
DIVERSIFIED FINANCIAL SERVICES - 11.0% | |||
Chicago Mercantile Exchange Holdings, Inc. Class A | 400 | 50,200 | |
CIT Group, Inc. | 198,800 | 6,910,288 | |
Citigroup, Inc. | 556,469 | 24,534,718 | |
Encore Capital Group, Inc. (a) | 30,500 | 467,260 | |
J.P. Morgan Chase & Co. | 540,894 | 20,191,573 | |
Principal Financial Group, Inc. | 32,400 | 1,101,276 | |
TOTAL DIVERSIFIED FINANCIAL SERVICES | 53,255,315 | ||
INDUSTRIAL CONGLOMERATES - 0.7% | |||
General Electric Co. | 108,300 | 3,600,975 | |
INSURANCE - 22.5% | |||
ACE Ltd. | 166,200 | 6,746,058 | |
AFLAC, Inc. | 92,200 | 3,654,808 | |
Allstate Corp. | 40,900 | 1,925,572 | |
AMBAC Financial Group, Inc. | 76,350 | 5,429,249 | |
American International Group, Inc. | 459,660 | 32,474,979 | |
Berkshire Hathaway, Inc. Class B (a) | 4,124 | 11,934,856 | |
Cincinnati Financial Corp. | 33,421 | 1,332,829 | |
Endurance Specialty Holdings Ltd. | 141,970 | 4,692,109 | |
Everest Re Group Ltd. | 32,900 | 2,417,492 | |
Fidelity National Financial, Inc. | 32,350 | 1,172,688 | |
Genworth Financial, Inc. Class A | 26,700 | 607,158 | |
Hartford Financial Services Group, Inc. | 110,400 | 7,187,040 | |
HCC Insurance Holdings, Inc. | 28,100 | 851,430 | |
Lincoln National Corp. | 6,500 | 284,050 | |
Marsh & McLennan Companies, Inc. | 71,500 | 3,173,170 | |
MBIA, Inc. | 67,200 | 3,627,456 | |
MetLife, Inc. | 185,000 | 6,598,950 | |
Montpelier Re Holdings Ltd. | 24,500 | 866,810 | |
PartnerRe Ltd. | 8,000 | 418,480 | |
Protective Life Corp. | 17,200 | 623,500 | |
Scottish Re Group Ltd. | 27,500 | 561,000 | |
Sun Life Financial, Inc. | 142,200 | 3,947,474 | |
Torchmark Corp. | 17,500 | 914,900 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INSURANCE - CONTINUED | |||
UnumProvident Corp. | 88,800 | $ 1,416,360 | |
XL Capital Ltd. Class A | 80,800 | 5,710,944 | |
TOTAL INSURANCE | 108,569,362 | ||
IT SERVICES - 0.2% | |||
Paychex, Inc. | 24,000 | 737,040 | |
REAL ESTATE - 2.7% | |||
Apartment Investment & Management Co. Class A | 130,500 | 4,172,085 | |
CBL & Associates Properties, Inc. | 12,146 | 669,245 | |
Duke Realty Corp. | 23,000 | 707,480 | |
Equity Residential (SBI) | 29,600 | 874,680 | |
Federal Realty Investment Trust (SBI) | 7,400 | 312,280 | |
Healthcare Realty Trust, Inc. | 47,000 | 1,697,640 | |
Manufactured Home Communities, Inc. | 14,200 | 449,998 | |
Reckson Associates Realty Corp. | 25,400 | 703,834 | |
Simon Property Group, Inc. | 54,400 | 2,807,584 | |
The Mills Corp. | 9,500 | 433,200 | |
Vornado Realty Trust | 300 | 17,427 | |
TOTAL REAL ESTATE | 12,845,453 | ||
SOFTWARE - 0.1% | |||
Fair, Isaac & Co., Inc. | 15,800 | 451,564 | |
THRIFTS & MORTGAGE FINANCE - 10.2% | |||
Countrywide Financial Corp. | 60,408 | 4,355,417 | |
Doral Financial Corp. | 800 | 31,400 | |
Fannie Mae | 264,335 | 18,757,212 | |
Golden West Financial Corp., Delaware | 47,100 | 5,035,461 | |
Greenpoint Financial Corp. | 26,400 | 1,072,632 | |
MGIC Investment Corp. | 36,200 | 2,570,200 | |
NetBank, Inc. | 146,800 | 1,576,632 | |
New York Community Bancorp, Inc. | 100,533 | 1,934,255 | |
Radian Group, Inc. | 45,455 | 2,091,839 | |
Sovereign Bancorp, Inc. | 434,800 | 9,465,596 | |
The PMI Group, Inc. | 28,200 | 1,162,686 | |
W Holding Co., Inc. | 29,600 | 488,400 | |
Washington Mutual, Inc. | 12,400 | 481,120 | |
TOTAL THRIFTS & MORTGAGE FINANCE | 49,022,850 | ||
TOTAL COMMON STOCKS (Cost $394,282,976) | 471,900,046 | ||
Money Market Funds - 1.1% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 5,274,915 | $ 5,274,915 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 255,750 | 255,750 | |
TOTAL MONEY MARKET FUNDS (Cost $5,530,665) | 5,530,665 | ||
TOTAL INVESTMENT PORTFOLIO - 99.0% (Cost $399,813,641) | 477,430,711 | ||
NET OTHER ASSETS - 1.0% | 4,757,801 | ||
NET ASSETS - 100% | $ 482,188,512 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
The fund hereby designates approximately $4,729,000 as a capital gain dividend for the purpose of the dividend paid deduction. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $253,890) (cost $399,813,641) - See accompanying schedule | $ 477,430,711 | |
Receivable for investments sold | 13,272,826 | |
Receivable for fund shares sold | 103,958 | |
Dividends receivable | 795,892 | |
Interest receivable | 6,817 | |
Prepaid expenses | 957 | |
Other affiliated receivables | 936 | |
Other receivables | 220,396 | |
Total assets | 491,832,493 | |
Liabilities | ||
Payable for investments purchased | $ 7,256,929 | |
Payable for fund shares redeemed | 1,314,465 | |
Accrued management fee | 233,828 | |
Distribution fees payable | 298,062 | |
Other affiliated payables | 159,404 | |
Other payables and accrued expenses | 125,543 | |
Collateral on securities loaned, at value | 255,750 | |
Total liabilities | 9,643,981 | |
Net Assets | $ 482,188,512 | |
Net Assets consist of: | ||
Paid in capital | $ 370,382,581 | |
Undistributed net investment income | 1,503 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 34,187,064 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 77,617,364 | |
Net Assets | $ 482,188,512 | |
Calculation of Maximum Offering Price | $ 22.17 | |
Maximum offering price per share (100/94.25 of $22.17) | $ 23.52 | |
Class T: | $ 22.07 | |
Maximum offering price per share (100/96.50 of $22.07) | $ 22.87 | |
Class B: | $ 21.65 | |
Class C: | $ 21.65 | |
Institutional: | $ 22.37 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 9,895,622 | |
Interest | 43,378 | |
Security lending | 53,021 | |
Total income | 9,992,021 | |
Expenses | ||
Management fee | $ 3,061,745 | |
Transfer agent fees | 1,799,314 | |
Distribution fees | 3,912,453 | |
Accounting and security lending fees | 204,603 | |
Non-interested trustees' compensation | 2,929 | |
Custodian fees and expenses | 18,868 | |
Registration fees | 63,775 | |
Audit | 39,911 | |
Legal | 1,886 | |
Miscellaneous | 112,528 | |
Total expenses before reductions | 9,218,012 | |
Expense reductions | (113,546) | 9,104,466 |
Net investment income (loss) | 887,555 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 60,134,324 | |
Foreign currency transactions | (45,282) | |
Total net realized gain (loss) | 60,089,042 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (3,466,311) | |
Assets and liabilities in foreign currencies | 1,590 | |
Total change in net unrealized appreciation (depreciation) | (3,464,721) | |
Net gain (loss) | 56,624,321 | |
Net increase (decrease) in net assets resulting from operations | $ 57,511,876 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Financial Services Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 887,555 | $ 2,210,845 |
Net realized gain (loss) | 60,089,042 | 2,197,120 |
Change in net unrealized appreciation (depreciation) | (3,464,721) | 48,537,174 |
Net increase (decrease) in net assets resulting from operations | 57,511,876 | 52,945,139 |
Distributions to shareholders from net investment income | (1,712,624) | (1,354,216) |
Share transactions - net increase (decrease) | (93,511,617) | (91,318,552) |
Redemption fees | 62,072 | 20,838 |
Total increase (decrease) in net assets | (37,650,293) | (39,706,791) |
Net Assets | ||
Beginning of period | 519,838,805 | 559,545,596 |
End of period (including undistributed net investment income of $1,503 and undistributed net investment income of $849,010, respectively) | $ 482,188,512 | $ 519,838,805 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.98 | $ 17.83 | $ 20.45 | $ 18.29 | $ 17.49 |
Income from Investment Operations | |||||
Net investment income (loss)C | .14 | .16 | .12 | .15 | .15 |
Net realized and unrealized gain (loss) | 2.20 | 2.07 | (2.60) | 2.20 | .73 |
Total from investment operations | 2.34 | 2.23 | (2.48) | 2.35 | .88 |
Distributions from net investment income | (.15) | (.08) | (.14) | (.19) | (.09) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 22.17 | $ 19.98 | $ 17.83 | $ 20.45 | $ 18.29 |
Total ReturnA,B | 11.76% | 12.57% | (12.16)% | 12.86% | 5.12% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.27% | 1.31% | 1.27% | 1.20% | 1.25% |
Expenses net of voluntary waivers, if any | 1.27% | 1.31% | 1.27% | 1.20% | 1.25% |
Expenses net of all reductions | 1.25% | 1.27% | 1.23% | 1.18% | 1.22% |
Net investment income (loss) | .63% | .89% | .60% | .77% | .92% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 58,222 | $ 57,255 | $ 60,475 | $ 78,115 | $ 48,088 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.90 | $ 17.77 | $ 20.38 | $ 18.21 | $ 17.42 |
Income from Investment Operations | |||||
Net investment income (loss)C | .09 | .12 | .07 | .11 | .12 |
Net realized and unrealized gain (loss) | 2.19 | 2.07 | (2.59) | 2.19 | .71 |
Total from investment operations | 2.28 | 2.19 | (2.52) | 2.30 | .83 |
Distributions from net investment income | (.11) | (.06) | (.09) | (.13) | (.05) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 22.07 | $ 19.90 | $ 17.77 | $ 20.38 | $ 18.21 |
Total ReturnA,B | 11.49% | 12.37% | (12.39)% | 12.64% | 4.84% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.50% | 1.53% | 1.49% | 1.43% | 1.47% |
Expenses net of voluntary waivers, if any | 1.50% | 1.53% | 1.49% | 1.43% | 1.47% |
Expenses net of all reductions | 1.48% | 1.49% | 1.45% | 1.41% | 1.44% |
Net investment income (loss) | .41% | .67% | .38% | .54% | .70% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 144,887 | $ 157,238 | $ 169,429 | $ 234,268 | $ 179,862 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.53 | $ 17.50 | $ 20.08 | $ 17.95 | $ 17.21 |
Income from Investment Operations | |||||
Net investment income (loss)C | (.02) | .03 | (.03) | - | .03 |
Net realized and unrealized gain (loss) | 2.16 | 2.03 | (2.55) | 2.16 | .70 |
Total from investment operations | 2.14 | 2.06 | (2.58) | 2.16 | .73 |
Distributions from net investment income | (.02) | (.03) | - | (.03) | - |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 21.65 | $ 19.53 | $ 17.50 | $ 20.08 | $ 17.95 |
Total ReturnA,B | 10.96% | 11.80% | (12.85)% | 12.03% | 4.30% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 2.02% | 2.03% | 2.01% | 1.96% | 2.01% |
Expenses net of voluntary waivers, if any | 2.02% | 2.03% | 2.01% | 1.96% | 2.01% |
Expenses net of all reductions | 2.00% | 1.99% | 1.97% | 1.94% | 1.98% |
Net investment income (loss) | (.11)% | .17% | (.14)% | .01% | .16% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 179,873 | $ 193,373 | $ 206,460 | $ 269,612 | $ 150,880 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 19.53 | $ 17.49 | $ 20.05 | $ 17.96 | $ 17.24 |
Income from Investment Operations | |||||
Net investment income (loss)C | (.01) | .04 | (.02) | .01 | .03 |
Net realized and unrealized gain (loss) | 2.15 | 2.03 | (2.54) | 2.15 | .70 |
Total from investment operations | 2.14 | 2.07 | (2.56) | 2.16 | .73 |
Distributions from net investment income | (.02) | (.03) | - | (.07) | (.02) |
Redemption fees added to paid in capitalC | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 21.65 | $ 19.53 | $ 17.49 | $ 20.05 | $ 17.96 |
Total ReturnA,B | 10.96% | 11.86% | (12.77)% | 12.03% | 4.30% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.97% | 1.99% | 1.96% | 1.92% | 1.96% |
Expenses net of voluntary waivers, if any | 1.97% | 1.99% | 1.96% | 1.92% | 1.96% |
Expenses net of all reductions | 1.95% | 1.95% | 1.92% | 1.90% | 1.93% |
Net investment income (loss) | (.06)% | .22% | (.09)% | .05% | .21% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 86,199 | $ 97,434 | $ 107,899 | $ 149,160 | $ 83,078 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. EAmount represents less than $.01 per share.
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.17 | $ 17.95 | $ 20.59 | $ 18.39 | $ 17.60 |
Income from Investment Operations | |||||
Net investment income (loss)B | .23 | .24 | .19 | .22 | .21 |
Net realized and unrealized gain (loss) | 2.21 | 2.09 | (2.62) | 2.22 | .72 |
Total from investment operations | 2.44 | 2.33 | (2.43) | 2.44 | .93 |
Distributions from net investment income | (.24) | (.11) | (.21) | (.24) | (.15) |
Redemption fees added to paid in capitalB | -D | -D | -D | -D | .01 |
Net asset value, end of period | $ 22.37 | $ 20.17 | $ 17.95 | $ 20.59 | $ 18.39 |
Total ReturnA | 12.18% | 13.07% | (11.84)% | 13.29% | 5.40% |
Ratios to Average Net AssetsC | |||||
Expenses before expense reductions | .88% | .88% | .89% | .87% | .90% |
Expenses net of voluntary waivers, if any | .88% | .88% | .89% | .87% | .90% |
Expenses net of all reductions | .85% | .84% | .85% | .84% | .87% |
Net investment income (loss) | 1.03% | 1.32% | .98% | 1.10% | 1.27% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,008 | $ 14,539 | $ 15,283 | $ 17,966 | $ 9,749 |
Portfolio turnover rate | 74% | 60% | 125% | 110% | 73% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BCalculated based on average shares outstanding during the period. CExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. DAmount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Financial Services Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will treat a portion of the proceeds from shares redeemed as a distribution from net investment income and realized gain for income tax purposes.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 83,886,754 | |
Unrealized depreciation | (8,607,848) | |
Net unrealized appreciation (depreciation) | 75,278,906 | |
Undistributed long-term capital gain | 32,055,411 | |
Cost for federal income tax purposes | $ 402,151,805 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 1,674,060 | $ 1,354,216 |
Long-term Capital Gains | 38,564 | - |
Total | $ 1,712,624 | $ 1,354,216 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $390,518,639 and $494,584,050, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Financial Services
4. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 152,368 | $ 136 |
Class T | .25% | .25% | 797,600 | 3,990 |
Class B | .75% | .25% | 1,982,856 | 1,487,588 |
Class C | .75% | .25% | 979,629 | 73,897 |
$ 3,912,453 | $ 1,565,611 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 29,407 | |
Class T | 12,628 | |
Class B* | 519,390 | |
Class C* | 31,184 | |
$ 592,609 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 221,140 | .36 |
Class T | 538,347 | .34 |
Class B | 708,097 | .36 |
Class C | 300,870 | .31 |
Institutional Class | 30,860 | .22 |
$ 1,799,314 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $43,343 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $19,477 for the period.
Annual Report
Notes to Financial Statements - continued
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $113,546 for the period.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2004 | 2003 | |
From net investment income | ||
Class A | $ 420,433 | $ 252,487 |
Class T | 838,212 | 523,447 |
Class B | 192,478 | 326,913 |
Class C | 96,077 | 167,726 |
Institutional Class | 165,424 | 83,643 |
Total | $ 1,712,624 | $ 1,354,216 |
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 614,653 | 466,106 | $ 13,695,749 | $ 8,361,698 |
Reinvestment of distributions | 18,128 | 12,924 | 378,140 | 225,396 |
Shares redeemed | (872,521) | (1,005,991) | (19,145,577) | (17,596,177) |
Net increase (decrease) | (239,740) | (526,961) | $ (5,071,688) | $ (9,009,083) |
Class T | ||||
Shares sold | 658,242 | 786,561 | $ 14,430,306 | $ 14,027,178 |
Reinvestment of distributions | 37,421 | 27,729 | 777,299 | 482,206 |
Shares redeemed | (2,033,778) | (2,445,445) | (44,388,616) | (42,791,925) |
Net increase (decrease) | (1,338,115) | (1,631,155) | $ (29,181,011) | $ (28,282,541) |
Class B | ||||
Shares sold | 461,768 | 669,921 | $ 9,850,610 | $ 11,895,054 |
Reinvestment of distributions | 7,853 | 15,797 | 162,959 | 270,445 |
Shares redeemed | (2,060,890) | (2,581,642) | (44,422,627) | (44,031,477) |
Net increase (decrease) | (1,591,269) | (1,895,924) | $ (34,409,058) | $ (31,865,978) |
Class C | ||||
Shares sold | 653,543 | 411,834 | $ 13,848,576 | $ 7,357,880 |
Reinvestment of distributions | 3,576 | 7,556 | 74,185 | 129,283 |
Shares redeemed | (1,665,874) | (1,598,865) | (35,686,628) | (27,368,101) |
Net increase (decrease) | (1,008,755) | (1,179,475) | $ (21,763,867) | $ (19,880,938) |
Institutional Class | ||||
Shares sold | 67,364 | 104,118 | $ 1,519,011 | $ 1,915,337 |
Reinvestment of distributions | 5,506 | 3,152 | 115,490 | 55,316 |
Shares redeemed | (212,405) | (237,964) | (4,720,494) | (4,250,665) |
Net increase (decrease) | (139,535) | (130,694) | $ (3,085,993) | $ (2,280,012) |
Financial Services
Advisor Health Care Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | -2.56% | 0.67% | 9.82% |
Class T (incl. 3.50% sales charge) | -0.45% | 0.91% | 9.87% |
Class B (incl. contingent deferred sales charge) B, C | -2.36% | 0.74% | 9.86% |
Class C (incl. contingent deferred sales charge) D, E | 1.69% | 1.17% | 9.84% |
A From September 3, 1996.
B Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on March 3, 1997. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
C Class B shares' contingent deferred sales charges included in the past one year, five year and life of fund total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns between March 3, 1997 and November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
E Class C shares' contingent deferred sales charges included in the past one year, five year and life of fund total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Health Care Fund - Class T on September 3, 1996, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Health Care Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Sam Peters, Portfolio Manager of Fidelity ® Advisor Health Care Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial AverageSM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months that ended July 31, 2004, the fund's Class A, Class T, Class B and Class C shares had returns of 3.39%, 3.16%, 2.64% and 2.69%, respectively, lagging both the Goldman Sachs ® Health Care Index, which posted a 4.22% return, and the Standard & Poor's 500 Index. The fund's underperformance was attributable mainly to its somewhat defensive positioning relative to the health care sector, which benefited from having more exposure to growth-oriented stocks in a period of cyclical recovery. In the biotechnology space, Millennium Pharmaceuticals detracted from performance not because the company performed poorly, but because it did not meet investors' expectations. Pharmaceutical giants Merck and Wyeth fell victim to investor concerns about future governmental efforts to control health care costs. Performance was helped by Genentech, whose stock rose on robust sales of a new colorectal cancer drug; St. Jude Medical, which holds a strong position in heart therapy devices; and Caremark Rx, a leading prescription benefits manager that is helping to lower drug costs through group purchases.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 959.90 | $ 6.53 |
HypotheticalA | $ 1,000.00 | $ 1,018.25 | $ 6.75 |
Class T | |||
Actual | $ 1,000.00 | $ 959.30 | $ 7.75 |
HypotheticalA | $ 1,000.00 | $ 1,016.99 | $ 8.01 |
Class B | |||
Actual | $ 1,000.00 | $ 956.70 | $ 10.12 |
HypotheticalA | $ 1,000.00 | $ 1,014.53 | $ 10.47 |
Class C | |||
Actual | $ 1,000.00 | $ 956.80 | $ 9.78 |
HypotheticalA | $ 1,000.00 | $ 1,014.88 | $ 10.12 |
Institutional | |||
Actual | $ 1,000.00 | $ 962.10 | $ 4.49 |
HypotheticalA | $ 1,000.00 | $ 1,020.37 | $ 4.63 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.34% |
Class T | 1.59% |
Class B | 2.08% |
Class C | 2.01% |
Institutional | .92% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Johnson & Johnson | 10.4 |
Pfizer, Inc. | 7.5 |
Medtronic, Inc. | 7.1 |
Abbott Laboratories | 5.5 |
Genentech, Inc. | 5.2 |
UnitedHealth Group, Inc. | 5.1 |
Merck & Co., Inc. | 5.0 |
Baxter International, Inc. | 4.9 |
Amgen, Inc. | 4.1 |
Eli Lilly & Co. | 4.1 |
58.9 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Pharmaceuticals | 41.8% | |
| Health Care Equipment & Supplies | 26.0% | |
| Health Care Providers | 15.7% | |
| Biotechnology | 15.5% | |
| Insurance | 0.2% | |
| All Others * | 0.8% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value (Note 1) | ||
BIOTECHNOLOGY - 15.5% | |||
Affymetrix, Inc. (a) | 56,600 | $ 1,528,766 | |
Alkermes, Inc. (a) | 331,200 | 3,573,648 | |
Amgen, Inc. (a) | 563,900 | 32,074,632 | |
Biogen Idec, Inc. (a) | 165,500 | 9,930,000 | |
Celgene Corp. (a) | 102,100 | 5,444,993 | |
Genentech, Inc. (a) | 840,300 | 40,905,804 | |
Genzyme Corp. - General Division (a) | 160,600 | 8,235,568 | |
ImClone Systems, Inc. (a) | 49,500 | 2,916,540 | |
MedImmune, Inc. (a) | 213,030 | 4,908,211 | |
Millennium Pharmaceuticals, Inc. (a) | 496,100 | 5,516,632 | |
Neurocrine Biosciences, Inc. (a) | 85,600 | 3,986,392 | |
OSI Pharmaceuticals, Inc. (a) | 26,000 | 1,562,600 | |
Protein Design Labs, Inc. (a) | 59,600 | 965,520 | |
TOTAL BIOTECHNOLOGY | 121,549,306 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 26.0% | |||
Alcon, Inc. | 168,400 | 12,899,440 | |
Animas Corp. | 200 | 3,044 | |
Baxter International, Inc. | 1,283,600 | 38,597,852 | |
Biomet, Inc. | 431,275 | 18,971,787 | |
Boston Scientific Corp. (a) | 426,600 | 16,321,716 | |
Cytyc Corp. (a) | 119,900 | 2,897,983 | |
Dade Behring Holdings, Inc. (a) | 65,500 | 3,254,695 | |
Edwards Lifesciences Corp. (a) | 302,200 | 10,628,374 | |
Epix Medical, Inc. (a) | 102,500 | 1,850,125 | |
Guidant Corp. | 19,100 | 1,056,612 | |
Hospira, Inc. (a) | 4,182 | 108,356 | |
Kinetic Concepts, Inc. | 69,100 | 3,103,972 | |
Medtronic, Inc. | 1,113,196 | 55,292,445 | |
Novoste Corp. (a)(d) | 12,500 | 25,625 | |
ResMed, Inc. (a) | 66,300 | 3,248,700 | |
Respironics, Inc. (a) | 59,200 | 3,298,624 | |
Smith & Nephew PLC sponsored ADR | 25,000 | 1,291,500 | |
St. Jude Medical, Inc. (a) | 300,900 | 20,500,317 | |
Thoratec Corp. (a) | 78,700 | 802,740 | |
Waters Corp. (a) | 44,700 | 1,961,436 | |
Zimmer Holdings, Inc. (a) | 94,300 | 7,196,033 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 203,311,376 | ||
HEALTH CARE PROVIDERS & SERVICES - 15.7% | |||
Cardinal Health, Inc. | 57,600 | 2,563,200 | |
Caremark Rx, Inc. (a) | 558,700 | 17,040,350 | |
Coventry Health Care, Inc. (a) | 146,100 | 7,467,171 | |
DaVita, Inc. (a) | 71,550 | 2,172,974 | |
Shares | Value (Note 1) | ||
Health Management Associates, Inc. Class A | 3,800 | $ 76,228 | |
Health Net, Inc. (a) | 93,500 | 2,256,155 | |
IMS Health, Inc. | 190,200 | 4,610,448 | |
Inveresk Research Group, Inc. (a) | 32,100 | 1,165,230 | |
Laboratory Corp. of America Holdings (a) | 102,600 | 4,017,816 | |
McKesson Corp. | 228,000 | 7,334,760 | |
Omnicare, Inc. | 162,400 | 4,591,048 | |
PacifiCare Health Systems, Inc. (a) | 386,090 | 11,802,771 | |
Patterson Companies, Inc. (a) | 25,400 | 1,864,868 | |
Quest Diagnostics, Inc. | 77,200 | 6,336,576 | |
Tenet Healthcare Corp. (a) | 354,500 | 3,963,310 | |
UnitedHealth Group, Inc. | 639,900 | 40,249,710 | |
WebMD Corp. (a) | 618,700 | 5,036,218 | |
TOTAL HEALTH CARE PROVIDERS & SERVICES | 122,548,833 | ||
INSURANCE - 0.2% | |||
American Medical Securities Group, Inc. (a) | 65,100 | 1,654,191 | |
PERSONAL PRODUCTS - 0.1% | |||
NBTY, Inc. (a) | 42,700 | 929,152 | |
PHARMACEUTICALS - 41.8% | |||
Abbott Laboratories | 1,094,920 | 43,085,102 | |
Allergan, Inc. | 98,900 | 7,480,796 | |
Barr Pharmaceuticals, Inc. (a) | 87,902 | 3,019,434 | |
Biovail Corp. (a) | 220,470 | 3,429,994 | |
Eli Lilly & Co. | 499,500 | 31,828,140 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 89,000 | 1,708,800 | |
Forest Laboratories, Inc. (a) | 89,000 | 4,475,810 | |
Hollis-Eden Pharmaceutcals, Inc. (a) | 165,100 | 1,581,658 | |
Johnson & Johnson | 1,477,362 | 81,653,798 | |
King Pharmaceuticals, Inc. (a) | 351,500 | 3,968,435 | |
Medicis Pharmaceutical Corp. Class A | 30,300 | 1,083,831 | |
Merck & Co., Inc. | 867,600 | 39,345,660 | |
Novartis AG sponsored ADR | 102,000 | 4,555,320 | |
Perrigo Co. | 148,200 | 2,469,012 | |
Pfizer, Inc. | 1,846,320 | 59,008,387 | |
Schering-Plough Corp. | 1,024,500 | 19,936,770 | |
Sepracor, Inc. (a) | 60,100 | 2,762,797 | |
Watson Pharmaceuticals, Inc. (a) | 102,300 | 2,578,983 | |
Wyeth | 384,220 | 13,601,388 | |
TOTAL PHARMACEUTICALS | 327,574,115 | ||
TOTAL COMMON STOCKS (Cost $728,781,855) | 777,566,973 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
BIOTECHNOLOGY - 0.0% | |||
Geneprot, Inc. Series A (e) | 43,000 | 150,500 | |
Money Market Funds - 0.6% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.33% (b) | 3,534,017 | $ 3,534,017 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 1,327,000 | 1,327,000 | |
TOTAL MONEY MARKET FUNDS (Cost $4,861,017) | 4,861,017 | ||
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $733,879,372) | 782,578,490 | ||
NET OTHER ASSETS - 0.1% | 696,554 | ||
NET ASSETS - 100% | $ 783,275,044 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $25,625 or 0.0% of net assets. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $150,500 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Geneprot, Inc. Series A | 7/7/00 | $ 236,500 |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $39,599,000 of which $26,199,000 and $13,400,000 will expire on |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,271,266) (cost $733,879,372) - See accompanying schedule | $ 782,578,490 | |
Receivable for investments sold | 14,631,105 | |
Receivable for fund shares sold | 482,949 | |
Dividends receivable | 296,449 | |
Interest receivable | 10,702 | |
Prepaid expenses | 1,571 | |
Other affiliated receivables | 1,161 | |
Other receivables | 13,338 | |
Total assets | 798,015,765 | |
Liabilities | ||
Payable for investments purchased | $ 10,269,641 | |
Payable for fund shares redeemed | 1,766,128 | |
Accrued management fee | 387,378 | |
Distribution fees payable | 484,369 | |
Other affiliated payables | 297,205 | |
Other payables and accrued expenses | 209,000 | |
Collateral on securities loaned, at value | 1,327,000 | |
Total liabilities | 14,740,721 | |
Net Assets | $ 783,275,044 | |
Net Assets consist of: | ||
Paid in capital | $ 791,501,801 | |
Accumulated net investment loss | (581) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (56,925,294) | |
Net unrealized appreciation (depreciation) on investments | 48,699,118 | |
Net Assets | $ 783,275,044 | |
Calculation of Maximum | $ 18.91 | |
Maximum offering price per share (100/94.25 of $18.91) | $ 20.06 | |
Class T: | $ 18.60 | |
Maximum offering price per share (100/96.50 of $18.60) | $ 19.27 | |
Class B: | $ 17.91 | |
Class C: | $ 17.94 | |
Institutional: | $ 19.28 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 8,514,928 | |
Interest | 90,455 | |
Security lending | 32,350 | |
Total income | 8,637,733 | |
Expenses | ||
Management fee | $ 4,857,388 | |
Transfer agent fees | 3,322,048 | |
Distribution fees | 6,102,170 | |
Accounting and security lending fees | 279,659 | |
Non-interested trustees' compensation | 4,639 | |
Custodian fees and expenses | 15,107 | |
Registration fees | 75,906 | |
Audit | 40,437 | |
Legal | 3,294 | |
Miscellaneous | 209,535 | |
Total expenses before | 14,910,183 | |
Expense reductions | (224,391) | 14,685,792 |
Net investment income (loss) | (6,048,059) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 55,613,597 | |
Foreign currency transactions | 5,472 | |
Total net realized gain (loss) | 55,619,069 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (24,649,715) | |
Assets and liabilities in foreign currencies | (6,063) | |
Total change in net unrealized appreciation (depreciation) | (24,655,778) | |
Net gain (loss) | 30,963,291 | |
Net increase (decrease) in net assets resulting from operations | $ 24,915,232 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Health Care Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (6,048,059) | $ (3,893,423) |
Net realized gain (loss) | 55,619,069 | 13,765,258 |
Change in net unrealized appreciation (depreciation) | (24,655,778) | 71,504,161 |
Net increase (decrease) in net assets resulting from operations | 24,915,232 | 81,375,996 |
Share transactions - net increase (decrease) | (106,348,165) | (125,179,240) |
Redemption fees | 55,534 | 65,218 |
Total increase (decrease) in net assets | (81,377,399) | (43,738,026) |
Net Assets | ||
Beginning of period | 864,652,443 | 908,390,469 |
End of period (including accumulated net investment loss of $581 and $0, respectively) | $ 783,275,044 | $ 864,652,443 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 18.29 | $ 16.51 | $ 20.41 | $ 22.02 | $ 18.52 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.05) | - E | (.04) | .01 | .01 |
Net realized and unrealized gain (loss) | .67 | 1.78 | (3.86) | (.50) | 3.89 |
Total from investment operations | .62 | 1.78 | (3.90) | (.49) | 3.90 |
Distributions from net realized gain | - | - | - | (1.12) | (.41) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 18.91 | $ 18.29 | $ 16.51 | $ 20.41 | $ 22.02 |
Total Return A, B | 3.39% | 10.78% | (19.11)% | (2.50)% | 21.44% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.32% | 1.34% | 1.29% | 1.19% | 1.20% |
Expenses net of voluntary waivers, if any | 1.32% | 1.34% | 1.29% | 1.19% | 1.20% |
Expenses net of all reductions | 1.29% | 1.27% | 1.24% | 1.17% | 1.18% |
Net investment income (loss) | (.26)% | (.01)% | (.23)% | .05% | .07% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 104,258 | $ 108,692 | $ 103,292 | $ 136,304 | $ 108,248 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 18.03 | $ 16.31 | $ 20.22 | $ 21.87 | $ 18.40 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.04) | (.09) | (.04) | (.03) |
Net realized and unrealized gain (loss) | .66 | 1.76 | (3.82) | (.49) | 3.86 |
Total from investment operations | .57 | 1.72 | (3.91) | (.53) | 3.83 |
Distributions from net realized gain | - | - | - | (1.12) | (.37) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 18.60 | $ 18.03 | $ 16.31 | $ 20.22 | $ 21.87 |
Total Return A, B | 3.16% | 10.55% | (19.34)% | (2.71)% | 21.16% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.56% | 1.59% | 1.52% | 1.43% | 1.42% |
Expenses net of voluntary waivers, if any | 1.56% | 1.59% | 1.52% | 1.43% | 1.42% |
Expenses net of all reductions | 1.53% | 1.51% | 1.47% | 1.41% | 1.40% |
Net investment income (loss) | (.51)% | (.26)% | (.46)% | (.18)% | (.15)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 243,176 | $ 264,115 | $ 274,243 | $ 383,643 | $ 361,351 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.45 | $ 15.86 | $ 19.76 | $ 21.50 | $ 18.16 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.18) | (.12) | (.18) | (.14) | (.13) |
Net realized and unrealized gain (loss) | .64 | 1.71 | (3.72) | (.48) | 3.80 |
Total from investment operations | .46 | 1.59 | (3.90) | (.62) | 3.67 |
Distributions from net realized gain | - | - | - | (1.12) | (.34) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 17.91 | $ 17.45 | $ 15.86 | $ 19.76 | $ 21.50 |
Total Return A, B | 2.64% | 10.03% | (19.74)% | (3.20)% | 20.53% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.06% | 2.05% | 2.02% | 1.95% | 1.94% |
Expenses net of voluntary waivers, if any | 2.06% | 2.05% | 2.02% | 1.95% | 1.94% |
Expenses net of all reductions | 2.03% | 1.98% | 1.98% | 1.93% | 1.93% |
Net investment income (loss) | (1.01) % | (.73)% | (.97)% | (.70)% | (.68)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 285,299 | $ 317,906 | $ 334,056 | $ 456,851 | $ 366,413 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.47 | $ 15.87 | $ 19.76 | $ 21.50 | $ 18.17 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.17) | (.11) | (.17) | (.14) | (.12) |
Net realized and unrealized gain (loss) | .64 | 1.71 | (3.72) | (.48) | 3.80 |
Total from investment operations | .47 | 1.60 | (3.89) | (.62) | 3.68 |
Distributions from net realized gain | - | - | - | (1.12) | (.36) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 17.94 | $ 17.47 | $ 15.87 | $ 19.76 | $ 21.50 |
Total Return A, B | 2.69% | 10.08% | (19.69)% | (3.20)% | 20.59% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.00% | 2.00% | 1.97% | 1.91% | 1.91% |
Expenses net of voluntary waivers, if any | 2.00% | 2.00% | 1.97% | 1.91% | 1.91% |
Expenses net of all reductions | 1.97% | 1.92% | 1.93% | 1.89% | 1.89% |
Net investment income (loss) | (.95)% | (.67)% | (.92)% | (.66)% | (.64)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 130,184 | $ 150,576 | $ 160,877 | $ 229,494 | $ 183,264 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. |
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 18.58 | $ 16.70 | $ 20.58 | $ 22.13 | $ 18.59 |
Income from Investment Operations | |||||
Net investment income (loss) B | .03 | .06 | .02 | .07 | .07 |
Net realized and unrealized gain (loss) | .67 | 1.82 | (3.90) | (.50) | 3.90 |
Total from investment operations | .70 | 1.88 | (3.88) | (.43) | 3.97 |
Distributions from net investment income | - | - | - | - | (.03) |
Distributions from net realized gain | - | - | - | (1.12) | (.41) |
Total distributions | - | - | - | (1.12) | (.44) |
Redemption fees added to paid in capital B | - D | - D | - D | - D | .01 |
Net asset value, end of period | $ 19.28 | $ 18.58 | $ 16.70 | $ 20.58 | $ 22.13 |
Total Return A | 3.77% | 11.26% | (18.85)% | (2.21)% | 21.77% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | .91% | .96% | .95% | .91% | .93% |
Expenses net of voluntary waivers, if any | .91% | .96% | .95% | .91% | .93% |
Expenses net of all reductions | .88% | .88% | .90% | .89% | .92% |
Net investment income (loss) | .14% | .37% | .11% | .33% | .33% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 20,358 | $ 23,364 | $ 35,923 | $ 45,200 | $ 40,320 |
Portfolio turnover rate | 60% | 120% | 167% | 71% | 51% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Health Care Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 83,446,487 | |
Unrealized depreciation | (50,019,877) | |
Net unrealized appreciation (depreciation) | 33,426,610 | |
Capital loss carryforward | (39,598,744) | |
Cost for federal income tax purposes | $ 749,151,880 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally
may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the fund's Schedule of Investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $497,867,080 and $606,249,674, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 265,277 | $ 125 |
Class T | .25% | .25% | 1,301,860 | 8,192 |
Class B | .75% | .25% | 3,101,804 | 2,326,466 |
Class C | .75% | .25% | 1,433,229 | 105,800 |
$ 6,102,170 | $ 2,440,583 |
Health Care
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 61,017 | |
Class T | 39,283 | |
Class B* | 813,736 | |
Class C* | 8,645 | |
$ 922,681 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 439,635 | .41 |
Class T | 1,056,432 | .41 |
Class B | 1,269,262 | .41 |
Class C | 498,550 | .35 |
Institutional Class | 58,169 | .26 |
$ 3,322,048 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $90,391 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $13,807 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $224,341 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $50.
8. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 1,326,830 | 1,203,411 | $ 25,583,854 | $ 20,267,921 |
Shares redeemed | (1,754,987) | (1,518,948) | (33,233,576) | (25,469,009) |
Net increase (decrease) | (428,157) | (315,537) | $ (7,649,722) | $ (5,201,088) |
Class T | ||||
Shares sold | 2,113,234 | 1,868,517 | $ 40,035,265 | $ 31,251,267 |
Shares redeemed | (3,681,338) | (4,033,622) | (68,961,682) | (66,788,799) |
Net increase (decrease) | (1,568,104) | (2,165,105) | $ (28,926,417) | $ (35,537,532) |
Class B | ||||
Shares sold | 1,131,221 | 1,399,903 | $ 20,552,323 | $ 22,699,963 |
Shares redeemed | (3,413,291) | (4,244,862) | (61,904,937) | (67,782,071) |
Net increase (decrease) | (2,282,070) | (2,844,959) | $ (41,352,614) | $ (45,082,108) |
Class C | ||||
Shares sold | 865,725 | 882,963 | $ 15,749,574 | $ 14,326,120 |
Shares redeemed | (2,225,887) | (2,401,732) | (40,266,820) | (38,459,329) |
Net increase (decrease) | (1,360,162) | (1,518,769) | $ (24,517,246) | $ (24,133,209) |
Institutional Class | ||||
Shares sold | 122,545 | 185,023 | $ 2,394,261 | $ 3,143,586 |
Shares redeemed | (324,350) | (1,078,595) | (6,296,427) | (18,368,889) |
Net increase (decrease) | (201,805) | (893,572) | $ (3,902,166) | $ (15,225,303) |
Health Care
Advisor Natural Resources Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 27.31% | 6.60% | 9.41% |
Class T (incl. 3.50% sales charge) | 30.10% | 6.89% | 9.56% |
Class B (incl. contingent deferred sales charge) B, C | 29.12% | 6.78% | 9.55% |
Class C (incl. contingent deferred sales charge) D, E | 33.14% | 7.11% | 9.37% |
A Class A's 12b-1 fee may range over time between 0.25% and 0.35%, as an amount of brokerage commissions equivalent to up to 0.10% of the class's average net assets may be used to promote the sale of class shares. The initial offering of Class A shares took place on September 3, 1996. Returns prior to September 3, 1996 are those of Class T, the original class of the fund, and reflect a 0.50% 12b-1 fee (0.65% prior to January 1, 1996).
B Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on July 3, 1995. Returns prior to July 3, 1995 are those of Class T and reflect a 0.65% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to July 3, 1995 would have been lower.
C Class B shares' contingent deferred sales charges included in the past one year, five year, and ten year total return figures are 5%, 2% and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns between July 3, 1995 and November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Returns prior to July 3, 1995 are those of Class T and reflect a 0.65% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to July 3, 1995 would have been lower.
E Class C shares' contingent deferred sales charges included in the past one year, five year, and ten year total return figures are 1%, 0% and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Natural Resources Fund - Class T on July 31, 1994, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Natural Resources Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Matt Friedman, who became Portfolio Manager of Fidelity ® Advisor Natural Resources Fund on June 1, 2004
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
Although it posted strong absolute performance during the past year and easily outdistanced the overall market's gain, the fund lagged its sector benchmark. For the 12 months ending July 31, 2004, the fund's Class A, Class T, Class B and Class C shares returned 35.08%, 34.82%, 34.12% and 34.14%, respectively, significantly higher than the S&P 500, but lagging the Goldman Sachs ® Natural Resources Index, which gained 36.88% during the same time frame. Flat capital expenditures, strong refining margins and higher fuel prices helped place integrated oil companies, such as BP and ConocoPhillips, among the fund's top contributors to absolute performance and relative to the Goldman Sachs index. Oil services companies, which depend on increased capital spending by integrated oil companies, generally did not fare as well, although oil refiner Schlumberger saw its stock price rise as its international exploration efforts increased. Russian oil companies YUKOS and Sibneft detracted from performance - the former embroiled in a year-long tax dispute with the Kremlin. Gold producer Kinross also struggled as gold prices plummeted during the period.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Natural Resources Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,117.90 | $ 6.79 |
HypotheticalA | $ 1,000.00 | $ 1,018.51 | $ 6.49 |
Class T | |||
Actual | $ 1,000.00 | $ 1,116.90 | $ 7.84 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.50 |
Class B | |||
Actual | $ 1,000.00 | $ 1,114.00 | $ 10.62 |
HypotheticalA | $ 1,000.00 | $ 1,014.83 | $ 10.17 |
Class C | |||
Actual | $ 1,000.00 | $ 1,113.80 | $ 10.41 |
HypotheticalA | $ 1,000.00 | $ 1,015.03 | $ 9.97 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,119.80 | $ 4.80 |
HypotheticalA | $ 1,000.00 | $ 1,020.42 | $ 4.58 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.29% |
Class T | 1.49% |
Class B | 2.02% |
Class C | 1.98% |
Institutional Class | .91% |
Annual Report
Advisor Natural Resources Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
BP PLC sponsored ADR | 9.3 |
Exxon Mobil Corp. | 8.6 |
ChevronTexaco Corp. | 6.6 |
ConocoPhillips | 4.8 |
Schlumberger Ltd. (NY Shares) | 4.5 |
Newmont Mining Corp. | 3.8 |
Occidental Petroleum Corp. | 3.7 |
Alcoa, Inc. | 3.3 |
Halliburton Co. | 3.1 |
Total SA sponsored ADR | 2.7 |
50.4 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Oil & Gas | 51.9% | |
| Energy Equipment & Services | 22.9% | |
| Metals & Mining | 14.5% | |
| Paper & Forest Products | 5.8% | |
| Containers & Packaging | 1.4% | |
| All Others * | 3.5% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Natural Resources Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 96.8% | |||
Shares | Value (Note 1) | ||
CONTAINERS & PACKAGING - 1.4% | |||
Packaging Corp. of America | 63,300 | $ 1,478,688 | |
Smurfit-Stone Container Corp. (a) | 186,687 | 3,474,245 | |
TOTAL CONTAINERS & PACKAGING | 4,952,933 | ||
ENERGY EQUIPMENT & SERVICES - 22.9% | |||
Baker Hughes, Inc. | 136,750 | 5,511,025 | |
BJ Services Co. (a) | 89,200 | 4,429,672 | |
Cal Dive International, Inc. (a) | 13,700 | 424,700 | |
Cooper Cameron Corp. (a) | 12,600 | 643,734 | |
Diamond Offshore Drilling, Inc. | 52,300 | 1,278,212 | |
ENSCO International, Inc. | 99,000 | 2,980,890 | |
GlobalSantaFe Corp. | 109,766 | 3,007,588 | |
Grant Prideco, Inc. (a) | 130,800 | 2,470,812 | |
Grey Wolf, Inc. (a) | 105,200 | 472,348 | |
Halliburton Co. | 348,700 | 11,071,225 | |
Helmerich & Payne, Inc. | 200 | 5,064 | |
Maverick Tube Corp. (a) | 13,300 | 383,572 | |
Nabors Industries Ltd. (a) | 65,100 | 3,027,150 | |
National-Oilwell, Inc. (a) | 80,800 | 2,702,760 | |
Noble Corp. (a) | 39,000 | 1,510,080 | |
Pason Systems, Inc. | 17,900 | 457,179 | |
Patterson-UTI Energy, Inc. | 32,600 | 594,298 | |
Precision Drilling Corp. (a) | 27,200 | 1,350,536 | |
Pride International, Inc. (a) | 111,700 | 2,010,600 | |
Rowan Companies, Inc. (a) | 65,600 | 1,601,952 | |
Schlumberger Ltd. (NY Shares) | 246,300 | 15,842,016 | |
Smith International, Inc. (a) | 152,000 | 8,858,560 | |
Tidewater, Inc. | 14,700 | 446,145 | |
Transocean, Inc. (a) | 34,700 | 985,480 | |
Varco International, Inc. (a) | 69,300 | 1,674,981 | |
Weatherford International Ltd. (a) | 148,400 | 6,942,152 | |
Willbros Group, Inc. (a) | 42,600 | 626,646 | |
TOTAL ENERGY EQUIPMENT & SERVICES | 81,309,377 | ||
MACHINERY - 0.2% | |||
Bucyrus International, Inc. Class A | 26,600 | 638,400 | |
METALS & MINING - 14.5% | |||
Aber Diamond Corp. (a) | 9,300 | 279,437 | |
Alcan, Inc. | 134,900 | 5,336,123 | |
Alcoa, Inc. | 363,200 | 11,633,296 | |
Anglo American PLC ADR | 200 | 4,256 | |
Apex Silver Mines Ltd. (a) | 19,300 | 346,049 | |
CONSOL Energy, Inc. | 95,000 | 3,404,800 | |
Freeport-McMoRan Copper & Gold, | 103,097 | 3,592,930 | |
Goldcorp, Inc. | 132,300 | 1,524,797 | |
Inco Ltd. (a) | 31,600 | 1,047,905 | |
Kinross Gold Corp. (a) | 66,500 | 353,199 | |
Massey Energy Co. | 37,000 | 1,023,050 | |
Shares | Value (Note 1) | ||
Meridian Gold, Inc. (a) | 32,800 | $ 436,511 | |
Newmont Mining Corp. | 336,800 | 13,630,296 | |
Nucor Corp. | 10,000 | 836,500 | |
Peabody Energy Corp. | 66,100 | 3,713,498 | |
Phelps Dodge Corp. | 55,900 | 4,356,846 | |
TOTAL METALS & MINING | 51,519,493 | ||
OIL & GAS - 51.9% | |||
Amerada Hess Corp. | 31,900 | 2,658,865 | |
BP PLC sponsored ADR | 587,148 | 33,091,664 | |
Burlington Resources, Inc. | 153,500 | 5,859,095 | |
ChevronTexaco Corp. | 243,718 | 23,311,627 | |
ConocoPhillips | 217,499 | 17,132,396 | |
Cross Timbers Royalty Trust | 511 | 15,764 | |
EnCana Corp. | 185,732 | 8,229,915 | |
Encore Acquisition Co. (a) | 56,400 | 1,662,108 | |
EOG Resources, Inc. | 200 | 12,710 | |
Exxon Mobil Corp. | 659,560 | 30,537,628 | |
Forest Oil Corp. (a) | 31,500 | 891,135 | |
Frontier Oil Corp. | 41,900 | 898,755 | |
Kerr-McGee Corp. | 390 | 20,475 | |
Kinder Morgan, Inc. | 17,400 | 1,044,174 | |
Marathon Oil Corp. | 65,000 | 2,448,550 | |
Newfield Exploration Co. (a) | 9,200 | 543,444 | |
Noble Energy, Inc. | 200 | 11,062 | |
Occidental Petroleum Corp. | 266,600 | 13,135,382 | |
Patina Oil & Gas Corp. | 60,600 | 1,787,094 | |
Petro-Canada | 111,100 | 5,186,199 | |
Pioneer Natural Resources Co. | 100 | 3,605 | |
Pogo Producing Co. | 200 | 8,876 | |
Premcor, Inc. (a) | 63,900 | 2,294,010 | |
Quicksilver Resources, Inc. (a) | 114,100 | 3,613,547 | |
Range Resources Corp. | 108,700 | 1,820,725 | |
Royal Dutch Petroleum Co. (NY Shares) | 9,000 | 452,700 | |
Sibneft sponsored ADR | 700 | 17,661 | |
Sunoco, Inc. | 34,900 | 2,379,133 | |
Talisman Energy, Inc. | 281,600 | 6,683,829 | |
Total SA sponsored ADR | 99,500 | 9,686,325 | |
Ultra Petroleum Corp. (a) | 36,900 | 1,655,703 | |
Valero Energy Corp. | 78,400 | 5,873,728 | |
Vintage Petroleum, Inc. | 53,900 | 921,690 | |
YUKOS Corp. sponsored ADR | 18,983 | 298,982 | |
TOTAL OIL & GAS | 184,188,556 | ||
PAPER & FOREST PRODUCTS - 5.8% | |||
Bowater, Inc. | 200 | 7,460 | |
Canfor Corp. | 2,629 | 30,260 | |
Domtar, Inc. | 100 | 1,298 | |
Georgia-Pacific Corp. | 91,900 | 3,087,840 | |
International Paper Co. | 200,100 | 8,650,323 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
PAPER & FOREST PRODUCTS - CONTINUED | |||
MeadWestvaco Corp. | 71,137 | $ 2,124,151 | |
Weyerhaeuser Co. | 110,600 | 6,857,200 | |
TOTAL PAPER & FOREST PRODUCTS | 20,758,532 | ||
SPECIALTY RETAIL - 0.1% | |||
Boise Cascade Corp. | 11,100 | 357,975 | |
TOTAL COMMON STOCKS (Cost $267,323,399) | 343,725,266 | ||
Money Market Funds - 3.4% | |||
Fidelity Cash Central Fund, 1.33% (b) | 10,852,614 | 10,852,614 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 1,294,425 | 1,294,425 | |
TOTAL MONEY MARKET FUNDS (Cost $12,147,039) | 12,147,039 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $279,470,438) | 355,872,305 | ||
NET OTHER ASSETS - (0.2)% | (611,614) | ||
NET ASSETS - 100% | $ 355,260,691 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 72.6% |
United Kingdom | 9.3% |
Canada | 9.2% |
Netherlands Antilles | 4.5% |
France | 2.7% |
Cayman Islands | 1.3% |
Others (individually less than 1%) | 0.4% |
100.0% |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $9,417,000 all of which will expire on July 31, 2011. |
See accompanying notes which are an integral part of the financial statements.
