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, 2007 |
Item 1. Reports to Stockholders
Fidelity Advisor
Focus Funds®
Class A, Class T, Class B and Class C
Biotechnology
Communications Equipment (formerly Developing Communications)
Consumer Discretionary (formerly Consumer Industries)
Electronics
Energy (formerly Natural Resources)
Financial Services
Health Care
Industrials (formerly Cyclical Industries)
Technology
Utilities (formerly Telecommunications
& Utilities Growth)
Annual Report
July 31, 2007
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Note to Shareholders | ||
Biotechnology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Communications Equipment | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Consumer Discretionary | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Electronics | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Energy | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Financial Services | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Health Care | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Industrials | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Technology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Utilities | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Report of Independent Registered Public Accounting Firm | ||
Trustees and Officers | ||
Distributions | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://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.
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.
A 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. A 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 a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stocks are currently on pace to register their fifth straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Notes to Shareholders:
Effective October 1, 2006, Fidelity restructured the Advisor Focus Funds product line. The restructuring aligned the funds' investment goals more closely with standard industry classifications and facilitated adoption of more-specific benchmark indexes to evaluate fund performance. As restructured, the funds generally align under seven sectors in the widely recognized Global Industry Classification Standard (GICS), developed by Standard & Poor's® (S&P®) and Morgan Stanley Capital InternationalSM (MSCI®): Consumer Discretionary, Energy, Financials, Health Care, Industrials, Information Technology and Utilities. Changes to the funds ranged from simply adopting a new supplemental benchmark to, in some cases, changing investment policies and fund names.
For Advisor Communications Equipment Fund (formerly Advisor Developing Communications Fund), Advisor Consumer Discretionary Fund (formerly Advisor Consumer Industries Fund), Advisor Energy Fund (formerly Advisor Natural Resources Fund), Advisor Industrials Fund (formerly Advisor Cyclical Industries Fund), and Advisor Utilities Fund (formerly Advisor Telecommunications & Utilities Growth Fund), shareholders approved certain fundamental investment policy changes related to the restructuring at a special meeting of shareholders held in September 2006. All the funds adopted new benchmark indexes from MSCI. Taken together, the name, policy and benchmark changes will make it easier for investors to distinguish funds in the product line and to evaluate Fidelity Management & Research Company's skill in managing the funds.
Changes for each fund are described in detail below.
Advisor Biotechnology Fund
The fund is now benchmarked to the MSCI US Investable Market Biotechnology Index.
Advisor Communications Equipment Fund (formerly Advisor Developing Communications Fund)
Shareholders approved modifying the fund's policies so that it invests primarily in companies engaged in the development, manufacture or sale of communications equipment, rather than communications services companies. The fund is now benchmarked to the MSCI US Investable Market Communications Equipment Index.
Advisor Consumer Discretionary Fund (formerly Advisor Consumer Industries Fund)
Shareholders approved narrowing the fund's policies to focus on companies engaged in the manufacture and distribution of consumer discretionary products and services. Consumer discretionary companies are a subset of the broader consumer industries sector, which is generally made up of consumer discretionary and consumer staples companies. The fund is now benchmarked to the MSCI US Investable Market Consumer Discretionary Index.
Advisor Electronics Fund
The fund is now benchmarked to the MSCI US Investable Market Semiconductors & Semiconductor Equipment Index.
Advisor Energy Fund (formerly Advisor Natural Resources Fund)
Shareholders approved narrowing the fund's policies to focus on energy and to exclude industrial or agricultural materials and unfinished goods. Energy companies are a subset of the broader natural resources sector, which is generally made up of energy and materials companies. The fund is now benchmarked to the MSCI US Investable Market Energy Index.
Advisor Financial Services Fund
The fund is now benchmarked to the MSCI US Investable Market Financials Index.
Advisor Health Care Fund
The fund is now benchmarked to the MSCI US Investable Market Health Care Index.
Advisor Industrials Fund (formerly Advisor Cyclical Industries Fund)
Shareholders approved narrowing the fund's policies to invest primarily in companies engaged in the research, development, manufacture, distribution, supply or sale of industrial products, services or equipment. The industrials and materials industries are considered subsets of the cyclical industries sector. The fund is now benchmarked to the MSCI US Investable Market Industrials Index.
Advisor Technology Fund
The fund is now benchmarked to the MSCI US Investable Market Information Technology Index.
Advisor Utilities Fund (formerly Advisor Telecommunications & Utilities Growth Fund)
Shareholders approved narrowing the fund's policies to focus on utilities and to exclude telecommunications. The fund is now benchmarked to the MSCI US Investable Market Utilities Index, generally emphasizing power and gas utilities and not telephone companies and telecommunications utilities.
Annual Report
Advisor Biotechnology 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.
Average Annual Total Returns
Periods ended July 31, 2007 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 0.06% | 9.19% | -5.65% |
Class T (incl. 3.50% sales charge) | 2.25% | 9.44% | -5.55% |
Class B (incl. contingent deferred sales charge) B | 0.52% | 9.43% | -5.51% |
Class C (incl. contingent deferred sales charge) C | 4.52% | 9.70% | -5.51% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 5%, 2%, and 0%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year, past five years, 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 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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares advanced 6.17%, 5.96%, 5.52% and 5.52%, respectively (excluding sales charges), handily beating the 1.00% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Biotechnology Index and also topping the 2.06% return of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months 1. During the same 12-month period, the fund trailed the S&P 500. The fund lagged the Goldman Sachs index during the first two months of the period. A substantial overweighting in biotechnology - together with unrewarding stock selection in that group - accounted for much of the shortfall. An underweighting and lackluster picks in pharmaceuticals were detrimental as well. Offsetting some of the negative impact was our underweighting in the weak-performing health care equipment group. Among individual holdings, biotech stock Celgene detracted from performance, as investors worried - unnecessarily, as it turned out - about a potential slowdown in the sales of Revlimid, the company's recently approved treatment for multiple myeloma, a type of blood cancer. Other detractors included Amylin Pharmaceuticals and Pfizer. Conversely, Gilead Sciences was a strong contributor, as the company reached an agreement with co-developer Bristol-Myers Squibb to market HIV drug Atripla in Canada. Avoiding Medtronic, a maker of cardiac defibrillators, was helpful as well. During the period's final 10 months, the fund beat the MSCI index. Stock selection in the fund's core biotechnology area added the most to performance, with an additional boost provided by effective picks in pharmaceuticals. Significantly underweighting major index constituent Amgen helped, as the stock struggled due to some safety concerns about Aranesp, the company's top-selling drug, which is used to treat kidney-related disease and chemotherapy-induced anemia. Other contributors were New River Pharmaceuticals - a company that was not included in the index and that I sold after it received a buyout offer from another firm - and Alexion Pharmaceuticals. On the other hand, underweighting index component MedImmune detracted from our results, as the company was bought by AstraZeneca during the period.
During the past year, the fund's Institutional Class shares advanced 6.66%, handily beating the 1.00% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Biotechnology Index and also topping the 2.06% return of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund trailed the S&P 500. The fund lagged the Goldman Sachs index during the first two months of the period. A substantial overweighting in biotechnology - together with unrewarding stock selection in that group - accounted for much of the shortfall. An underweighting and lackluster picks in pharmaceuticals were detrimental as well. Offsetting some of the negative impact was our underweighting in the weak-performing health care equipment group. Among individual holdings, biotech stock Celgene detracted from performance, as investors worried - unnecessarily, as it turned out - about a potential slowdown in the sales of Revlimid, the company's recently approved treatment for multiple myeloma, a type of blood cancer. Other detractors included Amylin Pharmaceuticals and Pfizer. Conversely, Gilead Sciences was a strong contributor, as the company reached an agreement with co-developer Bristol-Myers Squibb to market HIV drug Atripla in Canada. Avoiding Medtronic, a maker of cardiac defibrillators, was helpful as well. During the period's final 10 months, the fund beat the MSCI index. Stock selection in the fund's core biotechnology area added the most to performance, with an additional boost provided by effective picks in pharmaceuticals. Significantly underweighting major index constituent Amgen helped, as the stock struggled due to some safety concerns about Aranesp, the company's top-selling drug, which is used to treat kidney-related disease and chemotherapy-induced anemia. Other contributors were New River Pharmaceuticals - a company that was not included in the index and that I sold after it received a buyout offer from another firm - and Alexion Pharmaceuticals. On the other hand, underweighting index component MedImmune detracted from our results, as the company was bought by AstraZeneca during the period.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Health Care Index, which returned 3.65% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Biotechnology Index, which returned -1.53% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 2.06%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 964.00 | $ 6.82 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 963.40 | $ 8.03 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 960.90 | $ 10.45 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 960.90 | $ 10.45 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 965.90 | $ 4.73 |
HypotheticalA | $ 1,000.00 | $ 1,019.98 | $ 4.86 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | .97% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Amgen, Inc. | 20.5 | 13.0 |
Biogen Idec, Inc. | 7.2 | 6.8 |
Gilead Sciences, Inc. | 6.5 | 11.0 |
Celgene Corp. | 6.3 | 4.2 |
Genentech, Inc. | 6.0 | 12.5 |
Cephalon, Inc. | 5.0 | 4.4 |
Alexion Pharmaceuticals, Inc. | 5.0 | 2.8 |
Vertex Pharmaceuticals, Inc. | 3.2 | 3.0 |
Amylin Pharmaceuticals, Inc. | 2.6 | 2.2 |
Elan Corp. PLC sponsored ADR | 2.4 | 1.4 |
64.7 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
 | Biotechnology | 85.6% | |
 | Pharmaceuticals | 9.3% | |
 | Life Sciences | 3.0% | |
 | Health Care Equipment & Supplies | 2.2% | |
 | Health Care | 0.2% | |
 | All Others | (0.3)%(dagger) | |
As of January 31, 2007 | |||
| Biotechnology | 88.5% | |
| Pharmaceuticals | 7.4% | |
| Life Sciences | 2.7% | |
| Health Care Equipment & Supplies | 1.4% | |
| Health Care | 0.1% | |
| All Others | (0.1)%(dagger) | |
(dagger) Short-term investments and net other assets are not included in the pie chart. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 100.3% | |||
Shares | Value | ||
BIOTECHNOLOGY - 85.6% | |||
Biotechnology - 85.6% | |||
3SBio, Inc. sponsored ADR | 11,700 | $ 104,949 | |
Acadia Pharmaceuticals, Inc. (a) | 31,774 | 446,107 | |
Acorda Therapeutics, Inc. (a) | 5,600 | 93,968 | |
Affymax, Inc. | 7,800 | 186,186 | |
Alexion Pharmaceuticals, Inc. (a) | 44,000 | 2,559,040 | |
Alkermes, Inc. (a) | 48,240 | 686,938 | |
Alnylam Pharmaceuticals, Inc. (a) | 10,000 | 241,100 | |
Altus Pharmaceuticals, Inc. (a) | 6,212 | 63,362 | |
Amgen, Inc. (a) | 196,240 | 10,545,935 | |
Amylin Pharmaceuticals, Inc. (a) | 29,108 | 1,353,813 | |
Arena Pharmaceuticals, Inc. (a) | 10,800 | 123,444 | |
ArQule, Inc. (a) | 15,381 | 87,364 | |
Array Biopharma, Inc. (a) | 4,500 | 45,225 | |
Biogen Idec, Inc. (a) | 65,807 | 3,720,728 | |
Celgene Corp. (a) | 53,995 | 3,269,937 | |
Cephalon, Inc. (a) | 34,099 | 2,562,199 | |
Cepheid, Inc. (a) | 9,900 | 146,025 | |
Cougar Biotechnology, Inc. (a) | 10,900 | 258,875 | |
Cougar Biotechnology, Inc. (a)(e) | 2,500 | 59,375 | |
Cubist Pharmaceuticals, Inc. (a) | 21,015 | 484,606 | |
Cytokinetics, Inc. (a) | 7,800 | 39,000 | |
Cytos Biotechnology AG (a) | 559 | 63,926 | |
Dendreon Corp. (a)(d) | 15,600 | 118,716 | |
Dyax Corp. (a) | 12,900 | 50,052 | |
Enzon Pharmaceuticals, Inc. (a) | 6,800 | 48,960 | |
Genentech, Inc. (a) | 41,500 | 3,086,770 | |
Gilead Sciences, Inc. (a) | 89,660 | 3,338,042 | |
GTx, Inc. (a) | 10,700 | 164,459 | |
Halozyme Therapeutics, Inc. (a) | 6,310 | 50,732 | |
Human Genome Sciences, Inc. (a) | 21,930 | 170,177 | |
Indevus Pharmaceuticals, Inc. (a) | 32,757 | 232,247 | |
Infinity Pharmaceuticals, Inc. (a) | 1,899 | 20,319 | |
Isis Pharmaceuticals, Inc. (a) | 16,500 | 171,765 | |
Ligand Pharmaceuticals, Inc. Class B | 10,400 | 56,160 | |
MannKind Corp. (a) | 23,300 | 246,048 | |
Martek Biosciences (a) | 6,300 | 161,406 | |
Medarex, Inc. (a) | 45,185 | 639,820 | |
Momenta Pharmaceuticals, Inc. (a) | 11,308 | 109,914 | |
Myriad Genetics, Inc. (a) | 15,605 | 583,315 | |
Neurochem, Inc. (a) | 1,300 | 8,117 | |
Neurocrine Biosciences, Inc. (a) | 31,940 | 324,830 | |
Novacea, Inc. (a) | 4,500 | 35,730 | |
Omrix Biopharmaceuticals, Inc. (a) | 4,700 | 134,796 | |
ONYX Pharmaceuticals, Inc. (a) | 26,294 | 731,236 | |
OREXIGEN Therapeutics, Inc. | 8,697 | 128,977 | |
OSI Pharmaceuticals, Inc. (a) | 38,700 | 1,247,688 | |
PDL BioPharma, Inc. (a) | 51,500 | 1,209,735 | |
Pharmion Corp. (a) | 6,366 | 155,076 | |
Poniard Pharmaceuticals, Inc. (a) | 8,500 | 49,300 | |
Shares | Value | ||
Regeneron Pharmaceuticals, Inc. (a) | 22,499 | $ 335,010 | |
Rosetta Genomics Ltd. | 745 | 5,096 | |
Sangamo Biosciences, Inc. (a) | 9,650 | 84,052 | |
Savient Pharmaceuticals, Inc. (a) | 10,100 | 119,584 | |
Tanox, Inc. (a) | 5,700 | 111,150 | |
Theravance, Inc. (a) | 14,800 | 396,196 | |
Trubion Pharmaceuticals, Inc. | 4,700 | 79,759 | |
United Therapeutics Corp. (a) | 7,103 | 492,664 | |
Vanda Pharmaceuticals, Inc. (a) | 11,531 | 215,745 | |
Vertex Pharmaceuticals, Inc. (a) | 51,700 | 1,669,910 | |
ViaCell, Inc. (a) | 500 | 2,500 | |
Zymogenetics, Inc. (a) | 16,395 | 189,526 | |
44,117,681 | |||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.2% | |||
Health Care Equipment - 2.2% | |||
Alsius Corp. (a) | 15,600 | 80,808 | |
Clinical Data, Inc. (a) | 5,898 | 135,654 | |
Gen-Probe, Inc. (a) | 4,723 | 297,596 | |
Quidel Corp. (a) | 39,800 | 592,224 | |
TomoTherapy, Inc. | 200 | 5,420 | |
1,111,702 | |||
HEALTH CARE PROVIDERS & SERVICES - 0.2% | |||
Health Care Services - 0.2% | |||
Oracle Healthcare Acquisition Corp. unit (a) | 9,600 | 79,200 | |
LIFE SCIENCES TOOLS & SERVICES - 3.0% | |||
Life Sciences Tools & Services - 3.0% | |||
AMAG Pharmaceuticals, Inc. (a) | 3,915 | 210,196 | |
Applera Corp. - Celera Genomics Group (a) | 24,400 | 293,288 | |
Exelixis, Inc. (a) | 39,500 | 382,755 | |
Medivation, Inc. (a) | 1,359 | 22,301 | |
QIAGEN NV (a)(d) | 31,800 | 546,960 | |
Ventana Medical Systems, Inc. (a) | 1,400 | 116,676 | |
1,572,176 | |||
PHARMACEUTICALS - 9.3% | |||
Pharmaceuticals - 9.3% | |||
Akorn, Inc. (a) | 125,679 | 852,104 | |
Alexza Pharmaceuticals, Inc. (a) | 5,100 | 44,778 | |
Auxilium Pharmaceuticals, Inc. (a) | 44,772 | 782,167 | |
Biodel, Inc. | 20,764 | 350,912 | |
Cardiome Pharma Corp. (a) | 2,600 | 23,302 | |
Catalyst Pharmaceutical Partners, Inc. | 24,894 | 83,644 | |
Cypress Bioscience, Inc. (a) | 2,700 | 31,131 | |
Elan Corp. PLC sponsored ADR (a) | 67,400 | 1,262,402 | |
Jazz Pharmaceuticals, Inc. (a) | 8,900 | 126,291 | |
Sepracor, Inc. (a) | 5,296 | 148,976 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Sirtris Pharmaceuticals, Inc. | 2,300 | $ 28,658 | |
Xenoport, Inc. (a) | 25,000 | 1,067,250 | |
4,801,615 | |||
TOTAL COMMON STOCKS (Cost $50,771,249) | 51,682,374 | ||
Money Market Funds - 1.2% | |||
Fidelity Cash Central Fund, 5.38% (b) | 113,509 | 113,509 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 508,225 | 508,225 | |