Natural Resources
Advisor Natural Resources Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,278,212) (cost $279,470,438) - See accompanying schedule | $ 355,872,305 | |
Cash | 676 | |
Receivable for investments sold | 10,238,293 | |
Receivable for fund shares sold | 480,065 | |
Dividends receivable | 194,928 | |
Interest receivable | 13,767 | |
Prepaid expenses | 470 | |
Other affiliated receivables | 819 | |
Other receivables | 36,943 | |
Total assets | 366,838,266 | |
Liabilities | ||
Payable for investments purchased | $ 9,157,660 | |
Payable for fund shares redeemed | 609,326 | |
Accrued management fee | 167,266 | |
Distribution fees payable | 177,818 | |
Other affiliated payables | 100,898 | |
Other payables and accrued expenses | 70,182 | |
Collateral on securities loaned, at value | 1,294,425 | |
Total liabilities | 11,577,575 | |
Net Assets | $ 355,260,691 | |
Net Assets consist of: | ||
Paid in capital | $ 289,836,735 | |
Accumulated net investment loss | (82,794) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (10,895,112) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 76,401,862 | |
Net Assets | $ 355,260,691 | |
Calculation of Maximum | $ 29.12 | |
Maximum offering price per share (100/94.25 of $29.12) | $ 30.90 | |
Class T: | $ 29.52 | |
Maximum offering price per share (100/96.50 of $29.52) | $ 30.59 | |
Class B: | $ 28.54 | |
Class C: | $ 28.68 | |
Institutional Class: | $ 29.64 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 4,599,259 | |
Interest | 95,168 | |
Security lending | 41,881 | |
Total income | 4,736,308 | |
Expenses | ||
Management fee | $ 1,741,552 | |
Transfer agent fees | 967,493 | |
Distribution fees | 1,860,886 | |
Accounting and security lending fees | 120,302 | |
Non-interested trustees' compensation | 1,595 | |
Custodian fees and expenses | 15,133 | |
Registration fees | 71,036 | |
Audit | 38,898 | |
Legal | 1,014 | |
Miscellaneous | 48,544 | |
Total expenses before reductions | 4,866,453 | |
Expense reductions | (39,000) | 4,827,453 |
Net investment income (loss) | (91,145) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 23,851,679 | |
Foreign currency transactions | 7,472 | |
Total net realized gain (loss) | 23,859,151 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 63,349,385 | |
Assets and liabilities in foreign currencies | 301 | |
Total change in net unrealized appreciation (depreciation) | 63,349,686 | |
Net gain (loss) | 87,208,837 | |
Net increase (decrease) in net assets resulting from operations | $ 87,117,692 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Natural Resources Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (91,145) | $ 921,486 |
Net realized gain (loss) | 23,859,151 | (8,227,381) |
Change in net unrealized appreciation (depreciation) | 63,349,686 | 23,378,509 |
Net increase (decrease) in net assets resulting from operations | 87,117,692 | 16,072,614 |
Distributions to shareholders from net investment income | (681,969) | (648,436) |
Share transactions - net increase (decrease) | 16,197,507 | (47,333,823) |
Redemption fees | 51,991 | 26,765 |
Total increase (decrease) in net assets | 102,685,221 | (31,882,880) |
Net Assets | ||
Beginning of period | 252,575,470 | 284,458,350 |
End of period (including accumulated net investment loss of $82,794 and undistributed net investment income of $481,755, respectively) | $ 355,260,691 | $ 252,575,470 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.65 | $ 20.33 | $ 26.42 | $ 24.07 | $ 21.98 |
Income from Investment Operations | |||||
Net investment income (loss) C | .07 | .13 | .15 | .19 | .10 |
Net realized and unrealized gain (loss) | 7.50 | 1.30 | (4.36) | 2.34 | 2.06 |
Total from investment operations | 7.57 | 1.43 | (4.21) | 2.53 | 2.16 |
Distributions from net investment income | (.10) | (.11) | (.18) | (.19) | (.08) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | (.10) | (.11) | (1.88) | (.19) | (.08) |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 29.12 | $ 21.65 | $ 20.33 | $ 26.42 | $ 24.07 |
Total Return A, B | 35.08% | 7.07% | (16.92)% | 10.56% | 9.92% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.30% | 1.36% | 1.28% | 1.23% | 1.26% |
Expenses net of voluntary waivers, if any | 1.30% | 1.36% | 1.28% | 1.23% | 1.26% |
Expenses net of all reductions | 1.29% | 1.32% | 1.24% | 1.18% | 1.21% |
Net investment income (loss) | .28% | .63% | .64% | .69% | .43% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 44,315 | $ 21,798 | $ 21,993 | $ 21,849 | $ 10,381 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Natural Resources
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.97 | $ 20.61 | $ 26.73 | $ 24.35 | $ 22.21 |
Income from Investment Operations | |||||
Net investment income (loss) C | .03 | .10 | .11 | .14 | .06 |
Net realized and unrealized gain (loss) | 7.60 | 1.32 | (4.42) | 2.36 | 2.08 |
Total from investment operations | 7.63 | 1.42 | (4.31) | 2.50 | 2.14 |
Distributions from net investment income | (.08) | (.06) | (.11) | (.13) | (.01) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | (.08) | (.06) | (1.81) | (.13) | (.01) |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 29.52 | $ 21.97 | $ 20.61 | $ 26.73 | $ 24.35 |
Total Return A, B | 34.82% | 6.91% | (17.07)% | 10.32% | 9.69% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.48% | 1.50% | 1.45% | 1.41% | 1.41% |
Expenses net of voluntary waivers, if any | 1.48% | 1.50% | 1.45% | 1.41% | 1.41% |
Expenses net of all reductions | 1.47% | 1.47% | 1.41% | 1.37% | 1.37% |
Net investment income (loss) | .10% | .48% | .47% | .51% | .27% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 201,187 | $ 155,249 | $ 174,670 | $ 253,062 | $ 245,995 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.28 | $ 20.02 | $ 26.04 | $ 23.77 | $ 21.78 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.01) | (.02) | (.01) | (.06) |
Net realized and unrealized gain (loss) | 7.37 | 1.27 | (4.29) | 2.31 | 2.04 |
Total from investment operations | 7.26 | 1.26 | (4.31) | 2.30 | 1.98 |
Distributions from net investment income | - | - | (.01) | (.04) | - |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | - | - | (1.71) | (.04) | - |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 28.54 | $ 21.28 | $ 20.02 | $ 26.04 | $ 23.77 |
Total Return A, B | 34.12% | 6.29% | (17.51)% | 9.72% | 9.14% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.02% | 2.06% | 2.00% | 1.95% | 1.96% |
Expenses net of voluntary waivers, if any | 2.02% | 2.06% | 2.00% | 1.95% | 1.96% |
Expenses net of all reductions | 2.01% | 2.02% | 1.95% | 1.91% | 1.92% |
Net investment income (loss) | (.44)% | (.07)% | (.07)% | (.03)% | (.28)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 68,347 | $ 50,833 | $ 58,656 | $ 83,243 | $ 50,685 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.38 | $ 20.10 | $ 26.15 | $ 23.88 | $ 21.92 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.10) | - E | (.01) | -E | (.05) |
Net realized and unrealized gain (loss) | 7.40 | 1.28 | (4.32) | 2.32 | 2.04 |
Total from investment operations | 7.30 | 1.28 | (4.33) | 2.32 | 1.99 |
Distributions from net investment income | - | - | (.02) | (.06) | (.04) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | - | - | (1.72) | (.06) | (.04) |
Redemption fees added to paid in capital C | - E | - E | - E | .01 | .01 |
Net asset value, end of period | $ 28.68 | $ 21.38 | $ 20.10 | $ 26.15 | $ 23.88 |
Total Return A, B | 34.14% | 6.37% | (17.52)% | 9.76% | 9.15% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.99% | 2.01% | 1.96% | 1.92% | 1.91% |
Expenses net of voluntary waivers, if any | 1.99% | 2.01% | 1.96% | 1.92% | 1.91% |
Expenses net of all reductions | 1.97% | 1.97% | 1.92% | 1.87% | 1.87% |
Net investment income (loss) | (.41)% | (.02)% | (.03)% | - | (.23)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 37,206 | $ 22,044 | $ 24,201 | $ 29,699 | $ 13,741 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokrage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.03 | $ 20.67 | $ 26.82 | $ 24.43 | $ 22.28 |
Income from Investment Operations | |||||
Net investment income (loss) B | .18 | .22 | .23 | .28 | .19 |
Net realized and unrealized gain (loss) | 7.62 | 1.32 | (4.43) | 2.37 | 2.07 |
Total from investment operations | 7.80 | 1.54 | (4.20) | 2.65 | 2.26 |
Distributions from net investment income | (.19) | (.18) | (.25) | (.27) | (.13) |
Distributions from net realized gain | - | - | (1.70) | - | - |
Total distributions | (.19) | (.18) | (1.95) | (.27) | (.13) |
Redemption fees added to paid in capital B | - D | - D | - D | .01 | .02 |
Net asset value, end of period | $ 29.64 | $ 22.03 | $ 20.67 | $ 26.82 | $ 24.43 |
Total Return A | 35.60% | 7.51% | (16.64)% | 10.90% | 10.31% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | .90% | .95% | .93% | .88% | .86% |
Expenses net of voluntary waivers, if any | .90% | .95% | .93% | .88% | .86% |
Expenses net of all reductions | .89% | .91% | .89% | .84% | .82% |
Net investment income (loss) | .68% | 1.04% | .99% | 1.04% | .82% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 4,206 | $ 2,652 | $ 4,938 | $ 6,960 | $ 3,470 |
Portfolio turnover rate | 40% | 41% | 85% | 130% | 90% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Natural Resources
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Natural Resources Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 77,085,929 | | |
Unrealized depreciation | (2,244,282) | |
Net unrealized appreciation (depreciation) | 74,841,647 | |
Capital loss carryforward | (9,416,999) | |
Cost for federal income tax purposes | $ 281,030,658 |
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 681,969 | $ 648,436 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $121,914,625 and $117,231,117, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 76,920 | $ 48 |
Class T | .25% | .25% | 897,022 | 11,122 |
Class B | .75% | .25% | 611,696 | 458,773 |
Class C | .75% | .25% | 275,248 | 52,636 |
$ 1,860,886 | $ 522,579 |
Natural Resources
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 43,377 | |
Class T | 21,176 | |
Class B* | 144,590 | |
Class C* | 4,128 | |
$ 213,271 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 116,089 | .38 |
Class T | 544,563 | .30 |
Class B | 213,786 | .35 |
Class C | 85,714 | .31 |
Institutional Class | 7,341 | .22 |
$ 967,493 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $95,144 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $1,710 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
Annual Report
Notes to Financial Statements - continued
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $39,000 for the period.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2004 | 2003 | |
From net investment income | ||
Class A | $ 99,224 | $ 122,749 |
Class T | 560,230 | 484,682 |
Institutional Class | 22,515 | 41,005 |
Total | $ 681,969 | $ 648,436 |
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 879,939 | 345,235 | $ 23,517,820 | $ 6,972,414 |
Reinvestment of distributions | 3,715 | 5,188 | 87,332 | 105,443 |
Shares redeemed | (368,575) | (425,490) | (9,483,597) | (8,681,223) |
Net increase (decrease) | 515,079 | (75,067) | $ 14,121,555 | $ (1,603,366) |
Class T | ||||
Shares sold | 1,119,622 | 554,155 | $ 29,514,297 | $ 11,575,295 |
Reinvestment of distributions | 22,018 | 21,538 | 522,475 | 445,500 |
Shares redeemed | (1,393,256) | (1,983,967) | (36,120,583) | (40,997,580) |
Net increase (decrease) | (251,616) | (1,408,274) | $ (6,083,811) | $ (28,976,785) |
Class B | ||||
Shares sold | 634,362 | 269,444 | $ 16,119,361 | $ 5,459,915 |
Shares redeemed | (627,931) | (811,138) | (16,075,114) | (16,148,876) |
Net increase (decrease) | 6,431 | (541,694) | $ 44,247 | $ (10,688,961) |
Class C | ||||
Shares sold | 581,963 | 187,479 | $ 15,409,819 | $ 3,795,065 |
Shares redeemed | (315,706) | (360,375) | (7,916,650) | (7,275,416) |
Net increase (decrease) | 266,257 | (172,896) | $ 7,493,169 | $ (3,480,351) |
Institutional Class | ||||
Shares sold | 62,791 | 34,404 | $ 1,688,343 | $ 712,141 |
Reinvestment of distributions | 613 | 1,446 | 14,771 | 29,777 |
Shares redeemed | (41,908) | (154,352) | (1,080,767) | (3,326,278) |
Net increase (decrease) | 21,496 | (118,502) | $ 622,347 | $ (2,584,360) |
Natural Resources
Advisor Technology Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | -1.38% | -10.21% | 6.44% |
Class T (incl. 3.50% sales charge) | 0.82% | -9.98% | 6.49% |
Class B (incl. contingent deferred sales charge) B,C | -1.16% | -10.17% | 6.47% |
Class C (incl. contingent deferred sales charge) D,E | 2.98% | -9.78% | 6.46% |
A From September 3, 1996.
B Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on March 3, 1997. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
C Class B shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 5%, 2% and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns between March 3, 1997 and November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
E Class C shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 1%, 0% and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Technology Fund - Class T on September 3, 1996, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Technology Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Sonu Kalra, Portfolio Manager of Fidelity ® Advisor Technology Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500 SM Index - - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500 ® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months ending July 31, 2004, the fund's Class A, Class T, Class B and Class C shares returned 4.64%, 4.48%, 3.84% and 3.98%, respectively, trailing both the 9.15% return of the Goldman Sachs® Technology Index and the Standard & Poor's 500 Index. Versus the Goldman Sachs index, the fund was particularly hurt by an overweighting and unfavorable stock picking in semiconductors. Agere Systems, a maker of chips for handsets and computer disk drives, was the fund's largest detractor in absolute terms and relative to its sector index. Also detracting from absolute performance was the fund's second-largest holding, Intel, which encountered some problems migrating to its new 90-nanometer semiconductor production technology. On the other hand, my picks in computer hardware and an overweighting in wireless telecommunication equipment aided performance compared with the Goldman Sachs index. Wireless handset maker Motorola was the fund's largest contributor, as a number of the company's handset products logged healthy sales during the period. Another contributor was wireless infrastructure stock LM Ericsson, which benefited from increasing competition among wireless service providers to improve their network quality.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 840.60 | $ 6.68 |
Hypothetical A | $ 1,000.00 | $ 1,017.65 | $ 7.35 |
Class T | |||
Actual | $ 1,000.00 | $ 840.00 | $ 7.55 |
Hypothetical A | $ 1,000.00 | $ 1,016.69 | $ 8.31 |
Class B | |||
Actual | $ 1,000.00 | $ 837.50 | $ 10.14 |
Hypothetical A | $ 1,000.00 | $ 1,013.82 | $ 11.18 |
Class C | |||
Actual | $ 1,000.00 | $ 838.20 | $ 9.83 |
Hypothetical A | $ 1,000.00 | $ 1,014.18 | $ 10.82 |
Institutional | |||
Actual | $ 1,000.00 | $ 843.30 | $ 4.40 |
Hypothetical A | $ 1,000.00 | $ 1,020.17 | $ 4.83 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.46% |
Class T | 1.65% |
Class B | 2.22% |
Class C | 2.15% |
Institutional | .96% |
Annual Report
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Microsoft Corp. | 10.3 |
Intel Corp. | 9.1 |
Cisco Systems, Inc. | 8.8 |
Dell, Inc. | 7.4 |
EMC Corp. | 4.7 |
Micron Technology, Inc. | 2.5 |
National Semiconductor Corp. | 2.5 |
Analog Devices, Inc. | 2.2 |
Applied Materials, Inc. | 2.1 |
QUALCOMM, Inc. | 2.0 |
51.6 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Semiconductors & Semiconductor Equipment | 32.2% | |
| Communications Equipment | 20.1% | |
| Computers & Peripherals | 18.8% | |
| Software | 18.5% | |
| Internet Software & Services | 3.2% | |
| All Others * | 7.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 98.2% | |||
Shares | Value (Note 1) | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Monster Worldwide, Inc. (a) | 147,600 | $ 3,260,484 | |
COMMUNICATIONS EQUIPMENT - 20.1% | |||
ADC Telecommunications, Inc. (a) | 1,004,500 | 2,410,800 | |
Alcatel SA sponsored ADR (a) | 811,500 | 10,500,810 | |
Avaya, Inc. (a) | 718,500 | 10,526,025 | |
Brocade Communications Systems, Inc. (a) | 140,800 | 678,656 | |
CIENA Corp. (a) | 1,040,500 | 2,934,210 | |
Cisco Systems, Inc. (a) | 4,119,700 | 85,936,942 | |
Comverse Technology, Inc. (a) | 237,000 | 4,043,220 | |
Corning, Inc. (a) | 385,000 | 4,758,600 | |
Emulex Corp. (a) | 330,500 | 3,566,095 | |
Enterasys Networks, Inc. (a) | 966,100 | 1,623,048 | |
Extreme Networks, Inc. (a) | 453,700 | 2,459,054 | |
F5 Networks, Inc. (a) | 57,100 | 1,495,449 | |
Foundry Networks, Inc. (a) | 120,500 | 1,236,330 | |
ITF Optical Technologies, Inc. Series A (d) | 34,084 | 42,605 | |
Juniper Networks, Inc. (a) | 85,646 | 1,966,432 | |
Marconi Corp. PLC (a) | 434,833 | 4,949,079 | |
McDATA Corp. Class A (a) | 631,000 | 3,249,650 | |
Motorola, Inc. | 782,300 | 12,462,039 | |
Nortel Networks Corp. (a) | 236,300 | 864,859 | |
Oplink Communications, Inc. (a) | 459,100 | 821,789 | |
OZ Optics Ltd. unit (d) | 68,000 | 1,003,000 | |
Plantronics, Inc. (a) | 25,200 | 974,736 | |
Powerwave Technologies, Inc. (a) | 411,300 | 2,278,602 | |
QLogic Corp. (a) | 64,900 | 1,586,805 | |
QUALCOMM, Inc. | 290,600 | 20,074,648 | |
Research in Motion Ltd. (a) | 61,800 | 3,821,674 | |
Scientific-Atlanta, Inc. | 180,400 | 5,547,300 | |
SiRF Technology Holdings, Inc. | 700 | 7,833 | |
Sonus Networks, Inc. (a) | 43,500 | 221,415 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 128,300 | 3,426,893 | |
WJ Communications, Inc. (a) | 604,100 | 1,576,701 | |
TOTAL COMMUNICATIONS EQUIPMENT | 197,045,299 | ||
COMPUTERS & PERIPHERALS - 18.8% | |||
Apple Computer, Inc. (a) | 384,000 | 12,418,560 | |
Compal Electronics, Inc. | 1,804,000 | 1,799,223 | |
Dell, Inc. (a) | 2,057,100 | 72,965,337 | |
Dot Hill Systems Corp. (a) | 493,000 | 4,091,900 | |
EMC Corp. (a) | 4,190,072 | 45,965,090 | |
Gateway, Inc. (a) | 219,700 | 988,650 | |
Hutchinson Technology, Inc. (a) | 18,500 | 411,995 | |
International Business Machines Corp. | 164,700 | 14,340,429 | |
Lexmark International, Inc. Class A (a) | 81,600 | 7,221,600 | |
Network Appliance, Inc. (a) | 108,900 | 2,102,859 | |
PalmOne, Inc. (a) | 139,868 | 5,625,491 | |
Quanta Computer, Inc. | 1,738,237 | 2,812,681 | |
Storage Technology Corp. (a) | 81,600 | 2,035,920 | |
Sun Microsystems, Inc. (a) | 1,613,000 | 6,371,350 | |
Shares | Value (Note 1) | ||
Synaptics, Inc. (a) | 78,000 | $ 1,153,620 | |
Western Digital Corp. (a) | 536,300 | 3,759,463 | |
TOTAL COMPUTERS & PERIPHERALS | 184,064,168 | ||
ELECTRICAL EQUIPMENT - 0.2% | |||
BYD Co. Ltd. (H Shares) | 623,000 | 1,781,152 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.6% | |||
Arrow Electronics, Inc. (a) | 104,200 | 2,465,372 | |
Avnet, Inc. (a) | 119,500 | 2,320,690 | |
Benchmark Electronics, Inc. (a) | 81,400 | 2,326,412 | |
Flextronics International Ltd. (a) | 216,300 | 2,718,891 | |
Hon Hai Precision Industries Co. Ltd. | 1,038,665 | 3,743,350 | |
Phoenix Precision Technology Corp. (a) | 787 | 364 | |
Photon Dynamics, Inc. (a) | 58,600 | 1,610,914 | |
Symbol Technologies, Inc. | 350,500 | 4,588,045 | |
Vishay Intertechnology, Inc. (a) | 267,300 | 4,143,150 | |
Xyratex Ltd. | 120,000 | 1,098,000 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 25,015,188 | ||
HOUSEHOLD DURABLES - 0.4% | |||
Harman International Industries, Inc. | 22,300 | 1,911,779 | |
ReignCom Ltd. | 24,592 | 435,340 | |
Sony Corp. sponsored ADR | 39,200 | 1,358,280 | |
TOTAL HOUSEHOLD DURABLES | 3,705,399 | ||
INTERNET & CATALOG RETAIL - 0.6% | |||
Amazon.com, Inc. (a) | 92,500 | 3,600,100 | |
eBay, Inc. (a) | 22,200 | 1,738,926 | |
Netflix, Inc. (a) | 48,500 | 994,250 | |
TOTAL INTERNET & CATALOG RETAIL | 6,333,276 | ||
INTERNET SOFTWARE & SERVICES - 3.2% | |||
Akamai Technologies, Inc. (a) | 148,700 | 2,220,091 | |
EarthLink, Inc. (a) | 212,900 | 2,101,323 | |
Openwave Systems, Inc. (a) | 205,466 | 2,336,148 | |
United Online, Inc. (a) | 306,650 | 4,783,740 | |
Yahoo!, Inc. (a) | 631,800 | 19,459,440 | |
TOTAL INTERNET SOFTWARE & SERVICES | 30,900,742 | ||
IT SERVICES - 0.5% | |||
Ceridian Corp. (a) | 118,200 | 2,127,600 | |
Infosys Technologies Ltd. sponsored ADR | 46,200 | 2,321,550 | |
Kanbay International, Inc. | 6,500 | 100,815 | |
TOTAL IT SERVICES | 4,549,965 | ||
OFFICE ELECTRONICS - 0.2% | |||
Canon, Inc. | 45,000 | 2,205,000 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 32.2% | |||
Altera Corp. (a) | 217,400 | 4,526,268 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Analog Devices, Inc. | 548,600 | $ 21,779,420 | |
Applied Materials, Inc. (a) | 1,203,700 | 20,426,789 | |
ATI Technologies, Inc. (a) | 67,200 | 1,074,290 | |
ATMI, Inc. (a) | 171,700 | 3,495,812 | |
Axcelis Technologies, Inc. (a) | 94,600 | 882,618 | |
Broadcom Corp. Class A (a) | 68,500 | 2,422,160 | |
Conexant Systems, Inc. (a) | 1,332,742 | 2,119,060 | |
Cypress Semiconductor Corp. (a) | 321,200 | 3,642,408 | |
Fairchild Semiconductor International, Inc. (a) | 342,600 | 5,032,794 | |
FormFactor, Inc. | 105,500 | 2,118,440 | |
Freescale Semiconductor, Inc. Class A | 189,900 | 2,668,095 | |
Infineon Technologies AG sponsored ADR (a) | 209,600 | 2,297,216 | |
Integrated Circuit Systems, Inc. (a) | 676,100 | 16,172,312 | |
Integrated Device Technology, Inc. (a) | 459,700 | 5,254,371 | |
Intel Corp. | 3,657,400 | 89,167,412 | |
International Rectifier Corp. (a) | 122,800 | 4,813,760 | |
Intersil Corp. Class A | 343,500 | 6,310,095 | |
KLA-Tencor Corp. (a) | 413,000 | 17,019,730 | |
Lam Research Corp. (a) | 90,200 | 2,151,270 | |
Lattice Semiconductor Corp. (a) | 312,400 | 1,530,760 | |
Linear Technology Corp. | 37,100 | 1,450,610 | |
LSI Logic Corp. (a) | 74,900 | 381,241 | |
Micron Technology, Inc. (a) | 1,839,300 | 24,885,729 | |
National Semiconductor Corp. (a) | 1,438,700 | 24,673,705 | |
Omnivision Technologies, Inc. (a) | 237,500 | 2,797,750 | |
ON Semiconductor Corp. (a) | 471,800 | 1,887,200 | |
PMC-Sierra, Inc. (a) | 69,800 | 829,224 | |
Samsung Electronics Co. Ltd. | 12,341 | 4,411,655 | |
Silicon Image, Inc. (a) | 294,000 | 3,525,060 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 725,591 | 915,794 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 920,069 | 6,550,891 | |
Teradyne, Inc. (a) | 662,600 | 11,330,460 | |
Texas Instruments, Inc. | 234,700 | 5,006,151 | |
Tower Semicondutor Ltd. (a) | 90,500 | 352,950 | |
United Microelectronics Corp. sponsored ADR (a) | 1,345,627 | 4,978,820 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 32,700 | 976,749 | |
Xilinx, Inc. | 206,000 | 6,062,580 | |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 315,921,649 | ||
SOFTWARE - 18.5% | |||
Amdocs Ltd. (a) | 210,100 | 4,559,170 | |
Cadence Design Systems, Inc. (a) | 474,700 | 6,394,209 | |
Lawson Software, Inc. (a) | 149,200 | 1,059,320 | |
Microsoft Corp. | 3,534,300 | 100,586,179 | |
Oracle Corp. (a) | 1,801,800 | 18,936,918 | |
Quest Software, Inc. (a) | 675,600 | 8,147,736 | |
Shares | Value (Note 1) | ||
RADWARE Ltd. (a) | 83,400 | $ 1,491,192 | |
Red Hat, Inc. (a) | 609,100 | 10,427,792 | |
Salesforce.com, Inc. | 700 | 9,107 | |
SAP AG sponsored ADR | 62,200 | 2,488,622 | |
Siebel Systems, Inc. (a) | 469,700 | 3,785,782 | |
Symantec Corp. (a) | 99,500 | 4,652,620 | |
Synopsys, Inc. (a) | 257,800 | 6,519,762 | |
THQ, Inc. (a) | 104,500 | 1,990,725 | |
VERITAS Software Corp. (a) | 523,900 | 9,985,534 | |
TOTAL SOFTWARE | 181,034,668 | ||
SPECIALTY RETAIL - 0.2% | |||
Best Buy Co., Inc. | 47,500 | 2,287,600 | |
WIRELESS TELECOMMUNICATION SERVICES - 0.4% | |||
American Tower Corp. Class A (a) | 88,700 | 1,282,602 | |
Nextel Communications, Inc. Class A (a) | 95,700 | 2,178,132 | |
TOTAL WIRELESS TELECOMMUNICATION SERVICES | 3,460,734 | ||
TOTAL COMMON STOCKS (Cost $1,004,951,202) | 961,565,324 | ||
Convertible Preferred Stocks - 0.0% | |||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
Chorum Technologies, Inc. Series E (a)(d) | 17,200 | 7,224 | |
Procket Networks, Inc. Series C (d) | 276,000 | 3 | |
TOTAL COMMUNICATIONS EQUIPMENT | 7,227 | ||
SOFTWARE - 0.0% | |||
Monterey Design Systems Series E (d) | 342,000 | 171,000 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $4,786,591) | 178,227 | ||
Money Market Funds - 2.9% | |||
Fidelity Cash Central Fund, 1.33% (b) | 18,822,396 | 18,822,396 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 9,361,175 | 9,361,175 | |
TOTAL MONEY MARKET FUNDS (Cost $28,183,571) | 28,183,571 | ||
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $1,037,921,364) | 989,927,122 | ||
NET OTHER ASSETS - (1.1)% | (10,301,811) | ||
NET ASSETS - 100% | $ 979,625,311 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
(d) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $1,223,832 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Chorum Technologies, Inc. Series E | 9/19/00 | $ 296,528 |
ITF Optical Technologies, Inc. Series A | 10/11/00 | $ 1,711,500 |
Monterey Design Systems Series E | 11/1/00 | $ 1,795,500 |
OZ Optics Ltd. unit | 8/18/00 | $ 1,003,680 |
Procket Networks, Inc. Series C | 11/15/00 - 12/26/00 | $ 2,725,776 |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $1,724,899,000 of which $1,225,092,000 and $499,807,000 will expire on July 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,904,160) (cost $1,037,921,364) - See accompanying schedule | $ 989,927,122 | |
Foreign currency held at value | 2,363,062 | |
Receivable for investments sold | 7,010,999 | |
Receivable for fund shares sold | 421,748 | |
Dividends receivable | 140,002 | |
Interest receivable | 11,555 | |
Prepaid expenses | 1,983 | |
Other affiliated receivables | 1,179 | |
Other receivables | 164,394 | |
Total assets | 1,000,042,044 | |
Liabilities | ||
Payable for investments purchased | $ 5,478,287 | |
Payable for fund shares redeemed | 3,671,594 | |
Accrued management fee | 480,078 | |
Distribution fees payable | 592,617 | |
Other affiliated payables | 484,519 | |
Other payables and accrued expenses | 348,463 | |
Collateral on securities loaned, at value | 9,361,175 | |
Total liabilities | 20,416,733 | |
Net Assets | $ 979,625,311 | |
Net Assets consist of: | ||
Paid in capital | $ 2,740,365,048 | |
Accumulated net investment loss | (843) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,712,721,019) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (48,017,875) | |
Net Assets | $ 979,625,311 | |
Calculation of Maximum | $ 13.98 | |
Maximum offering price per share (100/94.25 of $13.98) | $ 14.83 | |
Class T: | $ 13.76 | |
Maximum offering price per share (100/96.50 of $13.76) | $ 14.26 | |
Class B: | $ 13.25 | |
Class C: | $ 13.31 | |
Institutional: | $ 14.32 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 2,757,608 | |
Interest | 146,034 | |
Security lending | 127,089 | |
3,030,731 | ||
Less foreign taxes withheld | (188,972) | |
Total income | 2,841,759 | |
Expenses | ||
Management fee | $ 6,644,571 | |
Transfer agent fees | 5,805,763 | |
Distribution fees | 8,245,958 | |
Accounting and security lending fees | 353,493 | |
Non-interested trustees' compensation | 6,380 | |
Custodian fees and expenses | 72,278 | |
Registration fees | 76,192 | |
Audit | 44,891 | |
Legal | 4,247 | |
Miscellaneous | 365,028 | |
Total expenses before reductions | 21,618,801 | |
Expense reductions | (1,076,398) | 20,542,403 |
Net investment income (loss) | (17,700,644) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 172,501,785 | |
Foreign currency transactions | (15,278) | |
Total net realized gain (loss) | 172,486,507 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (101,929,036) | |
Assets and liabilities in foreign currencies | (22,485) | |
Total change in net unrealized appreciation (depreciation) | (101,951,521) | |
Net gain (loss) | 70,534,986 | |
Net increase (decrease) in net assets resulting from operations | $ 52,834,342 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Technology Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (17,700,644) | $ (12,623,914) |
Net realized gain (loss) | 172,486,507 | (113,015,425) |
Change in net unrealized appreciation (depreciation) | (101,951,521) | 376,634,726 |
Net increase (decrease) in net assets resulting from operations | 52,834,342 | 250,995,387 |
Share transactions - net increase (decrease) | (107,215,077) | (93,098,351) |
Redemption fees | 148,216 | 149,242 |
Total increase (decrease) in net assets | (54,232,519) | 158,046,278 |
Net Assets | ||
Beginning of period | 1,033,857,830 | 875,811,552 |
End of period (including accumulated net investment loss of $843 and $0, respectively) | $ 979,625,311 | $ 1,033,857,830 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.36 | $ 10.03 | $ 17.76 | $ 36.23 | $ 24.95 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.17) | (.11) | (.15) | (.17) | (.19) |
Net realized and unrealized gain (loss) | .79 | 3.44 | (7.58) | (16.67) | 13.04 |
Total from investment operations | .62 | 3.33 | (7.73) | (16.84) | 12.85 |
Distributions from net realized gain | - | - | - | (1.63) | (1.58) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.98 | $ 13.36 | $ 10.03 | $ 17.76 | $ 36.23 |
Total Return A, B | 4.64% | 33.20% | (43.52)% | (48.83)% | 53.76% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.44% | 1.70% | 1.53% | 1.23% | 1.16% |
Expenses net of voluntary waivers, if any | 1.44% | 1.59% | 1.51% | 1.23% | 1.16% |
Expenses net of all reductions | 1.35% | 1.38% | 1.43% | 1.21% | 1.15% |
Net investment income (loss) | (1.10)% | (1.03)% | (1.07)% | (.68)% | (.55)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 123,389 | $ 123,604 | $ 101,649 | $ 211,429 | $ 388,756 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.17 | $ 9.91 | $ 17.59 | $ 35.95 | $ 24.76 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.19) | (.14) | (.18) | (.22) | (.27) |
Net realized and unrealized gain (loss) | .78 | 3.40 | (7.50) | (16.55) | 12.96 |
Total from investment operations | .59 | 3.26 | (7.68) | (16.77) | 12.69 |
Distributions from net realized gain | - | - | - | (1.59) | (1.51) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.76 | $ 13.17 | $ 9.91 | $ 17.59 | $ 35.95 |
Total Return A, B | 4.48% | 32.90% | (43.66)% | (48.96)% | 53.41% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 1.62% | 1.85% | 1.70% | 1.43% | 1.38% |
Expenses net of voluntary waivers, if any | 1.62% | 1.83% | 1.70% | 1.43% | 1.38% |
Expenses net of all reductions | 1.53% | 1.63% | 1.62% | 1.41% | 1.37% |
Net investment income (loss) | (1.28)% | (1.28)% | (1.26)% | (.88)% | (.77)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 363,399 | $ 367,257 | $ 302,657 | $ 645,015 | $ 1,286,376 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 12.76 | $ 9.64 | $ 17.21 | $ 35.33 | $ 24.44 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.27) | (.17) | (.25) | (.35) | (.45) |
Net realized and unrealized gain (loss) | .76 | 3.29 | (7.32) | (16.27) | 12.78 |
Total from investment operations | .49 | 3.12 | (7.57) | (16.62) | 12.33 |
Distributions from net realized gain | - | - | - | (1.50) | (1.45) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.25 | $ 12.76 | $ 9.64 | $ 17.21 | $ 35.33 |
Total Return A, B | 3.84% | 32.37% | (43.99)% | (49.28)% | 52.57% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.21% | 2.38% | 2.28% | 1.98% | 1.91% |
Expenses net of voluntary waivers, if any | 2.21% | 2.25% | 2.25% | 1.98% | 1.91% |
Expenses net of all reductions | 2.12% | 2.05% | 2.18% | 1.96% | 1.91% |
Net investment income (loss) | (1.87)% | (1.69)% | (1.81)% | (1.43)% | (1.30)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 355,927 | $ 391,832 | $ 337,976 | $ 729,518 | $ 1,372,523 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 12.80 | $ 9.67 | $ 17.25 | $ 35.39 | $ 24.49 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.26) | (.17) | (.24) | (.33) | (.44) |
Net realized and unrealized gain (loss) | .77 | 3.30 | (7.34) | (16.30) | 12.80 |
Total from investment operations | .51 | 3.13 | (7.58) | (16.63) | 12.36 |
Distributions from net realized gain | - | - | - | (1.51) | (1.47) |
Redemption fees added to paid in capital C | - E | - E | - E | - E | .01 |
Net asset value, end of period | $ 13.31 | $ 12.80 | $ 9.67 | $ 17.25 | $ 35.39 |
Total Return A, B | 3.98% | 32.37% | (43.94)% | (49.24)% | 52.60% |
Ratios to Average Net Assets D | |||||
Expenses before expense reductions | 2.13% | 2.28% | 2.18% | 1.94% | 1.89% |
Expenses net of voluntary waivers, if any | 2.13% | 2.25% | 2.18% | 1.94% | 1.89% |
Expenses net of all reductions | 2.04% | 2.05% | 2.11% | 1.91% | 1.89% |
Net investment income (loss) | (1.79)% | (1.69)% | (1.74)% | (1.38)% | (1.28)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 125,926 | $ 139,654 | $ 123,034 | $ 269,563 | $ 472,462 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 13.61 | $ 10.15 | $ 17.90 | $ 36.43 | $ 25.05 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.09) | (.05) | (.08) | (.08) | (.09) |
Net realized and unrealized gain (loss) | .80 | 3.51 | (7.67) | (16.78) | 13.08 |
Total from investment operations | .71 | 3.46 | (7.75) | (16.86) | 12.99 |
Distributions from net realized gain | - | - | - | (1.67) | (1.62) |
Redemption fees added to paid in capital B | - D | - D | - D | - D | .01 |
Net asset value, end of period | $ 14.32 | $ 13.61 | $ 10.15 | $ 17.90 | $ 36.43 |
Total Return A | 5.22% | 34.09% | (43.30)% | (48.67)% | 54.16% |
Ratios to Average Net Assets C | |||||
Expenses before expense reductions | .93% | .99% | 1.00% | .86% | .87% |
Expenses net of voluntary waivers, if any | .93% | .99% | 1.00% | .86% | .87% |
Expenses net of all reductions | .84% | .79% | .92% | .84% | .87% |
Net investment income (loss) | (.59)% | (.43)% | (.56)% | (.31)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 10,984 | $ 11,511 | $ 10,495 | $ 24,084 | $ 63,957 |
Portfolio turnover rate | 105% | 140% | 164% | 181% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. D Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Technology
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Technology Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 96,960,320 | |
Unrealized depreciation | (132,800,206) | |
Net unrealized appreciation (depreciation) | (35,839,886) | |
Capital loss carryforward | (1,724,899,006) | |
Cost for federal income tax purposes | $ 1,025,767,008 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the fund's Schedule of Investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $1,176,959,390 and $1,288,618,867, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 350,489 | $ 829 |
Class T | .25% | .25% | 2,098,398 | 520 |
Class B | .75% | .25% | 4,273,239 | 3,205,356 |
Class C | .75% | .25% | 1,523,832 | 133,584 |
$ 8,245,958 | $ 3,340,289 |
Technology
4. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 64,357 | |
Class T | 54,391 | |
Class B* | 1,047,655 | |
Class C* | 21,340 | |
$ 1,187,743 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 747,300 | .53 |
Class T | 1,937,409 | .46 |
Class B | 2,363,931 | .55 |
Class C | 721,604 | .47 |
Institutional Class | 35,519 | .28 |
$ 5,805,763 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $141,803 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $432,300 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned
Annual Report
Notes to Financial Statements - continued
6. Security Lending - continued
because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $1,075,980 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $418.