TOTAL MONEY MARKET FUNDS (Cost $621,734) | 621,734 | ||
TOTAL INVESTMENT PORTFOLIO - 101.5% (Cost $51,392,983) | 52,304,108 | ||
NET OTHER ASSETS - (1.5)% | (754,903) | ||
NET ASSETS - 100% | $ 51,549,205 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $59,375 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Cougar Biotechnology, Inc. | 5/3/07 | $ 50,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 24,223 |
Fidelity Securities Lending Cash Central Fund | 37,417 |
Total | $ 61,640 |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $493,769) - See accompanying schedule: Unaffiliated issuers (cost $50,771,249) | $ 51,682,374 | |
Fidelity Central Funds (cost $621,734) | 621,734 | |
Total Investments (cost $51,392,983) | $ 52,304,108 | |
Receivable for investments sold | 289,332 | |
Receivable for fund shares sold | 69,014 | |
Distributions receivable from Fidelity Central Funds | 11,183 | |
Prepaid expenses | 105 | |
Other receivables | 28 | |
Total assets | 52,673,770 | |
Liabilities | ||
Payable for investments purchased | $ 307,773 | |
Payable for fund shares redeemed | 196,892 | |
Accrued management fee | 29,200 | |
Distribution fees payable | 29,548 | |
Other affiliated payables | 15,353 | |
Other payables and accrued expenses | 37,574 | |
Collateral on securities loaned, at value | 508,225 | |
Total liabilities | 1,124,565 | |
Net Assets | $ 51,549,205 | |
Net Assets consist of: | ||
Paid in capital | $ 49,691,286 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 946,794 | |
Net unrealized appreciation (depreciation) on investments | 911,125 | |
Net Assets | $ 51,549,205 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 7.23 | |
Maximum offering price per share (100/94.25 of $7.23) | $ 7.67 | |
Class T: | $ 7.11 | |
Maximum offering price per share (100/96.50 of $7.11) | $ 7.37 | |
Class B: | $ 6.88 | |
Class C: | $ 6.88 | |
Institutional Class: | $ 7.37 | |
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
Advisor Biotechnology Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 28,117 | |
Interest | 98 | |
Income from Fidelity Central Funds (including $37,417 from security lending) | 61,640 | |
Total income | 89,855 | |
Expenses | ||
Management fee | $ 326,120 | |
Transfer agent fees | 208,015 | |
Distribution fees | 391,357 | |
Accounting and security lending fees | 25,631 | |
Custodian fees and expenses | 10,853 | |
Independent trustees' compensation | 192 | |
Registration fees | 48,885 | |
Audit | 47,316 | |
Legal | 1,060 | |
Miscellaneous | 18,778 | |
Total expenses before reductions | 1,078,207 | |
Expense reductions | (22,132) | 1,056,075 |
Net investment income (loss) | (966,220) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 8,930,805 | |
Foreign currency transactions | 6 | |
Total net realized gain (loss) | 8,930,811 | |
Change in net unrealized appreciation (depreciation) on investment securities | (4,482,074) | |
Net gain (loss) | 4,448,737 | |
Net increase (decrease) in net assets resulting from operations | $ 3,482,517 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (966,220) | $ (1,015,236) |
Net realized gain (loss) | 8,930,811 | 1,447,883 |
Change in net unrealized appreciation (depreciation) | (4,482,074) | (1,063,236) |
Net increase (decrease) in net assets resulting from operations | 3,482,517 | (630,589) |
Share transactions - net increase (decrease) | (8,274,098) | 1,061,142 |
Redemption fees | 1,128 | 8,381 |
Total increase (decrease) in net assets | (4,790,453) | 438,934 |
Net Assets | ||
Beginning of period | 56,339,658 | 55,900,724 |
End of period | $ 51,549,205 | $ 56,339,658 |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.81 | $ 6.80 | $ 6.00 | $ 5.94 | $ 4.39 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.09) | (.08) H | (.09) | (.05) |
Net realized and unrealized gain (loss) | .51 | .10 | .88 | .15 | 1.60 |
Total from investment operations | .42 | .01 | .80 | .06 | 1.55 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 | $ 5.94 |
Total Return A, B | 6.17% | .15% | 13.33% | 1.01% | 35.31% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.42% | 1.48% | 1.56% | 1.68% | 2.04% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.45% | 1.50% | 1.50% |
Expenses net of all reductions | 1.40% | 1.37% | 1.43% | 1.48% | 1.47% |
Net investment income (loss) | (1.25)% | (1.29)% | (1.36)% H | (1.38)% | (1.11)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,081 | $ 12,539 | $ 11,022 | $ 10,197 | $ 7,718 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.37)%.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.71 | $ 6.72 | $ 5.95 | $ 5.90 | $ 4.37 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.11) | (.10) F | (.10) | (.06) |
Net realized and unrealized gain (loss) | .51 | .10 | .87 | .15 | 1.59 |
Total from investment operations | .40 | (.01) | .77 | .05 | 1.53 |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 | $ 5.90 |
Total Return A, B | 5.96% | (.15)% | 12.94% | .85% | 35.01% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.75% | 1.79% | 1.93% | 2.10% | 2.39% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.70% | 1.75% | 1.75% |
Expenses net of all reductions | 1.65% | 1.62% | 1.68% | 1.73% | 1.72% |
Net investment income (loss) | (1.49)% | (1.54)% | (1.61)% F | (1.63)% | (1.36)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,008 | $ 13,808 | $ 14,177 | $ 13,367 | $ 10,281 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.52 | $ 6.56 | $ 5.84 | $ 5.82 | $ 4.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.14) | (.13) F | (.13) | (.09) |
Net realized and unrealized gain (loss) | .50 | .10 | .85 | .15 | 1.58 |
Total from investment operations | .36 | (.04) | .72 | .02 | 1.49 |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 | $ 5.82 |
Total Return A, B | 5.52% | (.61)% | 12.33% | .34% | 34.41% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 2.17% | 2.23% | 2.33% | 2.46% | 2.78% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.12% | 2.18% | 2.22% | 2.22% |
Net investment income (loss) | (1.99)% | (2.04)% | (2.11)% F | (2.12)% | (1.86)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,656 | $ 14,938 | $ 16,921 | $ 16,819 | $ 15,154 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.52 | $ 6.57 | $ 5.84 | $ 5.82 | $ 4.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.14) | (.13) F | (.13) | (.09) |
Net realized and unrealized gain (loss) | .50 | .09 | .86 | .15 | 1.58 |
Total from investment operations | .36 | (.05) | .73 | .02 | 1.49 |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 | $ 5.82 |
Total Return A, B | 5.52% | (.76)% | 12.50% | .34% | 34.41% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 2.16% | 2.17% | 2.24% | 2.31% | 2.58% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.12% | 2.18% | 2.23% | 2.22% |
Net investment income (loss) | (1.99)% | (2.04)% | (2.11)% F | (2.13)% | (1.86)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 11,813 | $ 13,787 | $ 12,538 | $ 13,215 | $ 10,493 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
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. Expenses net of fee 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 - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.91 | $ 6.89 | $ 6.06 | $ 5.97 | $ 4.40 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.07) | (.07) | (.06) E | (.06) | (.04) |
Net realized and unrealized gain (loss) | .53 | .09 | .89 | .15 | 1.61 |
Total from investment operations | .46 | .02 | .83 | .09 | 1.57 |
Redemption fees added to paid in capital B | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 | $ 5.97 |
Total Return A | 6.66% | .29% | 13.70% | 1.51% | 35.68% |
Ratios to Average Net Assets C, F | |||||
Expenses before reductions | 1.06% | 1.05% | 1.10% | 1.16% | 1.37% |
Expenses net of fee waivers, if any | 1.06% | 1.05% | 1.10% | 1.16% | 1.25% |
Expenses net of all reductions | 1.06% | 1.03% | 1.09% | 1.14% | 1.22% |
Net investment income (loss) | (.91)% | (.94)% | (1.02)% E | (1.04)% | (.86)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 991 | $ 1,268 | $ 1,243 | $ 1,146 | $ 1,153 |
Portfolio turnover rate D | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Biotechnology Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, 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 | $ 5,721,262 |
Unrealized depreciation | (6,449,094) |
Net unrealized appreciation (depreciation) | (727,832) |
Undistributed long-term capital gain | 2,585,750 |
Cost for federal income tax purposes | $ 53,031,940 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Biotechnology
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $68,744,959 and $77,774,882, respectively.
6. 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 .26% 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 .56% 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% | $ 34,967 | $ 1,493 |
Class T | .25% | .25% | 71,880 | 218 |
Class B | .75% | .25% | 147,132 | 110,899 |
Class C | .75% | .25% | 137,378 | 26,818 |
$ 391,357 | $ 139,428 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 15,802 |
Class T | 8,599 |
Class B * | 46,535 |
Class C * | 3,551 |
$ 74,487 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 48,640 | .35 |
Class T | 60,175 | .42 |
Class B | 51,121 | .35 |
Class C | 45,105 | .33 |
Institutional Class | 2,974 | .24 |
$ 208,015 |
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.
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 $518 for the period.
7. 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, which amounted to $111 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 2,744 |
Class T | 1.65% | 13,561 |
Class B | 2.15% | 3,592 |
Class C | 2.15% | 708 |
Institutional Class | 1.15% | - |
$ 20,605 |
Biotechnology
9. 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 $434 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 654,030 | 802,915 | $ 4,756,477 | $ 5,733,744 |
Shares redeemed | (687,789) | (581,094) | (5,067,147) | (4,036,446) |
Net increase (decrease) | (33,759) | 221,821 | $ (310,670) | $ 1,697,298 |
Class T | ||||
Shares sold | 413,953 | 587,840 | $ 2,989,158 | $ 4,097,337 |
Shares redeemed | (643,045) | (638,853) | (4,647,999) | (4,417,619) |
Net increase (decrease) | (229,092) | (51,013) | $ (1,658,841) | $ (320,282) |
Class B | ||||
Shares sold | 235,936 | 419,648 | $ 1,623,598 | $ 2,840,429 |
Shares redeemed | (686,826) | (706,101) | (4,815,046) | (4,753,466) |
Net increase (decrease) | (450,890) | (286,453) | $ (3,191,448) | $ (1,913,037) |
Class C | ||||
Shares sold | 294,514 | 744,203 | $ 2,075,073 | $ 5,179,930 |
Shares redeemed | (691,341) | (539,467) | (4,822,276) | (3,621,319) |
Net increase (decrease) | (396,827) | 204,736 | $ (2,747,203) | $ 1,558,611 |
Institutional Class | ||||
Shares sold | 40,455 | 94,904 | $ 308,779 | $ 686,802 |
Shares redeemed | (89,434) | (92,008) | (674,715) | (648,250) |
Net increase (decrease) | (48,979) | 2,896 | $ (365,936) | $ 38,552 |
Annual Report
Advisor Communications Equipment 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.
Average Annual Total Returns
Periods ended July 31, 2007 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 22.69% | 17.70% | -1.68% |
Class T (incl. 3.50% sales charge) | 25.36% | 17.94% | -1.56% |
Class B (incl. contingent deferred sales charge)B | 24.18% | 17.96% | -1.54% |
Class C (incl. contingent deferred sales charge)C | 28.18% | 18.16% | -1.54% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 5%, 2%, and 0%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year, past five years, 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 Communications Equipment 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 performed over the same period.
Annual Report
Advisor Communications Equipment Fund
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 30.18%, 29.90%, 29.18% and 29.18%, respectively (excluding sales charges), trailing the 31.02% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Communications Equipment Index but beating the 25.42% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. Our results were aided by currency fluctuations that benefited the fund's foreign holdings. During the first two months of the period, the fund modestly trailed the Goldman Sachs index. Weak stock selection in the fund's core segment of communications equipment hurt and nearly offset the substantial benefits of having an overweighted exposure to that strong-performing group. Unfavorable picks and an underweighting in systems software also detracted, as did an overweighting in wireless telecommunication services. Positive influences included having no exposure to the weak-performing data processing and outsourced services group, along with rewarding stock selection in Internet software and services and in semiconductors. Among individual holdings, not owning strong-performing networking equipment maker and major index component Cisco Systems during this two-month stretch was detrimental. The stock price of Canada-based Sandvine, a supplier of Internet traffic monitoring equipment and an out-of-index holding, hit a weak patch despite the company's favorable prospects. Meanwhile, the fund's top contributor versus the Goldman Sachs index was Corning, which experienced strong demand for the glass substrates it makes for liquid crystal displays. During the final 10 months of the period, the fund handily beat the MSCI index and narrowed its focus to reflect its new benchmark. Stock selection in communications equipment added more than three percentage points to the fund's results, while my choices in systems software also helped significantly. Conversely, a weak showing in computer hardware, semiconductors and application software - groups not represented in the index - detracted modestly. At the stock level, a sizable underweighting in cellular handset maker Motorola, which sported a double-digit weighting in the index, proved to be timely. A lack of compelling products to follow the company's popular RAZR handset line caused Motorola's stock to post a steep loss. Also boosting the fund's performance were two Canada-based stocks: Research In Motion (RIM), maker of the popular BlackBerry handheld messaging device, and Sandvine, which I mentioned earlier. Among detractors, Cisco Systems had the most negative impact due to our sizable underweighting. Cisco is the largest component of the MSCI index, accounting for more than 41% of that benchmark, on average, during the period. While I liked the company's prospects, there were other opportunities that I thought offered faster growth and more-attractive valuations. That said, Cisco was a strong performer during the period. Wireless communications equipment maker Powerwave Technologies also held back our results.
During the past year, the fund's Institutional Class shares returned 30.58%, trailing the 31.02% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Communications Equipment Index but beating the 25.42% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. Our results were aided by currency fluctuations that benefited the fund's foreign holdings. During the first two months of the period, the fund modestly trailed the Goldman Sachs index. Weak stock selection in the fund's core segment of communications equipment hurt and nearly offset the substantial benefits of having an overweighted exposure to that strong-performing group. Unfavorable picks and an underweighting in systems software also detracted, as did an overweighting in wireless telecommunication services. Positive influences included having no exposure to the weak-performing data processing and outsourced services group, along with rewarding stock selection in Internet software and services and in semiconductors. Among individual holdings, not owning strong-performing networking equipment maker and major index component Cisco Systems, during this two-month stretch was detrimental. The stock price of Canada-based Sandvine, a supplier of Internet traffic monitoring equipment and an out-of-index holding, hit a weak patch despite the company's favorable prospects. Meanwhile, the fund's top contributor versus the Goldman Sachs index was Corning, which experienced strong demand for the glass substrates it makes for liquid crystal displays. During the final 10 months of the period, the fund handily beat the MSCI index and narrowed its focus to reflect its new benchmark. Stock selection in communications equipment added more than three percentage points to the fund's results, while my choices in systems software also helped significantly. Conversely, a weak showing in computer hardware, semiconductors and application software - groups not represented in the index - detracted modestly. At the stock level, a sizable underweighting in cellular handset maker Motorola, which sported a double-digit weighting in the index, proved to be timely. A lack of compelling products to follow the company's popular RAZR handset line caused Motorola's stock to post a steep loss. Also boosting the fund's performance were two Canada-based stocks: Research In Motion (RIM), maker of the popular BlackBerry handheld messaging device, and Sandvine, which I mentioned earlier. Among detractors, Cisco Systems had the most negative impact due to our sizable underweighting. Cisco is the largest component of the MSCI index, accounting for more than 41% of that benchmark, on average, during the period. While I liked the company's prospects, there were other opportunities that I thought offered faster growth and more-attractive valuations. That said, Cisco was a strong performer during the period. Wireless communications equipment maker Powerwave Technologies also held back our results.
Annual Report
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Technology Index, which returned 12.15% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Communications Equipment Index, which returned 11.83% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 25.42%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Portfolio
Advisor Communications Equipment 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,135.20 | $ 7.41 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 1,133.50 | $ 8.73 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 1,130.20 | $ 11.36 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 1,130.20 | $ 11.36 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,135.30 | $ 6.09 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Annual Report
Advisor Communications Equipment Fund
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
QUALCOMM, Inc. | 19.6 | 20.0 |
Research In Motion Ltd. | 10.2 | 6.2 |
Cisco Systems, Inc. | 6.6 | 10.2 |
Juniper Networks, Inc. | 5.8 | 3.5 |
Corning, Inc. | 4.8 | 4.2 |
Comverse Technology, Inc. | 4.7 | 7.7 |
Powerwave Technologies, Inc. | 4.4 | 3.9 |
F5 Networks, Inc. | 4.2 | 3.6 |
Sandvine Corp. (U.K.) | 3.0 | 1.2 |
Motorola, Inc. | 2.9 | 4.5 |
66.2 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Communications Equipment | 79.6% | |
| Software | 6.9% | |
| Semiconductors & Semiconductor Equipment | 6.2% | |
| Computers & Peripherals | 1.6% | |
| Household Durables | 1.5% | |
| All Others * | 4.2% | |
As of January 31, 2007 | |||
| Communications Equipment | 80.5% | |
| Semiconductors & Semiconductor Equipment | 6.3% | |
| Software | 4.0% | |
| Internet Software & Services | 2.4% | |
| Wireless Telecommunication Services | 2.2% | |
| All Others * | 4.6% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Advisor Communications Equipment Fund
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 98.3% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Human Resource & Employment Services - 0.0% | |||
Taleo Corp. Class A (a) | 100 | $ 2,151 | |
COMMUNICATIONS EQUIPMENT - 79.4% | |||
Communications Equipment - 79.4% | |||
3Com Corp. (a) | 7,700 | 30,800 | |
Acme Packet, Inc. | 100 | 1,105 | |
Adtran, Inc. | 3,083 | 80,435 | |
ADVA AG Optical Networking (a) | 7,013 | 70,053 | |
Airvana, Inc. | 3,700 | 26,122 | |
Alcatel-Lucent SA sponsored ADR | 8,803 | 102,115 | |
AudioCodes Ltd. (a) | 20,500 | 113,980 | |
Avanex Corp. (a) | 11,600 | 19,720 | |
Bookham, Inc. (a) | 18,772 | 49,370 | |
Carrier Access Corp. (a) | 3,100 | 14,880 | |
Ceragon Networks Ltd. (a) | 100 | 1,429 | |
Ciena Corp. (a) | 5,607 | 204,824 | |
Cisco Systems, Inc. (a) | 23,800 | 688,058 | |
Comtech Group, Inc. (a) | 7,601 | 108,086 | |
Comverse Technology, Inc. (a) | 25,306 | 487,647 | |
Corning, Inc. | 20,900 | 498,256 | |
F5 Networks, Inc. (a) | 5,100 | 442,119 | |
Finisar Corp. (a) | 2,800 | 10,164 | |
Foundry Networks, Inc. (a) | 6,900 | 121,371 | |
Foxconn International Holdings Ltd. (a) | 2,000 | 5,726 | |
Harris Stratex Networks, Inc. (a) | 11,175 | 190,199 | |
Ixia (a) | 2,963 | 27,734 | |
JDS Uniphase Corp. (a) | 4,600 | 65,918 | |
Juniper Networks, Inc. (a) | 20,150 | 603,694 | |
Motorola, Inc. | 17,500 | 297,325 | |
Opnext, Inc. | 500 | 6,105 | |
Orckit Communications Ltd. (a) | 3,800 | 29,488 | |
Powerwave Technologies, Inc. (a) | 69,500 | 454,530 | |
QUALCOMM, Inc. | 48,900 | 2,036,685 | |
Research In Motion Ltd. (a) | 4,940 | 1,057,160 | |
Riverbed Technology, Inc. | 2,300 | 101,568 | |
Riverstone Networks, Inc. (a) | 30,300 | 0 | |
Sonus Networks, Inc. (a) | 34,704 | 237,375 | |
Symmetricom, Inc. (a) | 8,145 | 60,762 | |
8,244,803 | |||
COMPUTERS & PERIPHERALS - 1.6% | |||
Computer Hardware - 1.2% | |||
Compal Electronics, Inc. | 5,670 | 6,489 | |
Concurrent Computer Corp. (a) | 77,917 | 119,213 | |
NEC Corp. sponsored ADR | 90 | 438 | |
126,140 | |||
Computer Storage & Peripherals - 0.4% | |||
SanDisk Corp. (a) | 610 | 32,714 | |
TOTAL COMPUTERS & PERIPHERALS | 158,854 | ||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.3% | |||
Alternative Carriers - 0.3% | |||
Aruba Networks, Inc. | 100 | $ 2,008 | |
Level 3 Communications, Inc. (a) | 5,900 | 30,857 | |
32,865 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.0% | |||
Electronic Equipment & Instruments - 0.7% | |||
Chi Mei Optoelectronics Corp. | 8,227 | 9,215 | |
HannStar Display Corp. (a) | 58,000 | 16,794 | |
Nippon Electric Glass Co. Ltd. | 3,000 | 46,775 | |
72,784 | |||
Electronic Manufacturing Services - 0.3% | |||
Molex, Inc. | 500 | 14,170 | |
Trimble Navigation Ltd. (a) | 600 | 19,818 | |
33,988 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 106,772 | ||
HOUSEHOLD DURABLES - 1.5% | |||
Consumer Electronics - 1.5% | |||
Tele Atlas NV (a) | 5,400 | 154,136 | |
INTERNET SOFTWARE & SERVICES - 1.4% | |||
Internet Software & Services - 1.4% | |||
Openwave Systems, Inc. | 18,107 | 95,243 | |
RADVision Ltd. (a) | 3,050 | 52,125 | |
147,368 | |||
MEDIA - 0.0% | |||
Publishing - 0.0% | |||
Gemstar-TV Guide International, Inc. (a) | 104 | 597 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.2% | |||
Semiconductor Equipment - 0.4% | |||
EMCORE Corp. (a) | 5,800 | 44,892 | |
Semiconductors - 5.8% | |||
Actel Corp. (a) | 451 | 5,322 | |
Altera Corp. | 2,500 | 58,000 | |
AMIS Holdings, Inc. (a) | 5,900 | 60,829 | |
Applied Micro Circuits Corp. (a) | 11,032 | 32,213 | |
Broadcom Corp. Class A (a) | 1,300 | 42,653 | |
Conexant Systems, Inc. (a) | 12,800 | 16,768 | |
Cree, Inc. (a) | 1,100 | 28,182 | |
CSR PLC (a) | 2,000 | 29,618 | |
Exar Corp. (a) | 143 | 2,021 | |
Hittite Microwave Corp. (a) | 600 | 24,132 | |
Intersil Corp. Class A | 2,000 | 58,500 | |
Marvell Technology Group Ltd. (a) | 1,200 | 21,600 | |
Microsemi Corp. (a) | 449 | 10,466 | |
Mindspeed Technologies, Inc. (a) | 12,509 | 22,766 | |
MIPS Technologies, Inc. (a) | 1,398 | 12,372 | |
Pericom Semiconductor Corp. (a) | 1,700 | 18,156 | |
Pixelplus Co. Ltd. sponsored ADR (a) | 3,600 | 4,464 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
PLX Technology, Inc. (a) | 1,400 | $ 15,456 | |
PMC-Sierra, Inc. (a) | 3,100 | 23,622 | |
Silicon Motion Technology Corp. sponsored ADR (a) | 1,800 | 32,940 | |
Silicon Storage Technology, Inc. (a) | 1,200 | 4,344 | |
SiRF Technology Holdings, Inc. (a) | 200 | 4,688 | |
Soitec SA (a) | 2,100 | 37,298 | |
Transmeta Corp. (a) | 5,800 | 3,538 | |
Vimicro International Corp. sponsored ADR (a) | 600 | 3,126 | |
Xilinx, Inc. | 1,000 | 25,000 | |
598,074 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 642,966 | ||
SOFTWARE - 6.9% | |||
Application Software - 3.4% | |||
NAVTEQ Corp. (a) | 2,100 | 113,673 | |
Smith Micro Software, Inc. (a) | 6,700 | 91,455 | |
Ulticom, Inc. (a) | 17,898 | 145,869 | |
350,997 | |||
Home Entertainment Software - 0.5% | |||
Ubisoft Entertainment SA (a) | 800 | 52,490 | |
Systems Software - 3.0% | |||
Allot Communications Ltd. | 300 | 2,103 | |
Sandvine Corp. (U.K.) (a) | 57,300 | 314,278 | |
316,381 | |||
TOTAL SOFTWARE | 719,868 | ||
TOTAL COMMON STOCKS (Cost $9,863,354) | 10,210,380 | ||
Convertible Bonds - 0.2% | ||||
Principal Amount | Value | |||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 20,000 | $ 20,792 | ||
Money Market Funds - 2.5% | |||
Shares | |||
Fidelity Cash Central Fund, 5.38% (b) | 265,659 | 265,659 | |
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $10,149,013) | 10,496,831 | ||
NET OTHER ASSETS - (1.0)% | (106,875) | ||
NET ASSETS - 100% | $ 10,389,956 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 8,471 |
Other |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 79.2% |
Canada | 13.2% |
Israel | 1.9% |
France | 1.9% |
Netherlands | 1.5% |
Others (individually less than 1%) | 2.3% |
100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2008 approximately $221,739 of losses recognized during the period November 1, 2006 to July 31, 2007. |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Advisor Communications Equipment Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $9,883,354) | $ 10,231,172 | |
Fidelity Central Funds (cost $265,659) | 265,659 | |
Total Investments (cost $10,149,013) | $ 10,496,831 | |
Receivable for fund shares sold | 13,048 | |
Dividends receivable | 489 | |
Interest receivable | 12 | |
Distributions receivable from Fidelity Central Funds | 623 | |
Prepaid expenses | 21 | |
Receivable from investment adviser for expense reductions | 2,668 | |
Other receivables | 46 | |
Total assets | 10,513,738 | |
Liabilities | ||
Payable for investments purchased | $ 36,795 | |
Payable for fund shares redeemed | 37,467 | |
Accrued management fee | 5,069 | |
Distribution fees payable | 5,554 | |
Other affiliated payables | 2,929 | |
Other payables and accrued expenses | 35,968 | |
Total liabilities | 123,782 | |
Net Assets | $ 10,389,956 | |
Net Assets consist of: | ||
Paid in capital | $ 10,231,581 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (189,443) | |
Net unrealized appreciation (depreciation) on investments | 347,818 | |
Net Assets | $ 10,389,956 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 9.49 | |
Maximum offering price per share (100/94.25 of $9.49) | $ 10.07 | |
Class T: | $ 9.34 | |
Maximum offering price per share (100/96.50 of $9.34) | $ 9.68 | |
Class B: | $ 9.03 | |
Class C: | $ 9.03 | |
Institutional Class: | $ 9.65 | |
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
Fund Name
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 33,717 | |
Interest | 178 | |
Income from Fidelity Central Funds | 8,471 | |
Total income | 42,366 | |
Expenses | ||
Management fee | $ 60,205 | |
Transfer agent fees | 40,385 | |
Distribution fees | 66,062 | |
Accounting fees and expenses | 4,278 | |
Custodian fees and expenses | 4,525 | |
Independent trustees' compensation | 37 | |
Registration fees | 52,170 | |
Audit | 47,685 | |
Legal | 341 | |
Miscellaneous | 5,666 | |
Total expenses before reductions | 281,354 | |
Expense reductions | (92,420) | 188,934 |
Net investment income (loss) | (146,568) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 337,496 | |
Foreign currency transactions | (131) | |
Total net realized gain (loss) | 337,365 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 2,613,992 | |
Assets and liabilities in foreign currencies | 5 | |
Total change in net unrealized appreciation (depreciation) | 2,613,997 | |
Net gain (loss) | 2,951,362 | |
Net increase (decrease) in net assets resulting from operations | $ 2,804,794 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (146,568) | $ (181,630) |
Net realized gain (loss) | 337,365 | 2,011,059 |
Change in net unrealized appreciation (depreciation) | 2,613,997 | (2,915,095) |
Net increase (decrease) in net assets resulting from operations | 2,804,794 | (1,085,666) |
Share transactions - net increase (decrease) | (3,045,289) | 1,243,705 |
Redemption fees | 192 | 3,257 |
Total increase (decrease) in net assets | (240,303) | 161,296 |
Net Assets | ||
Beginning of period | 10,630,259 | 10,468,963 |
End of period | $ 10,389,956 | $ 10,630,259 |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.29 | $ 7.70 | $ 6.53 | $ 5.57 | $ 3.96 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.09) | (.07) | (.09) | (.04) |
Net realized and unrealized gain (loss) | 2.29 | (.32) | 1.24 | 1.01 | 1.65 |
Total from investment operations | 2.20 | (.41) | 1.17 | .92 | 1.61 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 | $ 5.57 |
Total Return A, B | 30.18% | (5.32)% | 17.92% | 17.24% | 40.66% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.24% | 2.13% | 2.32% | 2.38% | 6.13% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.45% | 1.50% | 1.50% |
Expenses net of all reductions | 1.40% | 1.32% | 1.28% | 1.35% | 1.36% |
Net investment income (loss) | (1.00)% | (1.05)% | (.92)% | (1.18)% | (.82)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 2,825 | $ 3,145 | $ 2,406 | $ 3,480 | $ 970 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.19 | $ 7.61 | $ 6.48 | $ 5.54 | $ 3.95 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.11) | (.08) | (.10) | (.05) |
Net realized and unrealized gain (loss) | 2.26 | (.31) | 1.21 | 1.00 | 1.64 |
Total from investment operations | 2.15 | (.42) | 1.13 | .90 | 1.59 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 | $ 5.54 |
Total Return A, B | 29.90% | (5.52)% | 17.44% | 16.97% | 40.25% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.57% | 2.51% | 2.78% | 3.06% | 6.82% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.71% | 1.75% | 1.75% |
Expenses net of all reductions | 1.64% | 1.57% | 1.54% | 1.60% | 1.61% |
Net investment income (loss) | (1.25)% | (1.30)% | (1.18)% | (1.43)% | (1.07)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 3,271 | $ 2,932 | $ 3,034 | $ 3,250 | $ 1,723 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 | $ 3.92 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.14) | (.12) | (.13) | (.07) |
Net realized and unrealized gain (loss) | 2.18 | (.31) | 1.20 | .98 | 1.62 |
Total from investment operations | 2.04 | (.45) | 1.08 | .85 | 1.55 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Total Return A, B | 29.18% | (6.05)% | 16.98% | 16.27% | 39.54% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 3.00% | 2.94% | 3.14% | 3.48% | 6.88% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.20% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.07% | 2.04% | 2.11% | 2.11% |
Net investment income (loss) | (1.75)% | (1.80)% | (1.68)% | (1.93)% | (1.56)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 2,225 | $ 2,406 | $ 2,864 | $ 2,998 | $ 1,846 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 | $ 3.92 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.15) | (.12) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 2.18 | (.30) | 1.20 | .99 | 1.62 |
Total from investment operations | 2.04 | (.45) | 1.08 | .85 | 1.55 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Total Return A, B | 29.18% | (6.05)% | 16.98% | 16.27% | 39.54% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.98% | 2.86% | 3.07% | 3.19% | 6.81% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.07% | 2.02% | 2.10% | 2.11% |
Net investment income (loss) | (1.75)% | (1.81)% | (1.66)% | (1.93)% | (1.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 1,745 | $ 1,768 | $ 1,846 | $ 3,180 | $ 1,009 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Communications Equipment
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.39 | $ 7.79 | $ 6.60 | $ 5.61 | $ 3.98 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.07) | (.07) | (.05) | (.07) | (.03) |
Net realized and unrealized gain (loss) | 2.33 | (.33) | 1.24 | 1.02 | 1.66 |
Total from investment operations | 2.26 | (.40) | 1.19 | .95 | 1.63 |
Redemption fees added to paid in capital B | - F | - F | - F | .04 | - F |
Net asset value, end of period | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 | $ 5.61 |
Total Return A | 30.58% | (5.13)% | 18.03% | 17.65% | 40.95% |
Ratios to Average Net Assets C, E | |||||
Expenses before reductions | 1.87% | 1.70% | 1.85% | 1.55% | 5.34% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.18% | 1.25% | 1.25% |
Expenses net of all reductions | 1.15% | 1.07% | 1.01% | 1.11% | 1.11% |
Net investment income (loss) | (.75)% | (.80)% | (.65)% | (.93)% | (.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 324 | $ 379 | $ 319 | $ 607 | $ 154 |
Portfolio turnover rate D | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Communications Equipment Fund (the Fund) (formerly Fidelity Advisor Developing Communications Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,597,418 |
Unrealized depreciation | (1,362,508) |
Net unrealized appreciation (depreciation) | 234,910 |
Undistributed long-term capital gain | 145,205 |
Cost for federal income tax purposes | $ 10,261,921 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Communications Equipment
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities , other than short-term securities, aggregated $6,151,484 and $9,415,403, respectively.
6. 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 .26% 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 .56% 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, except for the Institutional Class. 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% | $ 7,364 | $ 123 |
Class T | .25% | .25% | 15,680 | 26 |
Class B | .75% | .25% | 23,744 | 17,826 |
Class C | .75% | .25% | 19,274 | 4,539 |
$ 66,062 | $ 22,514 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 2,348 |
Class T | 1,596 |
Class B* | 3,860 |
Class C* | 388 |
$ 8,192 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 10,449 | .35 |
Class T | 14,069 | .45 |
Class B | 8,476 | .36 |
Class C | 6,628 | .34 |
Institutional Class | 763 | .23 |
$ 40,385 |
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.
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 $355 for the period.
7. 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, which amounted to $21 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 24,759 |
Class T | 1.65% | 28,846 |
Class B | 2.15% | 20,000 |
Class C | 2.15% | 15,929 |
Institutional Class | 1.15% | 2,420 |
$ 91,954 |
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 $243 for the period.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
Communications Equipment
9. Other - continued
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 81,005 | 258,256 | $ 690,457 | $ 2,231,744 |
Shares redeemed | (214,792) | (139,347) | (1,810,328) | (1,139,179) |
Net increase (decrease) | (133,787) | 118,909 | $ (1,119,871) | $ 1,092,565 |
Class T | ||||
Shares sold | 82,403 | 114,159 | $ 704,729 | $ 950,677 |
Shares redeemed | (139,753) | (104,980) | (1,173,589) | (831,470) |
Net increase (decrease) | (57,350) | 9,179 | $ (468,860) | $ 119,207 |
Class B | ||||
Shares sold | 24,084 | 69,205 | $ 199,321 | $ 569,934 |
Shares redeemed | (121,877) | (109,978) | (1,002,926) | (860,340) |
Net increase (decrease) | (97,793) | (40,773) | $ (803,605) | $ (290,406) |
Class C | ||||
Shares sold | 60,107 | 307,489 | $ 487,807 | $ 2,475,377 |
Shares redeemed | (119,863) | (302,626) | (990,194) | (2,257,686) |
Net increase (decrease) | (59,756) | 4,863 | $ (502,387) | $ 217,691 |
Institutional Class | ||||
Shares sold | 1,716 | 30,494 | $ 15,290 | $ 275,027 |
Shares redeemed | (19,380) | (20,224) | (165,856) | (170,379) |
Net increase (decrease) | (17,664) | 10,270 | $ (150,566) | $ 104,648 |
Annual Report
Advisor Consumer Discretionary 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 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, 2007 | Past 1 | Past 5 | Past 10 | |
Class A (incl. 5.75% sales charge) | 5.25% | 7.24% | 5.43% | |
Class T (incl. 3.50% sales charge) | 7.53% | 7.47% | 5.42% | |
Class B (incl. contingent deferred sales charge) A | 6.05% | 7.41% | 5.50% | |
Class C (incl. contingent deferred sales charge) B | 9.93% | 7.71% | 5.27% | |
A Class B shares bear a 1.00% 12b-1 fee. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns prior to November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years 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 Consumer Discretionary Fund - Class T on July 31, 1997, 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 performed over the same period.