8. Other Information.
At the end of the period, one otherwise unaffiliated shareholder was the owner of record of 12% of the total outstanding shares of the fund.
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 1,949,432 | 1,802,585 | $ 30,174,313 | $ 19,778,045 |
Shares redeemed | (2,376,787) | (2,687,789) | (36,367,643) | (28,008,624) |
Net increase (decrease) | (427,355) | (885,204) | $ (6,193,330) | $ (8,230,579) |
Class T | ||||
Shares sold | 6,284,281 | 6,499,652 | $ 95,617,905 | $ 69,995,024 |
Shares redeemed | (7,757,438) | (9,153,206) | (117,704,082) | (94,351,747) |
Net increase (decrease) | (1,473,157) | (2,653,554) | $ (22,086,177) | $ (24,356,723) |
Class B | ||||
Shares sold | 1,611,188 | 2,551,777 | $ 23,596,499 | $ 26,996,352 |
Shares redeemed | (5,460,468) | (6,904,437) | (80,101,949) | (68,882,635) |
Net increase (decrease) | (3,849,280) | (4,352,660) | $ (56,505,450) | $ (41,886,283) |
Class C | ||||
Shares sold | 1,207,664 | 1,584,472 | $ 17,854,754 | $ 17,036,571 |
Shares redeemed | (2,652,498) | (3,396,214) | (39,082,309) | (33,826,918) |
Net increase (decrease) | (1,444,834) | (1,811,742) | $ (21,227,555) | $ (16,790,347) |
Institutional Class | ||||
Shares sold | 171,199 | 212,132 | $ 2,734,772 | $ 2,356,185 |
Shares redeemed | (249,741) | (400,084) | (3,937,337) | (4,190,604) |
Net increase (decrease) | (78,542) | (187,952) | $ (1,202,565) | $ (1,834,419) |
Technology
Advisor Telecommunications & Utilities Growth Fund - Class A, T, B, and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns may reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2004 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 10.90% | -8.91% | 5.64% |
Class T (incl. 3.50% sales charge) | 13.31% | -8.69% | 5.70% |
Class B (incl. contingent deferred sales charge) B,C | 11.79% | -8.85% | 5.71% |
Class C (incl. contingent deferred sales charge) D,E | 15.98% | -8.44% | 5.72% |
A From September 3, 1996.
B Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on March 3, 1997. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
C Class B shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 5%, 2% and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns between March 3, 1997 and November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Returns prior to March 3, 1997 are those of Class T and reflect a 0.50% 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to March 3, 1997 would have been lower.
E Class C shares' contingent deferred sales charges included in the past one year, five year, and life of fund total return figures are 1%, 0% and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Telecommunications & Utilities Growth Fund - Class T on September 3, 1996, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have grown, and also shows how the S&P 500 Index did over the same period.
Annual Report
Advisor Telecommunications & Utilities Growth Fund - Class A, T, B, and C
Management's Discussion of Fund Performance
Comments from Brian Younger, Portfolio Manager of Fidelity ® Advisor Telecommunications & Utilities Growth Fund
U.S. equity markets reversed course during the 12 months that ended July 31, 2004. In the first half of the period, stocks rose as investors grew more confident about the recovering economy. Speculative, high-growth industries such as semiconductors and biotechnology led the charge early on. In the second half, though, the less glamorous but steadier growth of household and personal product companies, among others, gained favor against a backdrop of near-record-high prices for oil and gasoline, concerns about rising interest rates and threats of terrorism. The Standard & Poor's 500SM Index - a popular benchmark of commonly held stocks - reflects the equity markets' reversal well. In the first six months of the period, the S&P 500® gained 15.23%. But the benchmark lost 1.78% in the second half of the period. For the 12 months overall, the S&P 500 climbed 13.17%. Meanwhile, the Dow Jones Industrial Average SM - a performance measure of 30 large-cap, blue-chip stocks - rose 12.11%, and the tech-heavy NASDAQ Composite ® Index returned 9.29%, despite losing 8.45% in the past six months.
For the 12 months that ended July 31, 2004, the fund's Class A, Class T, Class B and Class C shares returned 17.67%, 17.42%, 16.79% and 16.98%, respectively. These returns trailed the Goldman Sachs ® Utilities Index, which gained 18.08%, but beat the S&P 500. Utilities benefited as investors grew more risk averse and moved into safer-haven sectors. Strong stock selection within electric utilities and wireline telecommunications aided relative performance, while disappointing stock picks in broadcasting and wireless telecom hurt. The fund's best performers were TXU, a regulated utility with better-than-expected financial results, and AES, an electric wholesaler benefiting from debt reductions and turnarounds in its Latin American markets. Regional Bell Operating Companies such as Verizon Communications were strong absolute performers, but modest relative detractors because of the fund's overweighting in them early in the period when they were not performing as well. The fund suffered from investing in EchoStar Communications, a satellite television stock that fell as investors worried about increased cable competition. The fund also was hurt by not owning enough of AT&T Wireless, which rallied strongly after Cingular's acquisition announcement.
The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2004 to July 31, 2004).
Actual Expenses
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,040.40 | $ 7.61 |
HypotheticalA | $ 1,000.00 | $ 1,017.45 | $ 7.55 |
Class T | |||
Actual | $ 1,000.00 | $ 1,039.70 | $ 8.87 |
HypotheticalA | $ 1,000.00 | $ 1,016.19 | $ 8.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,036.80 | $ 11.39 |
HypotheticalA | $ 1,000.00 | $ 1,013.67 | $ 11.33 |
Class C | |||
Actual | $ 1,000.00 | $ 1,037.70 | $ 10.89 |
HypotheticalA | $ 1,000.00 | $ 1,014.18 | $ 10.82 |
Institutional | |||
Actual | $ 1,000.00 | $ 1,042.70 | $ 5.43 |
HypotheticalA | $ 1,000.00 | $ 1,019.61 | $ 5.39 |
A 5% return per year before expenses.
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annualized | |
Class A | 1.50% |
Class T | 1.75% |
Class B | 2.25% |
Class C | 2.15% |
Institutional | 1.07% |
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Investment Summary
Top Ten Stocks as of July 31, 2004 | |
% of fund's | |
Verizon Communications, Inc. | 10.9 |
SBC Communications, Inc. | 10.3 |
BellSouth Corp. | 9.5 |
TXU Corp. | 7.1 |
Nextel Communications, Inc. Class A | 6.3 |
EchoStar Communications Corp. Class A | 5.5 |
AT&T Wireless Services, Inc. | 4.9 |
Citizens Communications Co. | 4.7 |
FirstEnergy Corp. | 4.5 |
Dominion Resources, Inc. | 4.0 |
67.7 | |
Top Industries as of July 31, 2004 | |||
% of fund's net assets | |||
| Diversified Telecommunication Services | 39.5% | |
| Electric Utilities | 23.4% | |
| Wireless Telecommunication Services | 19.5% | |
| Media | 7.9% | |
| Multi-Utilities & Unregulated Power | 7.6% | |
| All Others* | 2.1% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Investments July 31, 2004
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value (Note 1) | ||
COMMUNICATIONS EQUIPMENT - 0.0% | |||
SiRF Technology Holdings, Inc. | 200 | $ 2,238 | |
CONSTRUCTION & ENGINEERING - 0.6% | |||
Dycom Industries, Inc. (a) | 41,200 | 1,109,928 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 39.5% | |||
ALLTEL Corp. | 20,700 | 1,076,400 | |
BellSouth Corp. | 689,300 | 18,673,137 | |
Citizens Communications Co. (a) | 645,300 | 9,292,320 | |
Covad Communications Group, Inc. (a) | 400 | 760 | |
Qwest Communications International, Inc. (a) | 1,149,000 | 4,469,610 | |
SBC Communications, Inc. | 801,600 | 20,312,544 | |
Sprint Corp. - FON Group | 135,200 | 2,525,536 | |
Verizon Communications, Inc. | 558,000 | 21,505,320 | |
TOTAL DIVERSIFIED TELECOMMUNICATION | 77,855,627 | ||
ELECTRIC UTILITIES - 23.4% | |||
Black Hills Corp. | 6,500 | 179,530 | |
Entergy Corp. | 89,800 | 5,163,500 | |
Exelon Corp. | 40,800 | 1,423,920 | |
FirstEnergy Corp. | 229,500 | 8,973,450 | |
PG&E Corp. (a) | 266,400 | 7,603,056 | |
PPL Corp. | 75,300 | 3,490,155 | |
TXU Corp. | 353,500 | 14,019,810 | |
Westar Energy, Inc. | 14,700 | 296,499 | |
Wisconsin Energy Corp. | 159,600 | 5,131,140 | |
TOTAL ELECTRIC UTILITIES | 46,281,060 | ||
GAS UTILITIES - 0.7% | |||
KeySpan Corp. | 33,900 | 1,220,061 | |
UGI Corp. | 6,200 | 200,818 | |
TOTAL GAS UTILITIES | 1,420,879 | ||
INDUSTRIAL CONGLOMERATES - 0.1% | |||
Allete, Inc. | 5,900 | 163,548 | |
MEDIA - 7.9% | |||
EchoStar Communications Corp. | 393,800 | 10,916,136 | |
The DIRECTV Group, Inc. (a) | 268,924 | 4,359,258 | |
XM Satellite Radio Holdings, Inc. | 13,900 | 366,821 | |
TOTAL MEDIA | 15,642,215 | ||
MULTI-UTILITIES & UNREGULATED POWER - 7.6% | |||
AES Corp. (a) | 81,700 | 788,405 | |
Constellation Energy Group, Inc. | 65,400 | 2,521,170 | |
Dominion Resources, Inc. | 125,800 | 7,983,268 | |
Energen Corp. | 3,500 | 165,725 | |
Shares | Value (Note 1) | ||
Equitable Resources, Inc. | 12,000 | $ 615,360 | |
SCANA Corp. | 36,900 | 1,351,278 | |
Sierra Pacific Resources (a) | 203,400 | 1,671,948 | |
TOTAL MULTI-UTILITIES & UNREGULATED POWER | 15,097,154 | ||
WATER UTILITIES - 0.2% | |||
Aqua America, Inc. | 17,194 | 334,423 | |
WIRELESS TELECOMMUNICATION SERVICES - 19.5% | |||
American Tower Corp. Class A (a) | 361,600 | 5,228,736 | |
AT&T Wireless Services, Inc. (a) | 669,900 | 9,673,356 | |
Crown Castle International Corp. (a) | 154,800 | 2,185,776 | |
Nextel Communications, Inc. Class A (a) | 550,100 | 12,520,276 | |
Nextel Partners, Inc. Class A (a) | 165,400 | 2,657,978 | |
NII Holdings, Inc. (a) | 76,200 | 2,897,124 | |
SpectraSite, Inc. (a) | 38,400 | 1,651,200 | |
Western Wireless Corp. Class A (a) | 63,740 | 1,682,099 | |
TOTAL WIRELESS TELECOMMUNICATION | 38,496,545 | ||
TOTAL COMMON STOCKS (Cost $176,879,589) | 196,403,617 | ||
Money Market Funds - 1.0% | |||
Fidelity Cash Central Fund, 1.33% (b) | 553,962 | 553,962 | |
Fidelity Securities Lending Cash Central Fund, 1.32% (b)(c) | 1,377,000 | 1,377,000 | |
TOTAL MONEY MARKET FUNDS (Cost $1,930,962) | 1,930,962 | ||
TOTAL INVESTMENT PORTFOLIO - 100.5% (Cost $178,810,551) | 198,334,579 | ||
NET OTHER ASSETS - (0.5)% | (1,058,604) | ||
NET ASSETS - 100% | $ 197,275,975 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
Income Tax Information |
At July 31, 2004, the fund had a capital loss carryforward of approximately $352,944,000 of which $57,788,000, $140,743,000 and $154,413,000 will expire on July 31, 2009, 2010 and 2011, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Advisor Telecommunications & Utilities Growth Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2004 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,331,640) (cost $178,810,551) - See accompanying schedule | $ 198,334,579 | |
Receivable for investments sold | 1,898,313 | |
Receivable for fund shares sold | 61,128 | |
Dividends receivable | 704,188 | |
Interest receivable | 286 | |
Prepaid expenses | 386 | |
Receivable from investment adviser for expense reductions | 16,503 | |
Other affiliated receivables | 114 | |
Other receivables | 8,811 | |
Total assets | 201,024,308 | |
Liabilities | ||
Payable for investments purchased | $ 1,476,579 | |
Payable for fund shares redeemed | 486,938 | |
Accrued management fee | 94,111 | |
Distribution fees payable | 126,114 | |
Other affiliated payables | 92,049 | |
Other payables and accrued expenses | 95,542 | |
Collateral on securities loaned, at value | 1,377,000 | |
Total liabilities | 3,748,333 | |
Net Assets | $ 197,275,975 | |
Net Assets consist of: | ||
Paid in capital | $ 534,363,422 | |
Undistributed net investment income | 473,223 | |
Accumulated undistributed net realized gain (loss) on investments | (357,084,698) | |
Net unrealized appreciation (depreciation) on investments | 19,524,028 | |
Net Assets | $ 197,275,975 | |
Calculation of Maximum Offering Price | $ 12.09 | |
Maximum offering price per share (100/94.25 of $12.09) | $ 12.83 | |
Class T: | $ 12.04 | |
Maximum offering price per share (100/96.50 of $12.04) | $ 12.48 | |
Class B: | $ 11.82 | |
Class C: | $ 11.84 | |
Institutional: | $ 12.20 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Statement of Operations
Year ended July 31, 2004 | ||
Investment Income | ||
Dividends | $ 4,749,598 | |
Interest | 15,608 | |
Security lending | 8,983 | |
Total income | 4,774,189 | |
Expenses | ||
Management fee | $ 1,184,937 | |
Transfer agent fees | 1,117,302 | |
Distribution fees | 1,586,037 | |
Accounting and security lending fees | 81,211 | |
Non-interested trustees' compensation | 1,138 | |
Custodian fees and expenses | 5,376 | |
Registration fees | 57,519 | |
Audit | 37,259 | |
Legal | 1,032 | |
Miscellaneous | 78,050 | |
Total expenses before reductions | 4,149,861 | |
Expense reductions | (133,214) | 4,016,647 |
Net investment income (loss) | 757,542 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on investment securities | 26,016,597 | |
Change in net unrealized appreciation (depreciation) on investment securities | 5,705,831 | |
Net gain (loss) | 31,722,428 | |
Net increase (decrease) in net assets resulting from operations | $ 32,479,970 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Telecommunications & Utilities Growth Fund
Financial Statements - continued
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 757,542 | $ 2,004,042 |
Net realized gain (loss) | 26,016,597 | (28,721,331) |
Change in net unrealized appreciation (depreciation) | 5,705,831 | 63,352,175 |
Net increase (decrease) in net assets resulting from operations | 32,479,970 | 36,634,886 |
Distributions to shareholders from net investment income | (1,058,918) | (2,317,127) |
Share transactions - net increase (decrease) | (39,718,704) | (46,408,827) |
Redemption fees | 13,588 | 16,304 |
Total increase (decrease) in net assets | (8,284,064) | (12,074,764) |
Net Assets | ||
Beginning of period | 205,560,039 | 217,634,803 |
End of period (including undistributed net investment income of $473,223 and undistributed net investment | $ 197,275,975 | $ 205,560,039 |
Financial Highlights - Class A
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.37 | $ 8.74 | $ 15.18 | $ 21.08 | $ 20.31 |
Income from Investment Operations | |||||
Net investment income (loss)C | .10 | .13 | .10 | .05 | .53D |
Net realized and unrealized gain (loss) | 1.72 | 1.69 | (6.54) | (5.41) | 1.29 |
Total from investment operations | 1.82 | 1.82 | (6.44) | (5.36) | 1.82 |
Distributions from net investment income | (.10) | (.19) | - | (.28) | (.05) |
Distributions from net realized gain | - | - | - | (.26) | (1.01) |
Total distributions | (.10) | (.19) | - | (.54) | (1.06) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 12.09 | $ 10.37 | $ 8.74 | $ 15.18 | $ 21.08 |
Total ReturnA,B | 17.67% | 21.22% | (42.42)% | (26.09)% | 9.59% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 1.51% | 1.67% | 1.45% | 1.25% | 1.20% |
Expenses net of voluntary waivers, if any | 1.50% | 1.58% | 1.45% | 1.25% | 1.20% |
Expenses net of all reductions | 1.45% | 1.47% | 1.36% | 1.20% | 1.17% |
Net investment income (loss) | .87% | 1.46% | .79% | .32% | 2.39% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 21,987 | $ 21,761 | $ 22,377 | $ 54,265 | $ 61,610 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Telecommunications & Utilities Growth
Financial Highlights - Class T
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.33 | $ 8.68 | $ 15.11 | $ 21.01 | $ 20.23 |
Income from Investment Operations | |||||
Net investment income (loss)C | .07 | .11 | .07 | .01 | .47D |
Net realized and unrealized gain (loss) | 1.72 | 1.68 | (6.50) | (5.40) | 1.31 |
Total from investment operations | 1.79 | 1.79 | (6.43) | (5.39) | 1.78 |
Distributions from net investment income | (.08) | (.14) | - | (.25) | (.01) |
Distributions from net realized gain | - | - | - | (.26) | (1.00) |
Total distributions | (.08) | (.14) | - | (.51) | (1.01) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 12.04 | $ 10.33 | $ 8.68 | $ 15.11 | $ 21.01 |
Total ReturnA,B | 17.42% | 20.91% | (42.55)% | (26.29)% | 9.41% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 1.79% | 1.94% | 1.71% | 1.49% | 1.44% |
Expenses net of voluntary waivers, if any | 1.75% | 1.83% | 1.71% | 1.49% | 1.44% |
Expenses net of all reductions | 1.70% | 1.72% | 1.62% | 1.44% | 1.41% |
Net investment income (loss) | .62% | 1.21% | .53% | .08% | 2.16% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 53,255 | $ 55,510 | $ 59,306 | $ 149,618 | $ 225,415 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the sales charges. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
Financial Highlights - Class B
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.15 | $ 8.49 | $ 14.85 | $ 20.72 | $ 20.02 |
Income from Investment Operations | |||||
Net investment income (loss)C | .01 | .07 | .01 | (.07) | .35D |
Net realized and unrealized gain (loss) | 1.69 | 1.65 | (6.37) | (5.33) | 1.29 |
Total from investment operations | 1.70 | 1.72 | (6.36) | (5.40) | 1.64 |
Distributions from net investment income | (.03) | (.06) | - | (.21) | - |
Distributions from net realized gain | - | - | - | (.26) | (.95) |
Total distributions | (.03) | (.06) | - | (.47) | (.95) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 11.82 | $ 10.15 | $ 8.49 | $ 14.85 | $ 20.72 |
Total ReturnA,B | 16.79% | 20.37% | (42.83)% | (26.66)% | 8.77% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 2.25% | 2.32% | 2.20% | 2.01% | 1.96% |
Expenses net of voluntary waivers, if any | 2.25% | 2.25% | 2.20% | 2.01% | 1.96% |