Annual Report
Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Comments from John Harris, who became Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund on April 11, 2007
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the 12 months ending July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 11.67%, 11.43%, 10.82% and 10.88%, respectively (excluding sales charges), while the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Discretionary Index returned 18.09% and a blended index specific to this fund advanced 16.19%. This blended index is a combination of the Goldman Sachs® Consumer Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. The new supplemental benchmark and the fund's simultaneous name change reflected a narrowing of the fund's focus, from both consumer discretionary and consumer staples stocks to consumer discretionary issues only. The portfolio also trailed the S&P 500 over the 12-month stretch. For the first two months of the period, fund performance was in line with that of the Goldman Sachs index. As the fund sold consumer staples stocks in advance of the October 1 benchmark change, consumer discretionary stocks in several areas of retailing helped results. Federated Department Stores, the nation's largest department store chain, and women's retailer Coldwater Creek were key contributors. On the negative side, some consumer staples holdings - particularly pharmacy chains CVS and Walgreen - hurt results before being sold out of the fund. The fund also missed strong performance by some travel industry stocks. A modest allocation to cash detracted as well. The fund underperformed the MSCI index during the final 10 months of the period, dragged down by the very stocks that had helped performance at the beginning of the period: apparel retailers, such as Coldwater Creek and Gymboree, and department stores, particularly Federated. Our holdings in footwear maker Skechers fell because expenses rose as the firm ramped up production to meet strong demand. Taking a longer view, I felt the company still had a good product line with strong potential. On the positive side, the fund's holdings in another footwear maker, Deckers Outdoor, performed well after the firm expanded the market for UGGS, which had been a women's-only, winter-only product. Electronics chain RadioShack's share price appreciated as a new management team cut costs, while timely ownership of department store chain Saks also contributed. I sold both RadioShack and Saks before period end, however, as I felt they had largely run their course. Some other stocks mentioned in this discussion also were sold from the fund.
For the 12 months ending July 31, 2007, the fund's Institutional Class shares were up 12.04%, while the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Discretionary Index returned 18.09% and a blended index specific to this fund advanced 16.19%. This blended index is a combination of the Goldman Sachs® Consumer Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. The new supplemental benchmark and the fund's simultaneous name change reflected a narrowing of the fund's focus, from both consumer discretionary and consumer staples stocks to consumer discretionary issues only. The portfolio also trailed the S&P 500 over the 12-month stretch. For the first two months of the period, fund performance was in line with that of the Goldman Sachs index. As the fund sold consumer staples stocks in advance of the October 1 benchmark change, consumer discretionary stocks in several areas of retailing helped results. Federated Department Stores, the nation's largest department store chain, and women's retailer Coldwater Creek were key contributors. On the negative side, some consumer staples holdings - particularly pharmacy chains CVS and Walgreen - hurt results before being sold out of the fund. The fund also missed strong performance by some travel industry stocks. A modest allocation to cash detracted as well. The fund underperformed the MSCI index during the final 10 months of the period, dragged down by the very stocks that had helped performance at the beginning of the period: apparel retailers, such as Coldwater Creek and Gymboree, and department stores, particularly Federated. Our holdings in footwear maker Skechers fell because expenses rose as the firm ramped up production to meet strong demand. Taking a longer view, I felt the company still had a good product line with strong potential. On the positive side, the fund's holdings in another footwear maker, Deckers Outdoor, performed well after the firm expanded the market for UGGS, which had been a women's-only, winter-only product. Electronics chain RadioShack's share price appreciated as a new management team cut costs, while timely ownership of department store chain Saks also contributed. I sold both RadioShack and Saks before period end, however, as I felt they had largely run their course. Some other stocks mentioned in this discussion also were sold from the fund.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Consumer Industries Index, which returned 6.79% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Consumer Discretionary Index, which returned 8.80% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 16.19%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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 Discretionary 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 955.50 | $ 6.79 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 954.30 | $ 8.00 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 951.60 | $ 10.40 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 951.70 | $ 10.40 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 956.90 | $ 5.58 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Annual Report
Advisor Consumer Discretionary Fund
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Home Depot, Inc. | 6.3 | 1.4 |
Time Warner, Inc. | 6.1 | 5.9 |
Target Corp. | 5.5 | 3.3 |
McDonald's Corp. | 5.0 | 3.0 |
Comcast Corp. Class A | 4.5 | 6.0 |
Staples, Inc. | 3.2 | 2.2 |
News Corp. Class A | 3.2 | 6.3 |
McGraw-Hill Companies, Inc. | 2.5 | 2.8 |
Coach, Inc. | 2.4 | 2.2 |
Las Vegas Sands Corp. | 2.1 | 0.8 |
40.8 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Media | 27.2% | |
| Specialty Retail | 20.8% | |
| Hotels, Restaurants & Leisure | 16.0% | |
| Multiline Retail | 12.5% | |
| Textiles, Apparel & Luxury Goods | 6.4% | |
| All Others* | 17.1% | |
As of January 31, 2007 | |||
| Media | 25.9% | |
| Multiline Retail | 19.0% | |
| Specialty Retail | 19.0% | |
| Hotels, Restaurants & Leisure | 13.6% | |
| Textiles, Apparel & Luxury Goods | 10.5% | |
| All Others* | 12.0% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Advisor Consumer Discretionary Fund
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
AUTO COMPONENTS - 1.7% | |||
Auto Parts & Equipment - 1.7% | |||
Johnson Controls, Inc. | 8,400 | $ 950,460 | |
AUTOMOBILES - 2.7% | |||
Automobile Manufacturers - 1.8% | |||
General Motors Corp. (d) | 18,100 | 586,440 | |
Renault SA | 1,300 | 190,444 | |
Toyota Motor Corp. sponsored ADR | 1,900 | 229,197 | |
1,006,081 | |||
Motorcycle Manufacturers - 0.9% | |||
Harley-Davidson, Inc. | 8,100 | 464,292 | |
TOTAL AUTOMOBILES | 1,470,373 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Hardware - 0.0% | |||
Hewlett-Packard Co. | 100 | 4,603 | |
DIVERSIFIED CONSUMER SERVICES - 0.9% | |||
Specialized Consumer Services - 0.9% | |||
Sotheby's Class A (ltd. vtg.) | 11,600 | 495,900 | |
FOOD & STAPLES RETAILING - 1.8% | |||
Food Retail - 0.6% | |||
Susser Holdings Corp. | 19,683 | 291,505 | |
Hypermarkets & Super Centers - 1.2% | |||
Costco Wholesale Corp. | 11,300 | 675,740 | |
TOTAL FOOD & STAPLES RETAILING | 967,245 | ||
HOTELS, RESTAURANTS & LEISURE - 16.0% | |||
Casinos & Gaming - 6.7% | |||
Aristocrat Leisure Ltd. | 11,176 | 129,998 | |
Bally Technologies, Inc. (a) | 8,452 | 207,919 | |
Boyd Gaming Corp. | 4,300 | 189,630 | |
International Game Technology | 26,600 | 939,512 | |
Las Vegas Sands Corp. (a)(d) | 12,900 | 1,125,525 | |
Penn National Gaming, Inc. (a) | 11,300 | 649,750 | |
Wynn Resorts Ltd. | 4,500 | 434,520 | |
3,676,854 | |||
Hotels, Resorts & Cruise Lines - 4.3% | |||
Accor SA | 5,800 | 502,376 | |
Carnival Corp. unit | 9,300 | 412,083 | |
Hilton Hotels Corp. | 19,500 | 862,095 | |
Home Inns & Hotels Management, Inc. ADR (d) | 4,400 | 133,672 | |
Starwood Hotels & Resorts Worldwide, Inc. | 6,800 | 428,128 | |
2,338,354 | |||
Restaurants - 5.0% | |||
McDonald's Corp. | 57,800 | 2,766,886 | |
TOTAL HOTELS, RESTAURANTS & LEISURE | 8,782,094 | ||
Shares | Value | ||
HOUSEHOLD DURABLES - 2.4% | |||
Homebuilding - 1.6% | |||
Centex Corp. (d) | 10,100 | $ 376,831 | |
D.R. Horton, Inc. | 7,700 | 125,664 | |
Toll Brothers, Inc. (a)(d) | 16,100 | 353,073 | |
855,568 | |||
Household Appliances - 0.8% | |||
The Stanley Works | 2,500 | 138,325 | |
Whirlpool Corp. | 3,100 | 316,541 | |
454,866 | |||
TOTAL HOUSEHOLD DURABLES | 1,310,434 | ||
INTERNET & CATALOG RETAIL - 3.6% | |||
Catalog Retail - 1.3% | |||
Liberty Media Corp. New - Interactive Series A (a) | 34,700 | 726,965 | |
Internet Retail - 2.3% | |||
Amazon.com, Inc. (a) | 9,900 | 777,546 | |
Blue Nile, Inc. (a)(d) | 5,100 | 385,611 | |
Orbitz Worldwide, Inc. | 6,600 | 79,728 | |
1,242,885 | |||
TOTAL INTERNET & CATALOG RETAIL | 1,969,850 | ||
INTERNET SOFTWARE & SERVICES - 2.4% | |||
Internet Software & Services - 2.4% | |||
Google, Inc. Class A (sub. vtg.) (a) | 2,200 | 1,122,000 | |
LoopNet, Inc. | 10,200 | 210,936 | |
1,332,936 | |||
LEISURE EQUIPMENT & PRODUCTS - 0.4% | |||
Photographic Products - 0.4% | |||
Eastman Kodak Co. | 8,900 | 224,725 | |
MEDIA - 27.2% | |||
Advertising - 2.1% | |||
National CineMedia, Inc. | 14,800 | 368,520 | |
Omnicom Group, Inc. | 14,900 | 772,863 | |
1,141,383 | |||
Broadcasting & Cable TV - 7.2% | |||
Citadel Broadcasting Corp. | 79 | 397 | |
Clear Channel Communications, Inc. | 18,600 | 686,340 | |
Comcast Corp. Class A (a)(d) | 93,650 | 2,460,186 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 21,500 | 542,875 | |
Time Warner Cable, Inc. | 7,500 | 286,650 | |
3,976,448 | |||
Movies & Entertainment - 12.9% | |||
Cinemark Holdings, Inc. | 8,600 | 140,610 | |
Live Nation, Inc. (a) | 7,314 | 145,256 | |
News Corp.: | |||
Class A | 82,484 | 1,742,062 | |
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Movies & Entertainment - continued | |||
News Corp.: - continued | |||
Class B | 6,100 | $ 138,226 | |
Regal Entertainment Group Class A (d) | 35,800 | 765,762 | |
The Walt Disney Co. | 19,500 | 643,500 | |
Time Warner, Inc. | 174,500 | 3,360,870 | |
Viacom, Inc. Class B (non-vtg.) (a) | 4,900 | 187,670 | |
7,123,956 | |||
Publishing - 5.0% | |||
Getty Images, Inc. (a) | 8,000 | 359,440 | |
McGraw-Hill Companies, Inc. | 23,000 | 1,391,500 | |
R.H. Donnelley Corp. (a) | 16,000 | 1,000,480 | |
2,751,420 | |||
TOTAL MEDIA | 14,993,207 | ||
MULTILINE RETAIL - 12.5% | |||
Department Stores - 5.8% | |||
JCPenney Co., Inc. | 15,000 | 1,020,600 | |
Macy's, Inc. (d) | 17,400 | 627,618 | |
Nordstrom, Inc. (d) | 13,500 | 642,330 | |
Sears Holdings Corp. (a) | 6,600 | 902,814 | |
3,193,362 | |||
General Merchandise Stores - 6.7% | |||
Family Dollar Stores, Inc. | 22,500 | 666,450 | |
Lojas Americanas SA (PN) | 15,000 | 1,343 | |
Target Corp. | 49,900 | 3,022,443 | |
3,690,236 | |||
TOTAL MULTILINE RETAIL | 6,883,598 | ||
PERSONAL PRODUCTS - 0.9% | |||
Personal Products - 0.9% | |||
Bare Escentuals, Inc. | 16,900 | 476,749 | |
SPECIALTY RETAIL - 20.8% | |||
Apparel Retail - 4.3% | |||
Abercrombie & Fitch Co. Class A | 7,900 | 552,210 | |
Casual Male Retail Group, Inc. (a)(d) | 27,900 | 285,138 | |
Lululemon Athletica, Inc. | 2,200 | 70,708 | |
Payless ShoeSource, Inc. (a) | 16,000 | 425,920 | |
TJX Companies, Inc. | 32,348 | 897,657 | |
Urban Outfitters, Inc. (a) | 5,600 | 112,336 | |
2,343,969 | |||
Automotive Retail - 0.3% | |||
Penske Auto Group, Inc. | 8,600 | 167,528 | |
Computer & Electronics Retail - 1.0% | |||
Best Buy Co., Inc. | 13,006 | 579,938 | |
Home Improvement Retail - 8.4% | |||
Home Depot, Inc. | 92,833 | 3,450,601 | |
Shares | Value | ||
Lowe's Companies, Inc. | 30,300 | $ 848,703 | |
Sherwin-Williams Co. | 4,700 | 327,543 | |
4,626,847 | |||
Homefurnishing Retail - 0.5% | |||
Williams-Sonoma, Inc. (d) | 9,800 | 301,742 | |
Specialty Stores - 6.3% | |||
OfficeMax, Inc. | 2,300 | 75,624 | |
PETsMART, Inc. | 31,600 | 1,021,628 | |
Staples, Inc. | 76,938 | 1,771,113 | |
Tiffany & Co., Inc. (d) | 12,100 | 583,825 | |
3,452,190 | |||
TOTAL SPECIALTY RETAIL | 11,472,214 | ||
TEXTILES, APPAREL & LUXURY GOODS - 6.4% | |||
Apparel, Accessories & Luxury Goods - 3.6% | |||
Burberry Group PLC | 21,600 | 280,821 | |
Coach, Inc. (a) | 29,700 | 1,350,162 | |
G-III Apparel Group Ltd. (a) | 15,600 | 251,628 | |
Polo Ralph Lauren Corp. Class A | 1,500 | 134,025 | |
2,016,636 | |||
Footwear - 2.8% | |||
Deckers Outdoor Corp. (a)(d) | 5,548 | 571,999 | |
Iconix Brand Group, Inc. (a) | 23,100 | 456,918 | |
Skechers U.S.A., Inc. Class A (sub. vtg.) (a) | 23,831 | 495,446 | |
1,524,363 | |||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 3,540,999 | ||
TOTAL COMMON STOCKS (Cost $52,268,076) | 54,875,387 | ||
Money Market Funds - 17.1% | |||
Fidelity Cash Central Fund, 5.38% (b) | 532,755 | 532,755 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 8,872,300 | 8,872,300 | |
TOTAL MONEY MARKET FUNDS (Cost $9,405,055) | 9,405,055 | ||
TOTAL INVESTMENT PORTFOLIO - 116.8% (Cost $61,673,131) | 64,280,442 | ||
NET OTHER ASSETS - (16.8)% | (9,267,662) | ||
NET ASSETS - 100% | $ 55,012,780 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 45,660 |
Fidelity Securities Lending Cash Central Fund | 21,857 |
Total | $ 67,517 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Discretionary Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,501,227) - See accompanying schedule: Unaffiliated issuers (cost $52,268,076) | $ 54,875,387 | |
Fidelity Central Funds (cost $9,405,055) | 9,405,055 | |
Total Investments (cost $61,673,131) | $ 64,280,442 | |
Receivable for investments sold | 336,300 | |
Receivable for fund shares sold | 86,725 | |
Dividends receivable | 12,762 | |
Distributions receivable from Fidelity Central Funds | 4,515 | |
Prepaid expenses | 101 | |
Receivable from investment adviser for expense reductions | 1,353 | |
Other receivables | 311 | |
Total assets | 64,722,509 | |
Liabilities | ||
Payable for investments purchased | $ 493,717 | |
Payable for fund shares redeemed | 232,011 | |
Accrued management fee | 27,523 | |
Distribution fees payable | 28,250 | |
Other affiliated payables | 16,969 | |
Other payables and accrued expenses | 38,959 | |
Collateral on securities loaned, at value | 8,872,300 | |
Total liabilities | 9,709,729 | |
Net Assets | $ 55,012,780 | |
Net Assets consist of: | ||
Paid in capital | $ 47,542,179 | |
Accumulated net investment loss | (12) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 4,863,248 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 2,607,365 | |
Net Assets | $ 55,012,780 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 15.89 | |
Maximum offering price per share (100/94.25 of $15.89) | $ 16.86 | |
Class T: | $ 15.47 | |
Maximum offering price per share (100/96.50 of $15.47) | $ 16.03 | |
Class B: | $ 14.56 | |
Class C: | $ 14.59 | |
Institutional Class: | $ 16.41 | |
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
Advisor Consumer Discretionary Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 575,030 | |
Special dividends | 258,300 | |
Interest | 143 | |
Income from Fidelity Central Funds | 67,517 | |
Total income | 900,990 | |
Expenses | ||
Management fee | $ 335,937 | |
Transfer agent fees | 197,977 | |
Distribution fees | 349,171 | |
Accounting and security lending fees | 24,539 | |
Custodian fees and expenses | 14,306 | |
Independent trustees' compensation | 195 | |
Registration fees | 61,596 | |
Audit | 46,844 | |
Legal | 1,064 | |
Miscellaneous | 20,962 | |
Total expenses before reductions | 1,052,591 | |
Expense reductions | (24,891) | 1,027,700 |
Net investment income (loss) | (126,710) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 8,082,299 | |
Foreign currency transactions | 1,367 | |
Total net realized gain (loss) | 8,083,666 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,699,359) | |
Assets and liabilities in foreign currencies | (49) | |
Total change in net unrealized appreciation (depreciation) | (1,699,408) | |
Net gain (loss) | 6,384,258 | |
Net increase (decrease) in net assets resulting from operations | $ 6,257,548 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (126,710) | $ (348,612) |
Net realized gain (loss) | 8,083,666 | 6,032,685 |
Change in net unrealized appreciation (depreciation) | (1,699,408) | (6,266,158) |
Net increase (decrease) in net assets resulting from operations | 6,257,548 | (582,085) |
Distributions to shareholders from net investment income | (93,265) | - |
Distributions to shareholders from net realized gain | (7,904,219) | (441,481) |
Total distributions | (7,997,484) | (441,481) |
Share transactions - net increase (decrease) | 3,157,156 | (8,793,822) |
Redemption fees | 895 | 4,458 |
Total increase (decrease) in net assets | 1,418,115 | (9,812,930) |
Net Assets | ||
Beginning of period | 53,594,665 | 63,407,595 |
End of period (including accumulated net investment loss of $12 and accumulated net investment loss of $20, respectively) | $ 55,012,780 | $ 53,594,665 |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.39 | $ 16.62 | $ 14.51 | $ 13.71 | $ 12.71 |
Income from Investment Operations | |||||
Net investment income (loss) C | .02H | (.04) | (.07) | (.07) | (.04) |
Net realized and unrealized gain (loss) | 1.83 | (.07) | 2.71 | .87 | 1.04 |
Total from investment operations | 1.85 | (.11) | 2.64 | .80 | 1.00 |
Distributions from net investment income | (.05) | - | - | - | - |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Total distributions | (2.35) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 | $ 13.71 |
Total Return A, B | 11.67% | (.69)% | 18.85% | 5.84% | 7.87% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.42% | 1.42% | 1.47% | 1.55% | 1.70% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.44% | 1.50% | 1.53% |
Expenses net of all reductions | 1.39% | 1.39% | 1.42% | 1.45% | 1.48% |
Net investment income (loss) | .11%H | (.23)% | (.45)% | (.50)% | (.33)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 19,708 | $ 16,935 | $ 17,887 | $ 11,856 | $ 9,101 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.03 | $ 16.29 | $ 14.27 | $ 13.51 | $ 12.57 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.02)H | (.07) | (.11) | (.11) | (.07) |
Net realized and unrealized gain (loss) | 1.79 | (.07) | 2.66 | .87 | 1.01 |
Total from investment operations | 1.77 | (.14) | 2.55 | .76 | .94 |
Distributions from net investment income | (.03) | - | - | - | - |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Total distributions | (2.33) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 | $ 13.51 |
Total Return A, B | 11.43% | (.89)% | 18.52% | 5.63% | 7.48% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.69% | 1.69% | 1.75% | 1.81% | 1.87% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.69% | 1.75% | 1.78% |
Expenses net of all reductions | 1.61% | 1.62% | 1.67% | 1.70% | 1.73% |
Net investment income (loss) | (.10)%H | (.46)% | (.70)% | (.74)% | (.58)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 14,787 | $ 14,267 | $ 16,782 | $ 15,555 | $ 13,693 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.26 | $ 15.60 | $ 13.75 | $ 13.08 | $ 12.22 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.10)H | (.15) | (.17) | (.18) | (.13) |
Net realized and unrealized gain (loss) | 1.70 | (.07) | 2.55 | .85 | .99 |
Total from investment operations | 1.60 | (.22) | 2.38 | .67 | .86 |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 | $ 13.08 |
Total Return A, B | 10.82% | (1.45)% | 17.97% | 5.12% | 7.04% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.20% | 2.19% | 2.24% | 2.29% | 2.37% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.14% | 2.16% | 2.20% | 2.19% |
Net investment income (loss) | (.64)%H | (.98)% | (1.20)% | (1.25)% | (1.05)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 11,081 | $ 14,088 | $ 18,862 | $ 17,302 | $ 15,944 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.28 | $ 15.62 | $ 13.77 | $ 13.10 | $ 12.24 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.10)H | (.15) | (.17) | (.18) | (.13) |
Net realized and unrealized gain (loss) | 1.71 | (.07) | 2.55 | .85 | .99 |
Total from investment operations | 1.61 | (.22) | 2.38 | .67 | .86 |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 | $ 13.10 |
Total Return A, B | 10.88% | (1.45)% | 17.94% | 5.11% | 7.03% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.16% | 2.12% | 2.17% | 2.24% | 2.33% |
Expenses net of fee waivers, if any | 2.15% | 2.12% | 2.17% | 2.24% | 2.25% |
Expenses net of all reductions | 2.15% | 2.12% | 2.14% | 2.19% | 2.19% |
Net investment income (loss) | (.64)%H | (.95)% | (1.18)% | (1.24)% | (1.05)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,051 | $ 7,160 | $ 8,505 | $ 6,992 | $ 6,759 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.82 | $ 17.01 | $ 14.81 | $ 13.95 | $ 12.91 |
Income from Investment Operations | |||||
Net investment income (loss) B | .06G | - | (.03) | (.04) | (.01) |
Net realized and unrealized gain (loss) | 1.89 | (.07) | 2.76 | .90 | 1.05 |
Total from investment operations | 1.95 | (.07) | 2.73 | .86 | 1.04 |
Distributions from net investment income | (.06) | - | - | - | - |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Total distributions | (2.36) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | - F |
Net asset value, end of period | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 | $ 13.95 |
Total Return A | 12.04% | (.44)% | 19.08% | 6.16% | 8.06% |
Ratios to Average Net Assets C, E | |||||
Expenses before reductions | 1.15% | 1.18% | 1.26% | 1.34% | 1.49% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.20% | 1.25% | 1.25% |
Expenses net of all reductions | 1.14% | 1.14% | 1.17% | 1.20% | 1.19% |
Net investment income (loss) | .36%G | .02% | (.21)% | (.25)% | (.05)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 1,385 | $ 1,144 | $ 1,371 | $ 907 | $ 766 |
Portfolio turnover rate D | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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.
G Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.07)%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Consumer Discretionary Fund (the Fund) (formerly Fidelity Advisor Consumer Industries Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, deferred trustees compensation, net operating losses 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 | $ 5,236,199 |
Unrealized depreciation | (2,682,562) |
Net unrealized appreciation (depreciation) | 2,553,637 |
Undistributed ordinary income | 2,263,115 |
Undistributed long-term capital gain | 2,180,446 |
Cost for federal income tax purposes | $ 61,726,805 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 1,304,072 | $ - |
Long-term Capital Gains | 6,693,412 | 441,481 |
Total | $ 7,997,484 | $ 441,481 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Consumer Discretionary
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $95,928,114 and $98,746,414, respectively.
6. 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 .26% 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 .56% 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% | $ 50,936 | $ 1,685 |
Class T | .25% | .25% | 77,866 | 232 |
Class B | .75% | .25% | 136,510 | 102,694 |
Class C | .75% | .25% | 83,859 | 15,406 |
$ 349,171 | $ 120,017 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 18,487 |
Class T | 4,898 |
Class B* | 30,788 |
Class C* | 321 |
$ 54,494 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 66,087 | .33 |
Class T | 52,937 | .34 |
Class B | 46,987 | .34 |
Class C | 26,162 | .31 |
Institutional Class | 5,804 | .32 |
$ 197,977 |
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.
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 $417 for the period.
7. 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, which amounted to $110 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $21,857.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 3,876 |
Class T | 1.65% | 5,682 |
Class B | 2.15% | 5,982 |
Class C | 2.15% | 582 |
$ 16,122 |
Consumer Discretionary
9. 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 $2,314 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class T | $ 5,377 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 58,649 | $ - |
Class T | 28,339 | - |
Class C | 505 | - |
Institutional Class | 5,772 | - |
Total | $ 93,265 | $ - |
From net realized gain | ||
Class A | $ 2,496,425 | $ 129,938 |
Class T | 2,054,841 | 112,178 |
Class B | 2,079,901 | 130,928 |
Class C | 1,100,868 | 59,730 |
Institutional Class | 172,184 | 8,707 |
Total | $ 7,904,219 | $ 441,481 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 540,609 | 426,479 | $ 8,973,622 | $ 7,019,654 |
Reinvestment of distributions | 141,640 | 7,092 | 2,265,680 | 116,631 |
Shares redeemed | (475,746) | (476,405) | (7,950,826) | (7,879,209) |
Net increase (decrease) | 206,503 | (42,834) | $ 3,288,476 | $ (742,924) |
Class T | ||||
Shares sold | 188,336 | 183,824 | $ 3,060,088 | $ 2,956,227 |
Reinvestment of distributions | 122,934 | 6,480 | 1,916,483 | 104,320 |
Shares redeemed | (245,736) | (330,058) | (4,018,366) | (5,310,774) |
Net increase (decrease) | 65,534 | (139,754) | $ 958,205 | $ (2,250,227) |
Class B | ||||
Shares sold | 83,325 | 124,427 | $ 1,279,468 | $ 1,901,339 |
Reinvestment of distributions | 122,770 | 7,467 | 1,810,224 | 114,882 |
Shares redeemed | (368,667) | (417,847) | (5,659,191) | (6,443,082) |
Net increase (decrease) | (162,572) | (285,953) | $ (2,569,499) | $ (4,426,861) |
Class C | ||||
Shares sold | 183,143 | 103,187 | $ 2,817,553 | $ 1,601,293 |
Reinvestment of distributions | 59,948 | 3,123 | 885,827 | 48,106 |
Shares redeemed | (159,811) | (182,363) | (2,453,389) | (2,814,524) |
Net increase (decrease) | 83,280 | (76,053) | $ 1,249,991 | $ (1,165,125) |
Institutional Class | ||||
Shares sold | 116,522 | 14,460 | $ 1,988,792 | $ 246,044 |
Reinvestment of distributions | 8,916 | 433 | 146,867 | 7,305 |
Shares redeemed | (109,046) | (27,416) | (1,905,676) | (462,034) |
Net increase (decrease) | 16,392 | (12,523) | $ 229,983 | $ (208,685) |
Consumer Discretionary
Advisor Electronics 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.
Average Annual Total Returns
Periods ended July 31, 2007 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 16.34% | 9.04% | -2.28% |
Class T (incl. 3.50% sales charge) | 18.87% | 9.32% | -2.15% |
Class B (incl. contingent deferred | 17.54% | 9.25% | -2.09% |
Class C (incl. contingent deferred | 21.57% | 9.54% | -2.11% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 5%, 2%, and 0%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year, past five years, 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 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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Christopher Lee and Paul Jackson, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 23.44%, 23.18%, 22.54% and 22.57%, respectively (excluding sales charges), trailing both the 25.06% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Semiconductors & Semiconductor Equipment Index and the 26.21% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. Over the same 12-month period, the fund beat the S&P 500. The fund considerably lagged the Goldman Sachs index during the first two months of the period, when unfavorable stock selection in the fund's core segment of semiconductors was the primary negative factor. Having no exposure to the strong-performing communications equipment and systems software groups also hurt, as did an overweighting in the technology distributors segment. Among individual holdings, an out-of-index position in United Kingdom-based CSR, a maker of semiconductors used in wireless networking, was a major detractor, as it was weighed down by higher-than-expected inventories. Having no stake in networking equipment manufacturer Cisco Systems, a key index component that did well, also dampened performance. On the plus side, our picks in electronic manufacturing services aided performance, as did not having exposure to two underperforming groups: data processing/outsourced services and Internet software/services. Performance particularly benefited from our position in Broadcom, a chip maker for cellular handsets and digital televisions. The stock rebounded after getting pounded earlier in the year, as the company made progress toward settling its stock options backdating issues with regulators and industry fundamentals improved. During the last 10 months of the period, the fund topped the MSCI index. Stock picking in technology distributors had by far the most positive impact, along with an underweighting and timely picks in the semiconductor group. Distributors Arrow Electronics and Avnet - out-of-index holdings - each added about two percentage points to the fund's relative results, riding a cyclical recovery in the semiconductor food chain. Underweighting Advanced Micro Devices, a maker of personal computer (PC) microprocessors, proved timely, as the company lost market share to larger rival Intel. Conversely, unrewarding stock selection in the diversified communications and professional services area - - specifically Arrowhead Research, a nanotechnology company - was the main drag on performance versus the MSCI index. The fund's results were further undermined by Vimicro International, a non-index maker of chips for PCs, camera sensors and the like. Competition hurt the company's pricing power. Underweighting strong-performing index component MEMC Electronic Materials detracted as well, along with the fund's modest cash position. Some stocks mentioned in this report were sold by period end.
During the past year, the fund's Institutional Class shares returned 23.83%, trailing both the 25.06% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Semiconductors & Semiconductor Equipment Index and the 26.21% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. Over the same 12-month period, the fund beat the S&P 500. The fund considerably lagged the Goldman Sachs index during the first two months of the period, when unfavorable stock selection in the fund's core segment of semiconductors was the primary negative factor. Having no exposure to the strong-performing communications equipment and systems software groups also hurt, as did an overweighting in the technology distributors segment. Among individual holdings, an out-of-index position in United Kingdom-based CSR, a maker of semiconductors used in wireless networking, was a major detractor, as it was weighed down by higher-than-expected inventories. Having no stake in networking equipment manufacturer Cisco Systems, a key index component that did well, also dampened performance. On the plus side, our picks in electronic manufacturing services aided performance, as did not having exposure to two underperforming groups: data processing/outsourced services and Internet software/services. Performance particularly benefited from our position in Broadcom, a chip maker for cellular handsets and digital televisions. The stock rebounded after getting pounded earlier in the year, as the company made progress toward settling its stock options backdating issues with regulators and industry fundamentals improved. During the last 10 months of the period, the fund topped the MSCI index. Stock picking in technology distributors had by far the most positive impact, along with an underweighting and timely picks in the semiconductor group. Distributors Arrow Electronics and Avnet - out-of-index holdings - each added about two percentage points to the fund's relative results, riding a cyclical recovery in the semiconductor food chain. Underweighting Advanced Micro Devices, a maker of personal computer (PC) microprocessors, proved timely, as the company lost market share to larger rival Intel. Conversely, unrewarding stock selection in the diversified communications and professional services area - specifically Arrowhead Research, a nanotechnology company - was the main drag on performance versus the MSCI index. The fund's results were further undermined by Vimicro International, a non-index maker of chips for PCs, camera sensors and the like. Competition hurt the company's pricing power. Underweighting strong-performing index component MEMC Electronic Materials detracted as well, along with the fund's modest cash position. Some stocks mentioned in this report were sold by period end.