Expenses net of all reductions | 2.20% | 2.13% | 2.11% | 1.96% | 1.93% |
Net investment income (loss) | .12% | .79% | .04% | (.44)% | 1.63% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 84,742 | $ 87,868 | $ 91,517 | $ 213,767 | $ 242,888 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.16 | $ 8.50 | $ 14.85 | $ 20.71 | $ 20.01 |
Income from Investment Operations | |||||
Net investment income (loss)C | .02 | .07 | .02 | (.06) | .36D |
Net realized and unrealized gain (loss) | 1.70 | 1.65 | (6.37) | (5.33) | 1.29 |
Total from investment operations | 1.72 | 1.72 | (6.35) | (5.39) | 1.65 |
Distributions from net investment income | (.04) | (.06) | - | (.21) | - |
Distributions from net realized gain | - | - | - | (.26) | (.96) |
Total distributions | (.04) | (.06) | - | (.47) | (.96) |
Redemption fees added to paid in capitalC | -F | -F | -F | -F | .01 |
Net asset value, end of period | $ 11.84 | $ 10.16 | $ 8.50 | $ 14.85 | $ 20.71 |
Total ReturnA,B | 16.98% | 20.35% | (42.76)% | (26.62)% | 8.84% |
Ratios to Average Net AssetsE | |||||
Expenses before expense reductions | 2.17% | 2.23% | 2.11% | 1.96% | 1.93% |
Expenses net of voluntary waivers, if any | 2.17% | 2.23% | 2.11% | 1.96% | 1.93% |
Expenses net of all reductions | 2.12% | 2.12% | 2.02% | 1.91% | 1.90% |
Net investment income (loss) | .21% | .80% | .13% | (.39)% | 1.66% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 35,038 | $ 37,530 | $ 41,496 | $ 104,628 | $ 107,332 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the contingent deferred sales charge. C Calculated based on average shares outstanding during the period. D Investment income per share reflects a special dividend which amounted to $.52 per share. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Amount represents less than $.01 per share. | |||||
Financial Highlights - Institutional Class
Years ended July 31, | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 10.47 | $ 8.86 | $ 15.31 | $ 21.19 | $ 20.38 |
Income from Investment Operations | |||||
Net investment income (loss)B | .15 | .18 | .16 | .12 | .60C |
Net realized and unrealized gain (loss) | 1.73 | 1.71 | (6.61) | (5.44) | 1.29 |
Total from investment operations | 1.88 | 1.89 | (6.45) | (5.32) | 1.89 |
Distributions from net investment income | (.15) | (.28) | - | (.30) | (.08) |
Distributions from net realized gain | - | - | - | (.26) | (1.01) |
Total distributions | (.15) | (.28) | - | (.56) | (1.09) |
Redemption fees added to paid in capitalB | -E | -E | -E | -E | .01 |
Net asset value, end of period | $ 12.20 | $ 10.47 | $ 8.86 | $ 15.31 | $ 21.19 |
Total ReturnA | 18.14% | 21.94% | (42.13)% | (25.78)% | 9.93% |
Ratios to Average Net AssetsD | |||||
Expenses before expense reductions | 1.09% | 1.06% | .96% | .85% | .88% |
Expenses net of voluntary waivers, if any | 1.09% | 1.06% | .96% | .85% | .88% |
Expenses net of all reductions | 1.04% | .94% | .87% | .80% | .85% |
Net investment income (loss) | 1.29% | 1.98% | 1.28% | .72% | 2.71% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 2,254 | $ 2,891 | $ 2,939 | $ 8,945 | $ 19,064 |
Portfolio turnover rate | 38% | 81% | 116% | 220% | 172% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Investment income per share reflects a special dividend which amounted to $.52 per share. D Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. E Amount represents less than $.01 per share. | |||||
See accompanying notes which are an integral part of the financial statements.
Telecommunications & Utilities Growth
Notes to Financial Statements
For the period ended July 31, 2004
1. Significant Accounting Policies.
Fidelity Advisor Telecommunications & Utilities Growth Fund (the fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. 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 fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 29,272,536 | | |
Unrealized depreciation | (13,888,963) | |
Net unrealized appreciation (depreciation) | 15,383,573 | |
Undistributed ordinary income | 473,370 | |
Capital loss carryforward | (352,944,244) | |
Cost for federal income tax purposes | $ 182,951,006 |
Annual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
July 31, 2004 | July 31, 2003 | |
Ordinary Income | $ 1,058,918 | $ 2,317,127 |
Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $77,061,731 and $114,498,743, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .58% of the fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |
Class A | 0% | .25% | $ 54,965 | $ 41 |
Class T | .25% | .25% | 278,174 | 614 |
Class B | .75% | .25% | 883,804 | 662,855 |
Class C | .75% | .25% | 369,094 | 20,186 |
$ 1,586,037 | $ 683,696 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | ||
Class A | $ 11,628 | |
Class T | 8,677 | |
Class B* | 293,259 | |
Class C* | 1,363 | |
$ 314,927 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Telecommunications & Utilities Growth
4. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
Amount | % of | |
Class A | $ 123,211 | .56 |
Class T | 326,914 | .59 |
Class B | 486,196 | .55 |
Class C | 170,976 | .46 |
Institutional Class | 10,005 | .38 |
$ 1,117,302 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $15,592 for the period.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $5,697 for the period.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
FMR agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.50% | $ 3,243 |
Class T | 1.75% | 22,650 |
Class B | 2.25% | 2,733 |
$ 28,626 |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $104,588 for the period.
Annual Report
Notes to Financial Statements - continued
8. Other Information.
At the end of the period, one otherwise unaffiliated shareholder was the owner of record of 10% of the total outstanding shares of the fund.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
From net investment income | 2004 | 2003 |
Class A | $ 201,967 | $ 464,762 |
Class T | 417,451 | 900,722 |
Class B | 256,606 | 594,921 |
Class C | 143,592 | 272,875 |
Institutional Class | 39,302 | 83,847 |
Total | $ 1,058,918 | $ 2,317,127 |
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2004 | 2003 | 2004 | 2003 | |
Class A | ||||
Shares sold | 298,298 | 276,709 | $ 3,438,753 | $ 2,506,688 |
Reinvestment of distributions | 17,065 | 47,515 | 183,774 | 418,463 |
Shares redeemed | (595,057) | (786,112) | (6,759,275) | (7,112,889) |
Net increase (decrease) | (279,694) | (461,888) | $ (3,136,748) | $ (4,187,738) |
Class T | ||||
Shares sold | 494,942 | 687,303 | $ 5,575,654 | $ 6,362,754 |
Reinvestment of distributions | 36,573 | 94,963 | 392,232 | 835,527 |
Shares redeemed | (1,480,100) | (2,241,515) | (16,736,309) | (20,155,205) |
Net increase (decrease) | (948,585) | (1,459,249) | $ (10,768,423) | $ (12,956,924) |
Class B | ||||
Shares sold | 312,692 | 485,244 | $ 3,435,209 | $ 4,462,261 |
Reinvestment of distributions | 21,061 | 56,917 | 219,667 | 497,557 |
Shares redeemed | (1,821,311) | (2,669,897) | (20,266,895) | (23,339,570) |
Net increase (decrease) | (1,487,558) | (2,127,736) | $ (16,612,019) | $ (18,379,752) |
Class C | ||||
Shares sold | 267,567 | 516,658 | $ 2,967,003 | $ 4,655,427 |
Reinvestment of distributions | 10,338 | 23,481 | 108,777 | 205,553 |
Shares redeemed | (1,009,938) | (1,732,363) | (11,224,441) | (15,285,051) |
Net increase (decrease) | (732,033) | (1,192,224) | $ (8,148,661) | $ (10,424,071) |
Institutional Class | ||||
Shares sold | 23,573 | 46,922 | $ 273,182 | $ 453,326 |
Reinvestment of distributions | 2,128 | 4,314 | 22,996 | 38,181 |
Shares redeemed | (117,098) | (106,668) | (1,349,031) | (951,849) |
Net increase (decrease) | (91,397) | (55,432) | $ (1,052,853) | $ (460,342) |
Telecommunications & Utilities Growth
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Advisor Series VII and Shareholders of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor Developing Communications Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Natural Resources Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Telecommunications & Utilities Growth Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor Developing Communications Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Natural Resources Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Telecommunications & Utilities Growth Fund, (collectively, the "Funds"), including the portfolios of investments, as of July 31, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2004, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor Developing Communications Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Natural Resources Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Telecommunications & Utilities Growth Fund, as of July 31, 2004, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 21, 2004
Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for William O. McCoy, each of the Trustees oversees 295 funds advised by FMR or an affiliate. Mr. McCoy oversees 297 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests 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; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. In any event, each non-interested Trustee shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (74)** | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, 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 Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc. | |
Abigail P. Johnson (42)** | |
Year of Election or Appointment: 2001 Senior Vice President of Advisor Biotechnology (2001), Advisor Consumer Industries (2001), Advisor Cyclical Industries (2001), Advisor Developing Communications (2001), Advisor Electronics (2001), Advisor Financial Services (2001), Advisor Health Care (2001), Advisor Natural Resources (2001), Advisor Technology (2001), and Advisor Telecommunications & Utilities Growth (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds. | |
Laura B. Cronin (50) | |
Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002). | |
Robert L. Reynolds (52) | |
Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000). | |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.
Annual Report
Trustees and Officers - continued
Non-Interested Trustees:
Correspondence intended for each non-interested Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation | |
J. Michael Cook (61) | |
Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/ consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), The Dow Chemical Company (2000), and Northrop Grumman Corporation (global defense technology, 2003). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Council of the Public Company Accounting Oversight Board (PCAOB), Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater. | |
Ralph F. Cox (72) | |
Year of Election or Appointment: 1991 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin. | |
Robert M. Gates (60) | |
Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001), and Brinker International (restaurant management, 2003). He also serves as a member of the Advisory Board of VoteHere.net (secure Internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy. | |
George H. Heilmeier (68) | |
Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), and Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002). | |
Donald J. Kirk (71) | |
Year of Election or Appointment: 1987 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. (leadership education for arts and culture). Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations). | |
Marie L. Knowles (57) | |
Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. | |
Ned C. Lautenbach (60) | |
Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Co-Chairman and a Director of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations. | |
Marvin L. Mann (71) | |
Year of Election or Appointment: 1993 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals), where he served as CEO until April 1998, retired as Chairman May 1999, and remains a member of the Board. 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. He is a member of the Executive Committee of the Independent Director's Council of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama. | |
William O. McCoy (70) | |
Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998). | |
William S. Stavropoulos (65) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman of the Board (2000), CEO (2002), a position he previously held from 1995-2000, Chairman of the Executive Committee (2000), and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. | |
Annual Report
Trustees and Officers - continued
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Dirks and Ms. Small may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Dennis J. Dirks (56) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). | |
Peter S. Lynch (61) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity Magellan Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston. | |
Cornelia M. Small (60) | |
Year of Election or Appointment: 2004 Member of the Advisory Board of Fidelity Advisor Series VII. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1998). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
Eric D. Roiter (55) | |
Year of Election or Appointment: 1998 or 2000 Secretary of Advisor Biotechnology (2000), Advisor Consumer Industries (1998), Advisor Cyclical Industries (1998), Advisor Developing Communications (2000), Advisor Electronics (2000), Advisor Financial Services (1998), Advisor Health Care (1998), Advisor Natural Resources (1998), Advisor Technology (1998), and Advisor Telecommunications & Utilities Growth (1998). He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management, Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003). | |
Stuart Fross (44) | |
Year of Election or Appointment: 2003 Assistant Secretary of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR. | |
Christine Reynolds (45) | |
Year of Election or Appointment: 2004 President, Treasurer, and Anti-Money Laundering (AML) officer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Ms. Reynolds also serves as President, Treasurer, and AML officer of other Fidelity funds (2004) and is a Vice President (2003) and an employee (2002) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was most recently an audit partner with PwC's investment management practice. | |
Timothy F. Hayes (53) | |
Year of Election or Appointment: 2002 Chief Financial Officer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998). | |
Kenneth A. Rathgeber (57) | |
Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004) and Executive Vice President of Risk Oversight for Fidelity Investments (2002). Previously, he served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). | |
John R. Hebble (46) | |
Year of Election or Appointment: 2003 Deputy Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003). | |
Kimberley H. Monasterio (40) | |
Year of Election or Appointment: 2004 Deputy Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). | |
John H. Costello (57) | |
Year of Election or Appointment: 1987, 1996, or 2000 Assistant Treasurer of Advisor Biotechnology (2000), Advisor Consumer Industries (1996), Advisor Cyclical Industries (1996), Advisor Developing Communications (2000), Advisor Electronics (2000), Advisor Financial Services (1996), Advisor Health Care (1996), Advisor Natural Resources (1987), Advisor Technology (1996), and Advisor Telecommunications & Utilities Growth (1996). Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR. | |
Francis V. Knox, Jr. (57) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002). | |
Peter L. Lydecker (50) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. | |
Mark Osterheld (49) | |
Year of Election or Appointment: 2002 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR. | |
Kenneth B. Robins (34) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). | |
Thomas J. Simpson (46) | |
Year of Election or Appointment: 2000 Assistant Treasurer of Advisor Biotechnology, Advisor Consumer Industries, Advisor Cyclical Industries, Advisor Developing Communications, Advisor Electronics, Advisor Financial Services, Advisor Health Care, Advisor Natural Resources, Advisor Technology, and Advisor Telecommunications & Utilities Growth. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995). | |
Annual Report
Distributions
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
Consumer Industries | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 09/13/04 | 09/10/04 | - | $0.53 |
Class T | 09/13/04 | 09/10/04 | - | $0.53 |
Class B | 09/13/04 | 09/10/04 | - | $0.53 |
Class C | 09/13/04 | 09/10/04 | - | $0.53 |
Cyclical Industries | ||||
Class A | 09/13/04 | 09/10/04 | - | $0.65 |
Class T | 09/13/04 | 09/10/04 | - | $0.63 |
Class B | 09/13/04 | 09/10/04 | - | $0.52 |
Class C | 09/13/04 | 09/10/04 | - | $0.51 |
Financial Services | ||||
Class A | 09/13/04 | 09/10/04 | - | $1.48 |
Class T | 09/13/04 | 09/10/04 | - | $1.48 |
Class B | 09/13/04 | 09/10/04 | - | $1.48 |
Class C | 09/13/04 | 09/10/04 | - | $1.48 |
Telecommunications & Utilities Growth | ||||
Class A | 09/13/04 | 09/10/04 | $.07 | - |
Class T | 09/13/04 | 09/10/04 | $.05 | - |
Class B | 09/13/04 | 09/10/04 | $.01 | - |
Class C | 09/13/04 | 09/10/04 | $.02 | - |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
Financial Services | |
Class A | 100% |
Class T | 100% |
Class B | 100% |
Class C | 100% |
Natural Resources | |
Class A | 100% |
Class T | 100% |
Telecommunications & Utilities Growth | |
Class A | 100% |
Class T | 100% |
Class B | 100% |
Class C | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for the purposes of the maximum rate under section 1 (h)(11) of the Internal Revenue Code.