Annual Report
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Technology Index, which returned 12.15% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Semiconductors & Semiconductor Equipment Index, which returned 12.54% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 26.21%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Electronics
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,085.80 | $ 7.24 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 1,084.50 | $ 8.53 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 1,083.40 | $ 11.11 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 1,082.20 | $ 11.10 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,087.70 | $ 5.95 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Intel Corp. | 18.8 | 7.2 |
Broadcom Corp. Class A | 5.9 | 3.1 |
Maxim Integrated Products, Inc. | 5.5 | 5.0 |
Applied Materials, Inc. | 5.0 | 5.8 |
Marvell Technology Group Ltd. | 4.8 | 4.8 |
Texas Instruments, Inc. | 4.2 | 3.5 |
Arrowhead Research Corp. | 3.6 | 0.0 |
Analog Devices, Inc. | 3.5 | 3.2 |
National Semiconductor Corp. | 3.0 | 4.5 |
Advanced Micro Devices, Inc. | 2.8 | 0.0 |
57.1 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 85.2% | |
| Commercial Services & Supplies | 4.6% | |
| Electronic Equipment & Instruments | 3.6% | |
| Communications Equipment | 2.0% | |
| Chemicals | 1.3% | |
| All Others* | 3.3% | |
As of January 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 78.8% | |
 | Electronic | 15.0% | |
| All Others* | 6.2% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 100.0% | |||
Shares | Value | ||
CAPITAL MARKETS - 0.6% | |||
Asset Management & Custody Banks - 0.3% | |||
Harris & Harris Group, Inc. (a) | 10,052 | $ 100,419 | |
Diversified Capital Markets - 0.1% | |||
Indochina Capital Vietnam Holdings Ltd. | 3,200 | 29,360 | |
Investment Banking & Brokerage - 0.2% | |||
REXCAPITAL Financial Holdings Ltd. (a) | 375,000 | 56,321 | |
TOTAL CAPITAL MARKETS | 186,100 | ||
CHEMICALS - 1.3% | |||
Specialty Chemicals - 1.3% | |||
Nanophase Technologies Corp. (a) | 28,000 | 183,120 | |
Nitto Denko Corp. | 900 | 47,219 | |
Tokuyama Corp. | 3,000 | 43,571 | |
Wacker Chemie AG | 400 | 98,795 | |
372,705 | |||
COMMERCIAL SERVICES & SUPPLIES - 4.6% | |||
Diversified Commercial & Professional Services - 4.6% | |||
Arrowhead Research Corp. (a) | 22,900 | 103,279 | |
Arrowhead Research Corp. (a)(c) | 259,516 | 1,053,375 | |
Arrowhead Research Corp. warrants 5/21/17 (a)(c) | 64,879 | 179,616 | |
1,336,270 | |||
COMMUNICATIONS EQUIPMENT - 2.0% | |||
Communications Equipment - 2.0% | |||
AAC Acoustic Technology Holdings, Inc. (a) | 34,000 | 40,264 | |
Alcatel-Lucent SA sponsored ADR | 9,300 | 107,880 | |
China Techfaith Wireless Communication Technology Ltd. sponsored ADR (a) | 10,603 | 51,000 | |
Foxconn International Holdings Ltd. (a) | 68,000 | 194,689 | |
Nokia Corp. sponsored ADR | 3,600 | 103,104 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 2,300 | 86,043 | |
582,980 | |||
COMPUTERS & PERIPHERALS - 0.7% | |||
Computer Storage & Peripherals - 0.7% | |||
SanDisk Corp. (a) | 3,400 | 182,342 | |
STEC, Inc. (a) | 4,400 | 32,340 | |
214,682 | |||
ELECTRICAL EQUIPMENT - 1.0% | |||
Electrical Components & Equipment - 1.0% | |||
Evergreen Solar, Inc. (a) | 16,900 | 140,777 | |
Neo-Neon Holdings Ltd. | 26,000 | 53,122 | |
Q-Cells AG (a) | 500 | 44,266 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 1,300 | 52,429 | |
290,594 | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.6% | |||
Electronic Equipment & Instruments - 0.8% | |||
LG.Philips LCD Co. Ltd. sponsored ADR (a) | 4,000 | $ 92,440 | |
Motech Industries, Inc. | 4,000 | 49,986 | |
Murata Manufacturing Co. Ltd. | 400 | 29,885 | |
Nidec Corp. | 700 | 46,337 | |
218,648 | |||
Electronic Manufacturing Services - 1.7% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 43,000 | 356,488 | |
Jabil Circuit, Inc. | 6,900 | 155,457 | |
511,945 | |||
Technology Distributors - 1.1% | |||
Arrow Electronics, Inc. (a) | 5,900 | 225,498 | |
Wolfson Microelectronics PLC (a) | 14,500 | 82,180 | |
307,678 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 1,038,271 | ||
MEDIA - 0.2% | |||
Broadcasting & Cable TV - 0.2% | |||
JumpTV, Inc. | 18,000 | 63,279 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 85.2% | |||
Semiconductor Equipment - 13.1% | |||
Applied Materials, Inc. | 65,800 | 1,450,232 | |
ASML Holding NV (NY Shares) (a) | 8,500 | 251,260 | |
Eagle Test Systems, Inc. (a) | 10,200 | 152,898 | |
Entegris, Inc. (a) | 2,500 | 26,950 | |
FormFactor, Inc. (a) | 5,550 | 213,065 | |
Greatek Electronics, Inc. | 21,000 | 35,652 | |
KLA-Tencor Corp. | 4,290 | 243,629 | |
MEMC Electronic Materials, Inc. (a) | 11,500 | 705,180 | |
PDF Solutions, Inc. (a) | 1,700 | 18,853 | |
Tessera Technologies, Inc. (a) | 5,100 | 209,763 | |
Topco Scientific Co. Ltd. | 12,000 | 34,015 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 8,500 | 399,500 | |
Verigy Ltd. | 3,700 | 90,502 | |
3,831,499 | |||
Semiconductors - 72.1% | |||
Advanced Analog Technology, Inc. | 5,000 | 49,224 | |
Advanced Analogic Technologies, Inc. (a) | 7,800 | 69,264 | |
Advanced Micro Devices, Inc. (a) | 60,300 | 816,462 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR (a) | 22,200 | 145,632 | |
Altera Corp. | 29,700 | 689,040 | |
Analog Devices, Inc. | 28,650 | 1,015,643 | |
ARM Holdings PLC sponsored ADR | 16,500 | 146,850 | |
Atheros Communications, Inc. (a) | 5,000 | 139,400 | |
Atmel Corp. (a) | 50,600 | 272,734 | |
Broadcom Corp. Class A (a) | 52,700 | 1,729,087 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Cavium Networks, Inc. | 1,700 | $ 40,375 | |
Diodes, Inc. (a) | 7,500 | 199,275 | |
Epistar Corp. | 8,000 | 41,452 | |
Fairchild Semiconductor International, Inc. (a) | 13,600 | 248,200 | |
Global Mixed-Mode Tech, Inc. | 11,500 | 125,309 | |
Himax Technologies, Inc. sponsored ADR (a) | 12,600 | 64,386 | |
Hittite Microwave Corp. (a) | 5,000 | 201,100 | |
Ikanos Communications, Inc. (a) | 6,100 | 43,920 | |
Infineon Technologies AG sponsored ADR (a) | 13,500 | 220,995 | |
Intel Corp. | 234,090 | 5,529,208 | |
Intersil Corp. Class A | 12,200 | 356,850 | |
Lattice Semiconductor Corp. (a) | 16,900 | 79,937 | |
Linear Technology Corp. | 1,900 | 67,735 | |
LSI Corp. (a) | 50,700 | 365,040 | |
Marvell Technology Group Ltd. (a) | 78,900 | 1,420,200 | |
Maxim Integrated Products, Inc. | 51,000 | 1,616,700 | |
Microchip Technology, Inc. | 900 | 32,679 | |
Micron Technology, Inc. (a) | 15,300 | 181,611 | |
Mindspeed Technologies, Inc. (a) | 16,400 | 29,848 | |
National Semiconductor Corp. | 33,920 | 881,581 | |
NVIDIA Corp. (a) | 8,100 | 370,656 | |
ON Semiconductor Corp. (a) | 35,100 | 414,882 | |
ProMOS Technologies, Inc. (a) | 172,000 | 66,841 | |
Richtek Technology Corp. | 10,350 | 148,425 | |
Samsung Electronics Co. Ltd. | 150 | 99,025 | |
Semtech Corp. (a) | 10,200 | 165,750 | |
Silicon Laboratories, Inc. (a) | 9,000 | 313,470 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 7,545 | 72,734 | |
SiRF Technology Holdings, Inc. (a) | 7,700 | 180,488 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 25,223 | 256,013 | |
Texas Instruments, Inc. | 35,100 | 1,235,169 | |
Volterra Semiconductor Corp. (a) | 25,000 | 287,250 | |
Xilinx, Inc. | 29,700 | 742,500 | |
21,172,940 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 25,004,439 | ||
Shares | Value | ||
SOFTWARE - 0.8% | |||
Home Entertainment Software - 0.8% | |||
Nintendo Co. Ltd. | 500 | $ 245,000 | |
TOTAL COMMON STOCKS (Cost $30,682,265) | 29,334,320 | ||
Money Market Funds - 0.4% | |||
Fidelity Cash Central Fund, 5.38% (b) | 128,513 | 128,513 | |
TOTAL INVESTMENT PORTFOLIO - 100.4% (Cost $30,810,778) | 29,462,833 | ||
NET OTHER ASSETS - (0.4)% | (118,875) | ||
NET ASSETS - 100% | $ 29,343,958 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) 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 $1,232,991 or 4.2% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Arrowhead Research Corp. | 5/18/07 | $ 1,265,060 |
Arrowhead Research Corp. warrants 5/21/17 | 5/18/07 | $ 234,942 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 50,342 |
Fidelity Securities Lending Cash Central Fund | 11,432 |
Total | $ 61,774 |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 82.1% |
Bermuda | 4.8% |
Taiwan | 4.7% |
Japan | 1.5% |
Cayman Islands | 1.4% |
Germany | 1.2% |
Others (individually less than 1%) | 4.3% |
100.0% |
Income Tax Information |
At July 31, 2007, the fund had a capital loss carryforward of approximately $7,319,181 of which $4,774,109, $2,265,871 and $279,201 will expire on July 31, 2011, 2012 and 2013, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $30,682,265) | $ 29,334,320 | |
Fidelity Central Funds (cost $128,513) | 128,513 | |
Total Investments (cost $30,810,778) | $ 29,462,833 | |
Receivable for investments sold | 139,730 | |
Receivable for fund shares sold | 12,696 | |
Dividends receivable | 12,509 | |
Distributions receivable from Fidelity Central Funds | 753 | |
Prepaid expenses | 59 | |
Receivable from investment adviser for expense reductions | 1,707 | |
Other receivables | 821 | |
Total assets | 29,631,108 | |
Liabilities | ||
Payable to custodian bank | $ 41,500 | |
Payable for investments purchased | 116,720 | |
Payable for fund shares redeemed | 52,835 | |
Accrued management fee | 14,379 | |
Distribution fees payable | 16,564 | |
Other affiliated payables | 8,691 | |
Other payables and accrued expenses | 36,461 | |
Total liabilities | 287,150 | |
Net Assets | $ 29,343,958 | |
Net Assets consist of: | ||
Paid in capital | $ 38,300,340 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (7,608,443) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (1,347,939) | |
Net Assets | $ 29,343,958 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 9.11 | |
Maximum offering price per share (100/94.25 of $9.11) | $ 9.67 | |
Class T: | $ 8.98 | |
Maximum offering price per share (100/96.50 of $8.98) | $ 9.31 | |
Class B: | $ 8.70 | |
Class C: | $ 8.69 | |
Institutional Class: | $ 9.30 | |
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
Advisor Electronics Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 255,984 | |
Interest | 1,668 | |
Income from Fidelity Central Funds | 61,774 | |
Total income | 319,426 | |
Expenses | ||
Management fee | $ 173,257 | |
Transfer agent fees | 107,153 | |
Distribution fees | 195,950 | |
Accounting and security lending fees | 13,516 | |
Custodian fees and expenses | 17,432 | |
Independent trustees' compensation | 102 | |
Registration fees | 48,905 | |
Audit | 47,967 | |
Legal | 669 | |
Miscellaneous | 10,871 | |
Total expenses before reductions | 615,822 | |
Expense reductions | (69,851) | 545,971 |
Net investment income (loss) | (226,545) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 4,563,969 | |
Foreign currency transactions | (1,742) | |
Total net realized gain (loss) | 4,562,227 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 2,119,333 | |
Assets and liabilities in foreign currencies | (68) | |
Total change in net unrealized appreciation (depreciation) | 2,119,265 | |
Net gain (loss) | 6,681,492 | |
Net increase (decrease) in net assets resulting from operations | $ 6,454,947 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (226,545) | $ (355,473) |
Net realized gain (loss) | 4,562,227 | 3,613,218 |
Change in net unrealized appreciation (depreciation) | 2,119,265 | (6,280,048) |
Net increase (decrease) in net assets resulting from operations | 6,454,947 | (3,022,303) |
Share transactions - net increase (decrease) | (7,957,827) | (10,537,180) |
Redemption fees | 878 | 3,363 |
Total increase (decrease) in net assets | (1,502,002) | (13,556,120) |
Net Assets | ||
Beginning of period | 30,845,960 | 44,402,080 |
End of period | $ 29,343,958 | $ 30,845,960 |
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.38 | $ 8.04 | $ 6.58 | $ 6.59 | $ 5.57 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.03) | (.04) | (.07) | (.09) | (.06) |
Net realized and unrealized gain (loss) | 1.76 | (.62) | 1.53 | .08 | 1.07 |
Total from investment operations | 1.73 | (.66) | 1.46 | (.01) | 1.01 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 | $ 6.59 |
Total Return A, B | 23.44% | (8.21)% | 22.19% | (.15)% | 18.31% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.60% | 1.50% | 1.59% | 1.55% | 1.89% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.45% | 1.50% | 1.50% |
Expenses net of all reductions | 1.38% | 1.36% | 1.38% | 1.48% | 1.46% |
Net investment income (loss) | (.35)% | (.52)% | (.96)% | (1.15)% | (1.09)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 7,551 | $ 7,916 | $ 11,397 | $ 8,374 | $ 8,116 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.29 | $ 7.96 | $ 6.53 | $ 6.56 | $ 5.55 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.05) | (.06) | (.08) | (.11) | (.07) |
Net realized and unrealized gain (loss) | 1.74 | (.61) | 1.51 | .08 | 1.07 |
Total from investment operations | 1.69 | (.67) | 1.43 | (.03) | 1.00 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 | $ 6.56 |
Total Return A, B | 23.18% | (8.42)% | 21.90% | (.46)% | 18.20% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.89% | 1.82% | 1.89% | 1.83% | 2.14% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.69% | 1.75% | 1.75% |
Expenses net of all reductions | 1.64% | 1.61% | 1.61% | 1.72% | 1.71% |
Net investment income (loss) | (.60)% | (.77)% | (1.20)% | (1.39)% | (1.33)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,103 | $ 9,048 | $ 12,085 | $ 15,445 | $ 14,362 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.10 | $ 7.78 | $ 6.42 | $ 6.48 | $ 5.52 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.10) | (.12) | (.14) | (.10) |
Net realized and unrealized gain (loss) | 1.69 | (.58) | 1.48 | .08 | 1.06 |
Total from investment operations | 1.60 | (.68) | 1.36 | (.06) | .96 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 | $ 6.48 |
Total Return A, B | 22.54% | (8.74)% | 21.18% | (.93)% | 17.39% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.36% | 2.29% | 2.41% | 2.41% | 2.76% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.21% | 2.25% | 2.25% |
Expenses net of all reductions | 2.13% | 2.11% | 2.13% | 2.23% | 2.21% |
Net investment income (loss) | (1.10)% | (1.27)% | (1.72)% | (1.90)% | (1.83)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 4,572 | $ 6,123 | $ 8,963 | $ 8,498 | $ 11,335 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.09 | $ 7.77 | $ 6.41 | $ 6.47 | $ 5.51 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.10) | (.11) | (.14) | (.10) |
Net realized and unrealized gain (loss) | 1.69 | (.58) | 1.47 | .08 | 1.06 |
Total from investment operations | 1.60 | (.68) | 1.36 | (.06) | .96 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 | $ 6.47 |
Total Return A, B | 22.57% | (8.75)% | 21.22% | (.93)% | 17.42% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.34% | 2.26% | 2.31% | 2.24% | 2.52% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.18% | 2.24% | 2.25% |
Expenses net of all reductions | 2.13% | 2.11% | 2.11% | 2.21% | 2.21% |
Net investment income (loss) | (1.10)% | (1.27)% | (1.69)% | (1.88)% | (1.83)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,389 | $ 7,009 | $ 11,058 | $ 12,322 | $ 13,061 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Electronics
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.51 | $ 8.15 | $ 6.65 | $ 6.64 | $ 5.60 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.01) | (.02) | (.05) | (.06) | (.04) |
Net realized and unrealized gain (loss) | 1.80 | (.62) | 1.55 | .07 | 1.07 |
Total from investment operations | 1.79 | (.64) | 1.50 | .01 | 1.03 |
Redemption fees added to paid in capital B | - F | - F | - F | - F | .01 |
Net asset value, end of period | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 | $ 6.64 |
Total Return A | 23.83% | (7.85)% | 22.56% | .15% | 18.57% |
Ratios to Average Net Assets C, E | |||||
Expenses before reductions | 1.26% | 1.11% | 1.16% | 1.12% | 1.46% |
Expenses net of fee waivers, if any | 1.15% | 1.11% | 1.16% | 1.12% | 1.25% |
Expenses net of all reductions | 1.13% | 1.07% | 1.08% | 1.09% | 1.21% |
Net investment income (loss) | (.10)% | (.23)% | (.67)% | (.76)% | (.84)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 730 | $ 750 | $ 899 | $ 687 | $ 625 |
Portfolio turnover rate D | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Electronics Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM) an affiliate of, FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 foreign currency transactions, passive foreign investment companies (PFIC), net operating losses, 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 | $ 1,577,796 |
Unrealized depreciation | (3,215,000) |
Net unrealized appreciation (depreciation) | (1,637,204) |
Capital loss carryforward | (7,319,181) |
Cost for federal income tax purposes | $ 31,100,037 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Electronics
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $29,088,126 and $36,888,144, respectively.
6. 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 .26% 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 .56% 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% | $ 20,055 | $ 302 |
Class T | .25% | .25% | 43,948 | 162 |
Class B | .75% | .25% | 53,350 | 40,094 |
Class C | .75% | .25% | 78,597 | 9,924 |
$ 195,950 | $ 50,482 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 1,222 |
Class T | 2,154 |
Class B* | 20,244 |
Class C* | 711 |
$ 24,331 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 27,063 | .34 |
Class T | 33,021 | .38 |
Class B | 18,328 | .34 |
Class C | 26,602 | .34 |
Institutional Class | 2,139 | .25 |
$ 107,153 |
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.
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 $858 for the period.
7. 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, which amounted to $58 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $11,432.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 16,383 |
Class T | 1.65% | 21,401 |
Class B | 2.15% | 11,365 |
Class C | 2.15% | 14,831 |
Institutional Class | 1.15% | 944 |
$ 64,924 |
Electronics
9. 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 $4,272 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 172,908 | 435,594 | $ 1,452,847 | $ 3,620,302 |
Shares redeemed | (416,578) | (781,896) | (3,518,739) | (6,327,084) |
Net increase (decrease) | (243,670) | (346,302) | $ (2,065,892) | $ (2,706,782) |
Class T | ||||
Shares sold | 96,013 | 251,455 | $ 811,586 | $ 2,041,805 |
Shares redeemed | (434,383) | (529,920) | (3,616,000) | (4,209,309) |
Net increase (decrease) | (338,370) | (278,465) | $ (2,804,414) | $ (2,167,504) |
Class B | ||||
Shares sold | 33,257 | 89,856 | $ 271,410 | $ 712,048 |
Shares redeemed | (370,189) | (378,696) | (3,005,497) | (2,960,769) |
Net increase (decrease) | (336,932) | (288,840) | $ (2,734,087) | $ (2,248,721) |
Class C | ||||
Shares sold | 354,933 | 184,474 | $ 2,907,179 | $ 1,462,697 |
Shares redeemed | (378,058) | (618,382) | (3,063,507) | (4,840,037) |
Net increase (decrease) | (23,125) | (433,908) | $ (156,328) | $ (3,377,340) |
Institutional Class | ||||
Shares sold | 23,807 | 66,399 | $ 203,253 | $ 577,320 |
Shares redeemed | (45,136) | (76,867) | (400,359) | (614,153) |
Net increase (decrease) | (21,329) | (10,468) | $ (197,106) | $ (36,833) |
Annual Report
Advisor Energy 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 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 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, 2007 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 15.06% | 25.84% | 12.70% |
Class T (incl. 3.50% sales charge) | 17.57% | 26.19% | 12.76% |
Class B (incl. contingent deferred sales charge) B | 16.18% | 26.25% | 12.80% |
Class C (incl. contingent deferred sales charge) C | 20.22% | 26.46% | 12.55% |
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. This practice has been discontinued and no commissions incurred after June 30, 2003 have been used to pay distribution expenses.
B Class B shares bear a 1.00% 12b-1 fee. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
C Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns prior to November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years 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 Energy Fund - Class T on July 31, 1997, 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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the 12 months that ended July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 22.08%, 21.84%, 21.18% and 21.22%, respectively (excluding sales charges), versus a gain of 21.20% for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Energy Index and a 20.14% advance for a blended index specific to this fund. The blended index is a combination of the Goldman Sachs® Natural Resources Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's remaining 10 months1. During the same 12-month period, the fund also beat the S&P 500. The fund slightly underperformed the Goldman Sachs benchmark during the first two months of the period, largely due to underweighted positions in the strong-performing integrated oil companies, including Exxon Mobil and Chevron. Overweighting several companies with sizable natural gas exposure - including Ultra Petroleum in the exploration and production (E&P) arena, and Smith International, National Oilwell Varco and Halliburton in energy services - also hurt when natural gas prices declined. A position in refiner Valero Energy also detracted. On the flip side, several out-of-index stocks provided gains, including Oregon Steel Mills and fertilizer manufacturer Mosaic. Among index components, overweighting Canadian aluminum producer Novelis boosted performance, as did underweighting or not owning the more commodity-price-sensitive integrated oil companies, such as ConocoPhillips, Hess and Marathon Oil. We sold several of these stocks. During the final 10 months of the period, the fund outperformed the MSCI index largely due to solid stock selection and overweighted positions in the oil and gas drilling and oil and gas equipment/services segments. Top performers in these areas included oil-rig manufacturer National Oilwell Varco and offshore oil and gas driller Noble Corp. A non-index position in Danish wind turbine manufacturer Vestas Wind Systems also helped, as did an overweighted position in natural gas producer Range Resources. On the other hand, the fund was hurt by underweighting strong-performing, large integrated oil companies such as Chevron. Positions in several oil and gas E&P companies, including Ultra Petroleum and Plains Exploration & Production, lagged due to their exposure to natural gas prices, which remained relatively flat overall. Oil-field services provider Baker Hughes also detracted from returns.
For the 12 months that ended July 31, 2007, the fund's Institutional Class shares returned 22.47%, outperforming the 21.20% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Energy Index and the 20.14% advance of a blended index specific to this fund. The blended index is a combination of the Goldman Sachs® Natural Resources Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's remaining 10 months1. During the same 12-month period, the fund also beat the S&P 500. The fund slightly underperformed the Goldman Sachs benchmark during the first two months of the period, largely due to underweighted positions in the strong-performing integrated oil companies, including Exxon Mobil and Chevron. Overweighting several companies with sizable natural gas exposure - including Ultra Petroleum in the exploration and production (E&P) arena, and Smith International, National Oilwell Varco and Halliburton in energy services - also hurt when natural gas prices declined. A position in refiner Valero Energy also detracted. On the flip side, several out-of-index stocks provided gains, including Oregon Steel Mills and fertilizer manufacturer Mosaic. Among index components, overweighting Canadian aluminum producer Novelis boosted performance, as did underweighting or not owning the more commodity-price-sensitive integrated oil companies, such as ConocoPhillips, Hess and Marathon Oil. We sold several of these stocks. During the final 10 months of the period, the fund outperformed the MSCI index largely due to solid stock selection and overweighted positions in the oil and gas drilling and oil and gas equipment/services segments. Top performers in these areas included oil-rig manufacturer National Oilwell Varco and offshore oil and gas driller Noble Corp. A non-index position in Danish wind turbine manufacturer Vestas Wind Systems also helped, as did an overweighted position in natural gas producer Range Resources. On the other hand, the fund was hurt by underweighting strong-performing, large integrated oil companies such as Chevron. Positions in several oil and gas E&P companies, including Ultra Petroleum and Plains Exploration & Production, lagged due to their exposure to natural gas prices, which remained relatively flat overall. Oil-field services provider Baker Hughes also detracted from returns.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Natural Resources Index, which returned -8.26% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Energy Index, which returned 30.96% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 20.14%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,220.10 | $ 6.33 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
Class T | |||
Actual | $ 1,000.00 | $ 1,219.00 | $ 7.48 |
HypotheticalA | $ 1,000.00 | $ 1,018.05 | $ 6.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,215.50 | $ 10.49 |
HypotheticalA | $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Class C | |||
Actual | $ 1,000.00 | $ 1,215.80 | $ 10.27 |
HypotheticalA | $ 1,000.00 | $ 1,015.52 | $ 9.35 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,222.10 | $ 4.68 |
HypotheticalA | $ 1,000.00 | $ 1,020.58 | $ 4.26 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.15% |
Class T | 1.36% |
Class B | 1.91% |
Class C | 1.87% |
Institutional Class | .85% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Exxon Mobil Corp. | 15.1 | 7.7 |
Schlumberger Ltd. (NY Shares) | 7.4 | 5.7 |
Valero Energy Corp. | 6.9 | 7.6 |
ConocoPhillips | 5.6 | 6.9 |
National Oilwell Varco, Inc. | 5.6 | 3.3 |
Range Resources Corp. | 3.8 | 3.8 |
Chevron Corp. | 3.3 | 7.6 |
Ultra Petroleum Corp. | 3.2 | 3.6 |
Cabot Oil & Gas Corp. | 2.6 | 2.2 |
Transocean, Inc. | 2.4 | 1.5 |
55.9 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Oil, Gas & Consumable Fuels | 63.4% | |
| Energy Equipment & Services | 32.2% | |
| Electrical Equipment | 1.5% | |
| Construction & Engineering | 1.0% | |
| Industrial Conglomerates | 0.4% | |
| All Others* | 1.5% | |
As of January 31, 2007 | |||
| Oil, Gas & Consumable Fuels | 60.0% | |
| Energy Equipment & Services | 35.4% | |
| Electrical Equipment | 1.5% | |
| Machinery | 1.3% | |
| Construction & Engineering | 0.9% | |
| All Others* | 0.9% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Environmental & Facility Services - 0.0% | |||
Fuel Tech, Inc. (a)(d) | 16,062 | $ 449,254 | |
CONSTRUCTION & ENGINEERING - 1.0% | |||
Construction & Engineering - 1.0% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 20,400 | 828,240 | |
Fluor Corp. | 16,200 | 1,871,262 | |
Jacobs Engineering Group, Inc. (a) | 103,400 | 6,372,542 | |
9,072,044 | |||
ELECTRICAL EQUIPMENT - 1.5% | |||
Electrical Components & Equipment - 0.1% | |||
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 15,700 | 633,181 | |
Heavy Electrical Equipment - 1.4% | |||
Suzlon Energy Ltd. | 73,040 | 2,309,965 | |
Vestas Wind Systems AS (a) | 164,200 | 11,112,039 | |
13,422,004 | |||
TOTAL ELECTRICAL EQUIPMENT | 14,055,185 | ||
ENERGY EQUIPMENT & SERVICES - 32.2% | |||
Oil & Gas Drilling - 10.1% | |||
Diamond Offshore Drilling, Inc. | 197,200 | 20,347,096 | |
GlobalSantaFe Corp. | 211,500 | 15,166,665 | |
Noble Corp. | 216,700 | 22,203,082 | |
Pride International, Inc. (a) | 370,000 | 12,968,500 | |
Transocean, Inc. (a) | 206,800 | 22,220,660 | |
92,906,003 | |||
Oil & Gas Equipment & Services - 22.1% | |||
Baker Hughes, Inc. | 229,150 | 18,114,308 | |
Cameron International Corp. (a) | 40,700 | 3,174,600 | |
FMC Technologies, Inc. (a) | 29,100 | 2,663,232 | |
Grant Prideco, Inc. (a) | 41,100 | 2,305,710 | |
Halliburton Co. | 178,700 | 6,436,774 | |
Hanover Compressor Co. (a) | 95,000 | 2,263,850 | |
National Oilwell Varco, Inc. (a) | 425,032 | 51,050,594 | |
Oceaneering International, Inc. (a) | 93,200 | 5,234,112 | |
Schlumberger Ltd. (NY Shares) | 715,500 | 67,772,160 | |
Smith International, Inc. | 331,927 | 20,383,637 | |
Superior Energy Services, Inc. (a) | 188,100 | 7,584,192 | |
Universal Compression Holdings, Inc. (a) | 31,400 | 2,293,456 | |
W-H Energy Services, Inc. (a) | 74,400 | 4,767,552 | |
Weatherford International Ltd. (a) | 158,000 | 8,742,140 | |
202,786,317 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 295,692,320 | ||
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
Questar Corp. | 19,400 | 998,906 | |
Shares | Value | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.3% | |||
Independent Power Producers & Energy Traders - 0.3% | |||
AES Corp. (a) | 41,400 | $ 813,510 | |
Constellation Energy Group, Inc. | 10,400 | 871,520 | |
NRG Energy, Inc. (a) | 21,900 | 844,245 | |
2,529,275 | |||
INDUSTRIAL CONGLOMERATES - 0.4% | |||
Industrial Conglomerates - 0.4% | |||
McDermott International, Inc. (a) | 38,900 | 3,226,366 | |
MULTI-UTILITIES - 0.3% | |||
Multi-Utilities - 0.3% | |||
Sempra Energy | 52,200 | 2,751,984 | |
OIL, GAS & CONSUMABLE FUELS - 63.4% | |||
Coal & Consumable Fuels - 2.7% | |||
Arch Coal, Inc. (d) | 163,385 | 4,883,578 | |
CONSOL Energy, Inc. | 248,259 | 10,339,987 | |
Foundation Coal Holdings, Inc. | 25,200 | 878,220 | |
International Coal Group, Inc. (a) | 15,000 | 60,900 | |
Natural Resource Partners LP | 4,700 | 175,310 | |
Peabody Energy Corp. | 209,700 | 8,861,922 | |
25,199,917 | |||
Integrated Oil & Gas - 29.6% | |||
Chevron Corp. (d) | 355,256 | 30,289,127 | |
ConocoPhillips | 636,838 | 51,481,984 | |
Exxon Mobil Corp. | 1,634,598 | 139,153,327 | |
Hess Corp. | 175,700 | 10,752,840 | |
Marathon Oil Corp. | 232,600 | 12,839,520 | |
Occidental Petroleum Corp. | 257,100 | 14,582,712 | |
Petroleo Brasileiro SA Petrobras sponsored ADR | 110,800 | 7,190,920 | |
Suncor Energy, Inc. | 60,100 | 5,434,185 | |
271,724,615 | |||
Oil & Gas Exploration & Production - 20.4% | |||
Aurora Oil & Gas Corp. (a) | 310,900 | 609,364 | |
Cabot Oil & Gas Corp. | 699,000 | 23,905,800 | |
Canadian Natural Resources Ltd. | 34,400 | 2,360,949 | |
Chesapeake Energy Corp. (d) | 524,700 | 17,860,788 | |
EOG Resources, Inc. | 261,300 | 18,317,130 | |
Goodrich Petroleum Corp. (a) | 10,300 | 309,927 | |
Mariner Energy, Inc. (a) | 34,210 | 722,857 | |
Newfield Exploration Co. (a) | 40,600 | 1,950,830 | |
Noble Energy, Inc. | 89,500 | 5,472,030 | |
Petrohawk Energy Corp. (a) | 316,500 | 4,744,335 | |
Plains Exploration & Production Co. (a) | 268,800 | 11,614,848 | |
Quicksilver Resources, Inc. (a) | 258,450 | 10,885,914 | |
Range Resources Corp. | 930,227 | 34,548,631 | |
Talisman Energy, Inc. | 154,800 | 2,831,300 | |
Ultra Petroleum Corp. (a) | 526,700 | 29,121,243 | |
W&T Offshore, Inc. | 88,000 | 2,060,960 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Western Oil Sands, Inc. Class A (a) | 79,000 | $ 2,763,926 | |
XTO Energy, Inc. | 325,800 | 17,765,874 | |
187,846,706 | |||
Oil & Gas Refining & Marketing - 8.8% | |||
Petroplus Holdings AG | 11,817 | 1,140,884 | |
Sunoco, Inc. | 162,200 | 10,821,984 | |
Tesoro Corp. | 101,800 | 5,069,640 | |
Valero Energy Corp. | 946,048 | 63,394,676 | |
80,427,184 | |||
Oil & Gas Storage & Transport - 1.9% | |||
Williams Companies, Inc. | 539,977 | 17,414,258 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 582,612,680 | ||
TOTAL COMMON STOCKS (Cost $628,731,257) | 911,388,014 | ||
Money Market Funds - 5.8% | |||
Fidelity Cash Central Fund, 5.38% (b) | 11,325,628 | 11,325,628 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 42,209,550 | 42,209,550 | |
TOTAL MONEY MARKET FUNDS (Cost $53,535,178) | 53,535,178 | ||
TOTAL INVESTMENT PORTFOLIO - 105.0% (Cost $682,266,435) | 964,923,192 | ||
NET OTHER ASSETS - (5.0)% | (45,906,810) | ||
NET ASSETS - 100% | $ 919,016,382 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 301,787 |
Fidelity Securities Lending Cash Central Fund | 87,241 |
Total | $ 389,028 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 81.0% |
Netherlands Antilles | 7.4% |
Canada | 4.6% |
Cayman Islands | 4.2% |
Denmark | 1.2% |
Others (individually less than 1%) | 1.6% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $41,090,448) - See accompanying schedule: Unaffiliated issuers (cost $628,731,257) | $ 911,388,014 | |
Fidelity Central Funds (cost $53,535,178) | 53,535,178 | |
Total Investments (cost $682,266,435) | $ 964,923,192 | |
Receivable for fund shares sold | 1,380,234 | |
Dividends receivable | 268,751 | |
Distributions receivable from Fidelity Central Funds | 42,212 | |
Prepaid expenses | 4,204 | |
Other receivables | 3,203 | |
Total assets | 966,621,796 | |
Liabilities | ||
Payable for investments purchased | $ 2,637,403 | |
Payable for fund shares redeemed | 1,575,628 | |
Accrued management fee | 441,836 | |
Distribution fees payable | 439,725 | |
Other affiliated payables | 221,106 | |
Other payables and accrued expenses | 80,166 | |
Collateral on securities loaned, at value | 42,209,550 | |
Total liabilities | 47,605,414 | |
Net Assets | $ 919,016,382 | |
Net Assets consist of: | ||
Paid in capital | $ 600,852,967 | |
Accumulated net investment loss | (26,290) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 35,570,540 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 282,619,165 | |
Net Assets | $ 919,016,382 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 48.28 | |
Maximum offering price per share (100/94.25 of $48.28) | $ 51.23 | |
Class T: | $ 49.26 | |
Maximum offering price per share (100/96.50 of $49.26) | $ 51.05 | |
Class B: | $ 46.64 | |
Class C: | $ 46.88 | |
Institutional Class: | $ 49.68 | |
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
Advisor Energy Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 7,824,692 | |
Special dividends | 899,600 | |
Interest | 6,852 | |
Income from Fidelity Central Funds | 389,028 | |
Total income | 9,120,172 | |
Expenses | ||
Management fee | $ 4,513,856 | |
Transfer agent fees | 2,206,663 | |
Distribution fees | 4,553,057 | |
Accounting and security lending fees | 288,058 | |
Custodian fees and expenses | 34,540 | |
Independent trustees' compensation | 2,696 | |
Registration fees | 129,614 | |
Audit | 52,841 | |
Legal | 16,673 | |
Interest | 1,122 | |
Miscellaneous | 162,571 | |
Total expenses before reductions | 11,961,691 | |
Expense reductions | (37,970) | 11,923,721 |
Net investment income (loss) | (2,803,549) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 67,310,609 | |
Foreign currency transactions | (12,598) | |
Total net realized gain (loss) | 67,298,011 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $37,594) | 88,823,208 | |
Assets and liabilities in foreign currencies | (1,106) | |
Total change in net unrealized appreciation (depreciation) | 88,822,102 | |
Net gain (loss) | 156,120,113 | |
Net increase (decrease) in net assets resulting from operations | $ 153,316,564 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (2,803,549) | $ (2,855,811) |
Net realized gain (loss) | 67,298,011 | 151,070,040 |
Change in net unrealized appreciation (depreciation) | 88,822,102 | 36,149,130 |
Net increase (decrease) in net assets resulting from operations | 153,316,564 | 184,363,359 |
Distributions to shareholders from net realized gain | (117,273,909) | (96,405,578) |
Share transactions - net increase (decrease) | 40,324,071 | 199,114,450 |
Redemption fees | 36,406 | 111,350 |
Total increase (decrease) in net assets | 76,403,132 | 287,183,581 |
Net Assets | ||
Beginning of period | 842,613,250 | 555,429,669 |
End of period (including accumulated net investment loss of $26,290 and undistributed net investment income of $6,675, respectively) | $ 919,016,382 | $ 842,613,250 |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 46.39 | $ 40.93 | $ 29.12 | $ 21.65 | $ 20.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.02) F | (.04) | .06 | .07 | .13 |
Net realized and unrealized gain (loss) | 8.42 | 12.30 | 12.21 | 7.50 | 1.30 |
Total from investment operations | 8.40 | 12.26 | 12.27 | 7.57 | 1.43 |
Distributions from net investment income | - | - | (.06) | (.10) | (.11) |
Distributions from net realized gain | (6.51) | (6.81) | (.41) | - | - |
Total distributions | (6.51) | (6.81) | (.47) | (.10) | (.11) |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 | $ 21.65 |
Total Return A, B | 22.08% | 32.90% | 42.69% | 35.08% | 7.07% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.19% | 1.21% | 1.25% | 1.30% | 1.36% |
Expenses net of fee waivers, if any | 1.19% | 1.21% | 1.25% | 1.30% | 1.36% |
Expenses net of all reductions | 1.19% | 1.17% | 1.19% | 1.29% | 1.32% |
Net investment income (loss) | (.05)% F | (.09)% | .19% | .28% | .63% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 268,108 | $ 204,391 | $ 90,342 | $ 44,315 | $ 21,798 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.17)%.