Financial Services | |||
Class A | 100% | ||
Class T | 100% | ||
Class B | 100% | ||
Class C | 100% | ||
Natural Resources | |||
Class A | 100% | ||
Class T | 100% | ||
Telecommunications & Utilities Growth | |||
Class A | 100% | ||
Class T | 100% | ||
Class B | 100% | ||
Class C | 100% |
The funds will notify shareholders in January 2005 of amounts for use in preparing 2004 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 19, 2004. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To amend the Declaration of Trust to allow the Board of Trustees, if permitted by applicable law, to authorize fund mergers without shareholder approval.* | ||
# of | % of | |
Affirmative | 1,258,992,294.05 | 67.854 |
Against | 285,112,169.59 | 15.366 |
Abstain | 81,809,335.63 | 4.409 |
Broker | 229,530,071.74 | 12.371 |
TOTAL | 1,855,443,871.01 | 100.000 |
PROPOSAL 2 | ||
To elect a Board of Trustees.* | ||
# of | % of | |
J. Michael Cook | ||
Affirmative | 1,764,542,479.15 | 95.101 |
Withheld | 90,901,391.86 | 4.899 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ralph F. Cox | ||
Affirmative | 1,762,691,678.51 | 95.001 |
Withheld | 92,752,192.50 | 4.999 |
TOTAL | 1,855,443,871.01 | 100.000 |
Laura B. Cronin | ||
Affirmative | 1,764,743,077.37 | 95.112 |
Withheld | 90,700,793.64 | 4.888 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert M. Gates | ||
Affirmative | 1,763,804,232.45 | 95.061 |
Withheld | 91,639,638.56 | 4.939 |
TOTAL | 1,855,443,871.01 | 100.000 |
George H. Heilmeier | ||
Affirmative | 1,764,595,044.83 | 95.104 |
Withheld | 90,848,826.18 | 4.896 |
TOTAL | 1,855,443,871.01 | 100.000 |
Abigail P. Johnson | ||
Affirmative | 1,762,763,373.33 | 95.005 |
Withheld | 92,680,497.68 | 4.995 |
TOTAL | 1,855,443,871.01 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 1,762,006,438.92 | 94.964 |
Withheld | 93,437,432.09 | 5.036 |
TOTAL | 1,855,443,871.01 | 100.000 |
Donald J. Kirk | ||
Affirmative | 1,763,115,160.88 | 95.024 |
Withheld | 92,328,710.13 | 4.976 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marie L. Knowles | ||
Affirmative | 1,764,877,372.29 | 95.119 |
Withheld | 90,566,498.72 | 4.881 |
TOTAL | 1,855,443,871.01 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 1,765,030,930.72 | 95.127 |
Withheld | 90,412,940.29 | 4.873 |
TOTAL | 1,855,443,871.01 | 100.000 |
Marvin L. Mann | ||
Affirmative | 1,763,707,568.69 | 95.056 |
Withheld | 91,736,302.32 | 4.944 |
TOTAL | 1,855,443,871.01 | 100.000 |
William O. McCoy | ||
Affirmative | 1,763,731,348.95 | 95.057 |
Withheld | 91,712,522.06 | 4.943 |
TOTAL | 1,855,443,871.01 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 1,764,938,615.07 | 95.122 |
Withheld | 90,505,255.94 | 4.878 |
TOTAL | 1,855,443,871.01 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 1,764,361,513.28 | 95.091 |
Withheld | 91,082,357.73 | 4.909 |
TOTAL | 1,855,443,871.01 | 100.000 |
* Denotes trust-wide proposals and voting results. | ||
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Far East) Inc.
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Custodians
JPMorgan Chase Bank
New York, NY
Brown Brothers Harriman & Co. (dagger)
Boston, MA
State Street Bank and Trust (dagger)(dagger)
Quincy, MA
* Custodian for Fidelity Advisor Natural Resources Fund only.
(dagger)(dagger) Custodian for Fidelity Advisor Biotechnology Fund, Fidelity Advisor Developing Communications Fund, and Fidelity Advisor Electronics Fund only.
Fidelity Advisor Aggressive Growth Fund |
Fidelity Advisor Asset Allocation Fund |
Fidelity Advisor Balanced Fund |
Fidelity Advisor Biotechnology Fund |
Fidelity Advisor California Municipal |
Fidelity Advisor Consumer |
Fidelity Advisor Cyclical Industries Fund |
Fidelity Advisor Developing |
Fidelity Advisor Diversified |
Fidelity Advisor Dividend Growth Fund |
Fidelity Advisor Dynamic |
Fidelity Advisor Electronics Fund |
Fidelity Advisor Emerging Asia Fund |
Fidelity Advisor Emerging Markets |
Fidelity Advisor Equity Growth Fund |
Fidelity Advisor Equity Income Fund |
Fidelity Advisor Equity Value Fund |
Fidelity Advisor Europe |
Fidelity Advisor Fifty Fund |
Fidelity Advisor Financial Services Fund |
Fidelity Advisor Floating Rate |
Fidelity Advisor Freedom Income, 2005, 2010, |
Fidelity Advisor Global Equity Fund |
Fidelity Advisor Government |
Fidelity Advisor Growth & Income Fund |
Fidelity Advisor |
Fidelity Advisor Health Care Fund |
Fidelity Advisor High Income Advantage Fund |
Fidelity Advisor High Income Fund |
Fidelity Advisor Inflation-Protected |
Fidelity Advisor Intermediate |
Fidelity Advisor International Capital |
Fidelity Advisor International |
Fidelity Advisor Investment Grade |
Fidelity Advisor Japan Fund |
Fidelity Advisor Korea Fund |
Fidelity Advisor Large Cap Fund |
Fidelity Advisor Latin America Fund |
Fidelity Advisor Leveraged Company Stock Fund |
Fidelity Advisor Mid Cap Fund |
Fidelity Advisor Mid Cap II Fund |
Fidelity Advisor Mortgage Securities Fund |
Fidelity Advisor Municipal Income Fund |
Fidelity Advisor Natural Resources Fund |
Fidelity Advisor New Insights Fund |
Fidelity Advisor New York Municipal Income Fund |
Fidelity Advisor Overseas Fund |
Fidelity Advisor Real Estate Fund |
Fidelity Advisor Short Fixed-Income Fund |
Fidelity Advisor Short Intermediate Municipal |
Fidelity Advisor Small Cap Fund |
Fidelity Advisor Strategic Growth Fund |
Fidelity Advisor Strategic Income Fund |
Fidelity Advisor Tax Managed Stock Fund |
Fidelity Advisor Technology Fund |
Fidelity Advisor Telecommunications & Utilities Growth Fund |
Fidelity Advisor Total Bond Fund |
Fidelity Advisor Ultra-Short Bond Fund |
Fidelity Advisor Value Fund |
Fidelity Advisor Value Leaders Fund |
Fidelity Advisor Value Strategies Fund |
Prime Fund |
Tax-Exempt Fund |
Treasury Fund |
Printed on Recycled Paper
AFOC-UANNPRO-0904
1.789241.101
Item 2. Code of Ethics
As of the end of the period, July 31, 2004, Fidelity Advisor Series VII (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Marie L. Knowles and Donald J. Kirk are each audit committee financial experts, as defined in Item 3 of Form N-CSR. Ms. Knowles and Mr. Kirk are each independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees.
For the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate Audit Fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte Entities") for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Fidelity Advisor Biotechnology Fund, Fidelity Advisor Consumer Industries Fund, Fidelity Advisor Cyclical Industries Fund, Fidelity Advisor Developing Communications Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Natural Resources Fund, Fidelity Advisor Real Estate Fund, Fidelity Advisor Technology Fund and Fidelity Advisor Telecommunications & Utilities Growth Fund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2004A | 2003A,B |
Fidelity Advisor Biotechnology Fund | $34,000 | $32,000 |
Fidelity Advisor Consumer Industries Fund | $32,000 | $30,000 |
Fidelity Advisor Cyclical Industries Fund | $32,000 | $30,000 |
Fidelity Advisor Developing Communications Fund | $34,000 | $32,000 |
Fidelity Advisor Electronics Fund | $34,000 | $32,000 |
Fidelity Advisor Financial Services Fund | $34,000 | $32,000 |
Fidelity Advisor Health Care Fund | $34,000 | $32,000 |
Fidelity Advisor Natural Resources Fund | $34,000 | $32,000 |
Fidelity Advisor Real Estate FundB | $41,000 | $32,000 |
Fidelity Advisor Technology Fund | $34,000 | $32,000 |
Fidelity Advisor Telecommunications & Utilities Growth Fund | $32,000 | $30,000 |
All funds in the Fidelity Group of Funds audited by Deloitte Entities | $4,200,000 | $3,600,000 |
A | Aggregate amounts may reflect rounding. |
B | Fidelity Advisor Real Estate Fund commenced operations on September 12, 2002. |
(b) Audit-Related Fees.
In each of the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate Audit-Related Fees billed by Deloitte Entities for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2004A | 2003 A, B, C |
Fidelity Advisor Biotechnology Fund | $0 | $0 |
Fidelity Advisor Consumer Industries Fund | $0 | $0 |
Fidelity Advisor Cyclical Industries Fund | $0 | $0 |
Fidelity Advisor Developing Communications Fund | $0 | $0 |
Fidelity Advisor Electronics Fund | $0 | $0 |
Fidelity Advisor Financial Services Fund | $0 | $0 |
Fidelity Advisor Health Care Fund | $0 | $0 |
Fidelity Advisor Natural Resources Fund | $0 | $0 |
Fidelity Advisor Real Estate Fund | $0 | $0 |
Fidelity Advisor Technology Fund | $0 | $0 |
Fidelity Advisor Telecommunications & Utilities Growth Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. |
C | Fidelity Advisor Real Estate Fund commenced operations on September 12, 2002. |
In each of the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate Audit-Related Fees that were billed by Deloitte Entities that were required to be approved by the Audit Committee for services rendered on behalf of Fidelity Management & Research Company (FMR) and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the funds ("Fund Service Providers") for assurance and related services that relate directly to the operations and financial reporting of each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Billed By | 2004 A | 2003A, B,C |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. |
C | May include amounts billed prior to Fidelity Advisor Real Estate Fund's commencement of operations. |
Fees included in the audit-related category comprise assurance and related services (e.g., due diligence services) that are traditionally performed by the independent registered public accounting firm. These audit-related services include due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
(c) Tax Fees.
In each of the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate Tax Fees billed by Deloitte Entities for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2004A | 2003A, B, C |
Fidelity Advisor Biotechnology Fund | $3,900 | $4,000 |
Fidelity Advisor Consumer Industries Fund | $3,900 | $4,000 |
Fidelity Advisor Cyclical Industries Fund | $3,900 | $4,000 |
Fidelity Advisor Developing Communications Fund | $3,900 | $4,000 |
Fidelity Advisor Electronics Fund | $3,900 | $4,000 |
Fidelity Advisor Financial Services Fund | $3,900 | $4,000 |
Fidelity Advisor Health Care Fund | $3,900 | $4,000 |
Fidelity Advisor Natural Resources Fund | $3,900 | $4,000 |
Fidelity Advisor Real Estate Fund | $3,600 | $3,000 |
Fidelity Advisor Technology Fund | $3,900 | $4,000 |
Fidelity Advisor Telecommunications & Utilities Growth Fund | $3,900 | $4,000 |
A | Aggregate amounts may reflect rounding. |
B | Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. |
C | Fidelity Advisor Real Estate Fund commenced operations on September 12, 2002. |
In each of the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate Tax Fees billed by Deloitte Entities that were required to be approved by the Audit Committee for professional services rendered on behalf of the Fund Service Providers for tax compliance, tax advice, and tax planning that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2004A | 2003A, B, C |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. |
C | May include amounts billed prior to Fidelity Advisor Real Estate Fund's commencement of operations. |
Fees included in the Tax Fees category comprise all services performed by professional staff in the independent registered public accounting firm's tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) All Other Fees.
In each of the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate Other Fees billed by Deloitte Entities for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2004A | 2003A, B, C |
Fidelity Advisor Biotechnology Fund | $0 | $0 |
Fidelity Advisor Consumer Industries Fund | $0 | $0 |
Fidelity Advisor Cyclical Industries Fund | $0 | $0 |
Fidelity Advisor Developing Communications Fund | $0 | $0 |
Fidelity Advisor Electronics Fund | $0 | $0 |
Fidelity Advisor Financial Services Fund | $0 | $0 |
Fidelity Advisor Health Care Fund | $0 | $0 |
Fidelity Advisor Natural Resources Fund | $0 | $0 |
Fidelity Advisor Real Estate Fund | $0 | $0 |
Fidelity Advisor Technology Fund | $0 | $0 |
Fidelity Advisor Telecommunications & Utilities Growth Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. |
C | Fidelity Advisor Real Estate Fund commenced operations on September 12, 2002. |
In each of the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate Other Fees billed by Deloitte Entities that were required to be approved by the Audit Committee for all other non-audit services rendered on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2004A | 2003A, B, C |
Deloitte Entities | $790,000 | $650,000 |
A | Aggregate amounts may reflect rounding. |
B | Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. |
C | May include amounts billed prior to Fidelity Advisor Real Estate Fund's commencement of operations. |
Fees included in the All Other Fees category include services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the fund.
(e) (1) | Audit Committee Pre-Approval Policies and Procedures: |
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity Fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (Covered Service) are subject to approval by the Audit Committee before such service is provided. Non-audit services provided by a fund audit firm for a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) but that are expected to exceed $50,000 are also subject to pre-approval by the Audit Committee.
All Covered Services, as well as Non-Covered Services that are expected to exceed $50,000, must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee. Neither pre-approval nor advance notice of Non-Covered Service engagements for which fees are not expected to exceed $50,000 is required; such engagements are to be reported to the Audit Committee monthly.
(e) (2) | Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X: |
Audit-Related Fees:
There were no amounts, including amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time, that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2004 and July 31, 2003 on behalf of each fund.
There were no amounts, including amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time, that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2004 and July 31, 2003 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
Tax Fees:
There were no amounts, including amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time, that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2004 and July 31, 2003 on behalf of each fund.
There were no amounts, including amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time, that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2004 and July 31, 2003 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
All Other Fees:
There were no amounts, including amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time, that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2004 and July 31, 2003 on behalf of each fund.
There were no amounts, including amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time, that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2004 and July 31, 2003 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
(f) According to Deloitte Entities for the fiscal year ended July 31, 2004, the percentage of hours spent on the audit of each fund's financial statements for the most recent fiscal year that were attributed to work performed by persons who are not full-time, permanent employees of Deloitte Entities is as follows:
Fund | 2004 |
Fidelity Advisor Biotechnology Fund | 0% |
Fidelity Advisor Consumer Industries Fund | 0% |
Fidelity Advisor Cyclical Industries Fund | 0% |
Fidelity Advisor Developing Communications Fund | 0% |
Fidelity Advisor Electronics Fund | 0% |
Fidelity Advisor Financial Services Fund | 0% |
Fidelity Advisor Health Care Fund | 0% |
Fidelity Advisor Natural Resources Fund | 0% |
Fidelity Advisor Real Estate Fund | 0% |
Fidelity Advisor Technology Fund | 0% |
Fidelity Advisor Telecommunications & Utilities Growth Fund | 0% |
(g) For the fiscal years ended July 31, 2004 and July 31, 2003, the aggregate fees billed by Deloitte Entities of $2,050,000A and $1,300,000A,B,C for non-audit services rendered on behalf of the funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
2004A | 2003A,B,C | |
Covered Services | $850,000 | $700,000 |
Non-Covered Services | $1,200,000 | $600,000 |
A | Aggregate amounts may reflect rounding. |
B | Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. |
C | May include amounts billed prior to Fidelity Advisor Real Estate Fund's commencement of operations. |
(h) The trust's Audit Committee has considered Non-Covered Services that were not pre-approved that were provided by Deloitte Entities to Fund Service Providers to be compatible with maintaining the independence of Deloitte Entities in its audit of the funds, taking into account representations from Deloitte Entities, in accordance with Independence Standards Board Standard No.1, regarding its independence from the funds and their related entities.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 10. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the trust's second fiscal half-year that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 11. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Advisor Series VII
By: | /s/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | September 23, 2004 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | September 23, 2004 |
By: | /s/Timothy F. Hayes |
Timothy F. Hayes | |
Chief Financial Officer | |
Date: | September 23, 2004 |