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. Expenses net of fee 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 T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 47.18 | $ 41.46 | $ 29.52 | $ 21.97 | $ 20.61 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) F | (.13) | - | .03 | .10 |
Net realized and unrealized gain (loss) | 8.61 | 12.49 | 12.37 | 7.60 | 1.32 |
Total from investment operations | 8.50 | 12.36 | 12.37 | 7.63 | 1.42 |
Distributions from net investment income | - | - | (.03) | (.08) | (.06) |
Distributions from net realized gain | (6.42) | (6.65) | (.41) | - | - |
Total distributions | (6.42) | (6.65) | (.44) | (.08) | (.06) |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 | $ 21.97 |
Total Return A, B | 21.84% | 32.60% | 42.41% | 34.82% | 6.91% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.40% | 1.42% | 1.44% | 1.48% | 1.50% |
Expenses net of fee waivers, if any | 1.40% | 1.42% | 1.44% | 1.48% | 1.50% |
Expenses net of all reductions | 1.39% | 1.38% | 1.39% | 1.47% | 1.47% |
Net investment income (loss) | (.26)% F | (.29)% | (.01)% | .10% | .48% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 382,222 | $ 362,272 | $ 280,820 | $ 201,187 | $ 155,249 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.37)%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 45.10 | $ 39.89 | $ 28.54 | $ 21.28 | $ 20.02 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.34) F | (.35) | (.18) | (.11) | (.01) |
Net realized and unrealized gain (loss) | 8.17 | 11.98 | 11.93 | 7.37 | 1.27 |
Total from investment operations | 7.83 | 11.63 | 11.75 | 7.26 | 1.26 |
Distributions from net realized gain | (6.29) | (6.43) | (.41) | - | - |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 | $ 21.28 |
Total Return A, B | 21.18% | 31.86% | 41.66% | 34.12% | 6.29% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.96% | 1.96% | 1.98% | 2.02% | 2.06% |
Expenses net of fee waivers, if any | 1.96% | 1.96% | 1.98% | 2.02% | 2.06% |
Expenses net of all reductions | 1.95% | 1.92% | 1.93% | 2.01% | 2.02% |
Net investment income (loss) | (.82)% F | (.84)% | (.55)% | (.44)% | (.07)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 116,487 | $ 130,973 | $ 102,003 | $ 68,347 | $ 50,833 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.93)%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 45.33 | $ 40.10 | $ 28.68 | $ 21.38 | $ 20.10 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.32) F | (.34) | (.17) | (.10) | - |
Net realized and unrealized gain (loss) | 8.20 | 12.06 | 11.99 | 7.40 | 1.28 |
Total from investment operations | 7.88 | 11.72 | 11.82 | 7.30 | 1.28 |
Distributions from net realized gain | (6.33) | (6.50) | (.41) | - | - |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 | $ 21.38 |
Total Return A, B | 21.22% | 31.96% | 41.70% | 34.14% | 6.37% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.91% | 1.92% | 1.94% | 1.99% | 2.01% |
Expenses net of fee waivers, if any | 1.91% | 1.92% | 1.94% | 1.99% | 2.01% |
Expenses net of all reductions | 1.91% | 1.88% | 1.89% | 1.97% | 1.97% |
Net investment income (loss) | (.77)% F | (.79)% | (.51)% | (.41)% | (.02)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 135,072 | $ 125,424 | $ 72,832 | $ 37,206 | $ 22,044 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.88)%.
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. Expenses net of fee 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.
Energy
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 47.48 | $ 41.76 | $ 29.64 | $ 22.03 | $ 20.67 |
Income from Investment Operations | |||||
Net investment income (loss) B | .11 E | .12 | .19 | .18 | .22 |
Net realized and unrealized gain (loss) | 8.67 | 12.56 | 12.44 | 7.62 | 1.32 |
Total from investment operations | 8.78 | 12.68 | 12.63 | 7.80 | 1.54 |
Distributions from net investment income | - | - | (.11) | (.19) | (.18) |
Distributions from net realized gain | (6.58) | (6.97) | (.41) | - | - |
Total distributions | (6.58) | (6.97) | (.52) | (.19) | (.18) |
Redemption fees added to paid in capital B | - G | .01 | .01 | - G | - G |
Net asset value, end of period | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 | $ 22.03 |
Total Return A | 22.47% | 33.35% | 43.21% | 35.60% | 7.51% |
Ratios to Average Net Assets C, F | |||||
Expenses before reductions | .88% | .87% | .89% | .90% | .95% |
Expenses net of fee waivers, if any | .88% | .87% | .89% | .90% | .95% |
Expenses net of all reductions | .88% | .83% | .84% | .89% | .91% |
Net investment income (loss) | .25% E | .26% | .54% | .68% | 1.04% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 17,127 | $ 19,553 | $ 9,433 | $ 4,206 | $ 2,652 |
Portfolio turnover rate D | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Energy Fund (the Fund) (formerly Fidelity Advisor Natural Resources Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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), partnerships deferred trustee compensation 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 | $ 287,689,452 |
Unrealized depreciation | (6,824,768) |
Net unrealized appreciation (depreciation) | 280,864,684 |
Undistributed ordinary income | 1,135,610 |
Undistributed long-term capital gain | 32,949,871 |
Cost for federal income tax purposes | $ 684,058,508 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 36,468,176 | $ 27,866,863 |
Long-term Capital Gains | 80,805,733 | 68,538,715 |
Total | $ 117,273,909 | $ 96,405,578 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Energy
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $647,297,130 and $729,051,628, respectively.
6. 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 .26% 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 .56% 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% | $ 539,831 | $ 27,767 |
Class T | .25% | .25% | 1,710,702 | 28,022 |
Class B | .75% | .25% | 1,141,656 | 861,467 |
Class C | .75% | .25% | 1,160,868 | 278,851 |
$ 4,553,057 | $ 1,196,107 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 209,383 |
Class T | 54,676 |
Class B* | 201,377 |
Class C* | 43,272 |
$ 508,708 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 640,928 | .30 |
Class T | 861,682 | .25 |
Class B | 357,753 | .31 |
Class C | 309,201 | .27 |
Institutional Class | 37,099 | .24 |
$ 2,206,663 |
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.
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 $887 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 7,517,000 | 5.37% | $ 1,122 |
7. 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, which amounted to $1,448 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $87,241.
Energy
9. 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 $22,560 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $1,326. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | |
Class C | $ 206 |
Institutional Class | 4 |
$ 210 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has reimbursed the Fund for related audit and legal expenses and, beginning in June 2007, remediated affected shareholders.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net realized gain | ||
Class A | $ 30,378,115 | $ 17,953,640 |
Class T | 48,658,927 | 46,191,250 |
Class B | 18,097,588 | 17,304,417 |
Class C | 17,464,821 | 12,815,774 |
Institutional Class | 2,674,458 | 2,140,497 |
Total | $ 117,273,909 | $ 96,405,578 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 2,409,415 | 2,831,331 | $ 103,800,389 | $ 124,673,619 |
Reinvestment of distributions | 718,262 | 400,806 | 27,810,279 | 16,449,083 |
Shares redeemed | (1,980,718) | (1,033,179) | (81,122,220) | (44,849,856) |
Net increase (decrease) | 1,146,959 | 2,198,958 | $ 50,488,448 | $ 96,272,846 |
Class T | ||||
Shares sold | 1,250,444 | 1,987,040 | $ 54,473,563 | $ 88,233,274 |
Reinvestment of distributions | 1,161,034 | 1,036,774 | 45,909,961 | 43,334,106 |
Shares redeemed | (2,330,754) | (2,118,138) | (98,273,495) | (92,809,287) |
Net increase (decrease) | 80,724 | 905,676 | $ 2,110,029 | $ 38,758,093 |
Class B | ||||
Shares sold | 451,905 | 1,013,249 | $ 18,746,589 | $ 43,295,228 |
Reinvestment of distributions | 414,158 | 367,313 | 15,588,355 | 14,743,317 |
Shares redeemed | (1,272,145) | (1,034,052) | (50,696,372) | (43,654,702) |
Net increase (decrease) | (406,082) | 346,510 | $ (16,361,428) | $ 14,383,843 |
Class C | ||||
Shares sold | 863,338 | 1,465,945 | $ 36,256,164 | $ 63,632,906 |
Reinvestment of distributions | 385,215 | 261,691 | 14,569,142 | 10,551,203 |
Shares redeemed | (1,134,191) | (777,152) | (44,464,337) | (32,787,487) |
Net increase (decrease) | 114,362 | 950,484 | $ 6,360,969 | $ 41,396,622 |
Institutional Class | ||||
Shares sold | 150,039 | 261,912 | $ 6,836,544 | $ 11,683,224 |
Reinvestment of distributions | 39,397 | 24,127 | 1,561,516 | 1,012,348 |
Shares redeemed | (256,502) | (100,080) | (10,672,007) | (4,392,526) |
Net increase (decrease) | (67,066) | 185,959 | $ (2,273,947) | $ 8,303,046 |
Energy
Advisor Financial Services 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 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, 2007 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | -1.47% | 9.02% | 7.40% |
Class T (incl. 3.50% sales charge) | 0.60% | 9.29% | 7.40% |
Class B (incl. contingent deferred sales charge) A | -0.78% | 9.23% | 7.48% |
Class C (incl. contingent deferred sales charge) B | 2.85% | 9.56% | 7.26% |
A Class B shares bear a 1.00% 12b-1 fee. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns prior to November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years 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 Financial Services Fund - Class T on July 31, 1997, 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 performed over the same period.
Annual Report
Advisor Financial Services Fund
Management's Discussion of Fund Performance
Comments from Brian Younger and Richard Manuel, Co-Portfolio Managers of Fidelity® Advisor Financial Services Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the year, the fund's Class A, Class T, Class B and Class C shares returned 4.54%, 4.25%, 3.71% and 3.75%, respectively (excluding sales charges). These returns beat the 2.58% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Financials Index and the 3.04% return of a blended index specific to the fund. This blended index is a combination of the Goldman Sachs® Financial Services Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. For the 12-month period, the fund trailed the S&P 500. The fund got off to a good start in the first two months of the period, modestly outperforming the Goldman Sachs index. Strong security selection and an overweighting in reinsurers boosted performance, as the industry benefited from a mild hurricane season that tempered loss claims. Standout contributors included reinsurers Endurance Specialty Holdings and Platinum Underwriters Holdings. An underweighting in the lagging regional banks group and strong stock selection among property and casualty insurers further aided returns relative to the index. Among the biggest detractors were investment banking and brokerage stocks, notably Goldman Sachs and Lehman Brothers, the latter of which was sold from the fund. We had underweightings in both names during a time when strong capital markets activity boosted their returns. Some disappointments among diversified banks hurt as well. During the last 10 months of the period, the fund declined modestly, but beat the MSCI index even as the subprime mortgage crisis and credit-quality concerns pressured the sector. The fund picked up ground mainly from positive stock selection but also from industry positioning. Reinsurers, regional banks, property/casualty insurers and asset managers/custody banks all added to returns. Contributors included Endurance Specialty and Platinum Underwriters, as well as custody banks Investors Financial Services and State Street. The latter two stocks benefited after State Street bought Investors Financial at a premium price, which helped State Street broaden its offerings. Conversely, a modest overweighting in retail and residential real estate investment trusts (REITs), along with subpar returns from our holdings there, hampered performance. Weak stock picking among investment banking and brokerage companies, including a sizable overweighting and untimely ownership of Goldman Sachs, also hurt. Other detractors included mortgage insurer Radian and mortgage originator Countrywide Financial, both of which suffered from rising default rates in the subprime mortgage market. The fund also lost ground from its stake in Equity Residential, an apartment-related REIT that struggled and was no longer held at period end.
For the year, the fund's Institutional Class shares were up 4.88%. This return beat the 2.58% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Financials Index and the 3.04% return of a blended index specific to the fund. This blended index is a combination of the Goldman Sachs® Financial Services Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. For the 12-month period, the fund trailed the S&P 500. The fund got off to a good start in the first two months of the period, modestly outperforming the Goldman Sachs index. Strong security selection and an overweighting in reinsurers boosted performance, as the industry benefited from a mild hurricane season that tempered loss claims. Standout contributors included reinsurers Endurance Specialty Holdings and Platinum Underwriters Holdings. An underweighting in the lagging regional banks group and strong stock selection among property and casualty insurers further aided returns relative to the index. Among the biggest detractors were investment banking and brokerage stocks, notably Goldman Sachs and Lehman Brothers, the latter of which was sold from the fund. We had underweightings in both names during a time when strong capital markets activity boosted their returns. Some disappointments among diversified banks hurt as well. During the last 10 months of the period, the fund declined modestly, but beat the MSCI index even as the subprime mortgage crisis and credit-quality concerns pressured the sector. The fund picked up ground mainly from positive stock selection but also from industry positioning. Reinsurers, regional banks, property/casualty insurers and asset managers/custody banks all added to returns. Contributors included Endurance Specialty and Platinum Underwriters, as well as custody banks Investors Financial Services and State Street. The latter two stocks benefited after State Street bought Investors Financial at a premium price, which helped State Street broaden its offerings. Conversely, a modest overweighting in retail and residential real estate investment trusts (REITs), along with subpar returns from our holdings there, hampered performance. Weak stock picking among investment banking and brokerage companies, including a sizable overweighting and untimely ownership of Goldman Sachs, also hurt. Other detractors included mortgage insurer Radian and mortgage originator Countrywide Financial, both of which suffered from rising default rates in the subprime mortgage market. The fund also lost ground from its stake in Equity Residential, an apartment-related REIT that struggled and was no longer held at period end.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance to the Goldman Sachs Financial Services Index, which returned 5.63% during that period. On October 1, 2006, the fund began comparing its performance to a different index, the MSCI US Investable Market Financials Index, which returned -2.45% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 3.04%.
Annual Report
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Financial Services
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 922.70 | $ 5.67 |
HypotheticalA | $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | |||
Actual | $ 1,000.00 | $ 921.20 | $ 6.76 |
HypotheticalA | $ 1,000.00 | $ 1,017.75 | $ 7.10 |
Class B | |||
Actual | $ 1,000.00 | $ 919.10 | $ 9.18 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | |||
Actual | $ 1,000.00 | $ 919.30 | $ 9.04 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.49 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 924.10 | $ 4.10 |
HypotheticalA | $ 1,000.00 | $ 1,020.53 | $ 4.31 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.19% |
Class T | 1.42% |
Class B | 1.93% |
Class C | 1.90% |
Institutional Class | .86% |
Annual Report
Advisor Financial Services Fund
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
American International Group, Inc. | 6.0 | 8.8 |
Bank of America Corp. | 5.3 | 4.9 |
JPMorgan Chase & Co. | 5.2 | 5.1 |
Wells Fargo & Co. | 5.2 | 4.2 |
Citigroup, Inc. | 5.1 | 2.6 |
ACE Ltd. | 3.6 | 2.8 |
Fannie Mae | 3.3 | 2.2 |
Platinum Underwriters Holdings Ltd. | 3.1 | 2.3 |
MetLife, Inc. | 2.5 | 2.3 |
American Express Co. | 2.5 | 2.1 |
41.8 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Insurance | 31.6% | |
| Diversified | 18.4% | |
| Capital Markets | 16.3% | |
| Commercial Banks | 13.4% | |
| Thrifts & | 8.9% | |
| All Others* | 11.4% | |
As of January 31, 2007 | |||
| Insurance | 31.8% | |
| Commercial Banks | 18.0% | |
| Capital Markets | 17.4% | |
| Diversified | 13.7% | |
| Real Estate | 7.7% | |
| All Others* | 11.4% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
CAPITAL MARKETS - 16.3% | |||
Asset Management & Custody Banks - 9.0% | |||
Bank New York Mellon Corp. | 101,200 | $ 4,306,060 | |
BlackRock Kelso Capital Corp. (d) | 27,000 | 355,320 | |
EFG International | 51,360 | 2,423,730 | |
Fortress Investment Group LLC (d) | 47,100 | 893,487 | |
Franklin Resources, Inc. | 40,600 | 5,171,222 | |
Janus Capital Group, Inc. | 87,000 | 2,615,220 | |
Julius Baer Holding AG (Bearer) | 20,078 | 1,422,087 | |
KKR Private Equity Investors, LP | 23,000 | 469,200 | |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 37,100 | 756,840 | |
State Street Corp. | 117,982 | 7,908,333 | |
T. Rowe Price Group, Inc. | 46,300 | 2,413,619 | |
The Blackstone Group LP | 47,000 | 1,128,470 | |
29,863,588 | |||
Diversified Capital Markets - 0.7% | |||
UBS AG (NY Shares) | 38,000 | 2,092,660 | |
Investment Banking & Brokerage - 6.6% | |||
Bear Stearns Companies, Inc. | 26,500 | 3,212,330 | |
Charles Schwab Corp. | 172,200 | 3,466,386 | |
Goldman Sachs Group, Inc. | 11,300 | 2,128,242 | |
Lazard Ltd. Class A | 22,500 | 833,175 | |
Merrill Lynch & Co., Inc. | 88,900 | 6,596,380 | |
Morgan Stanley | 86,900 | 5,550,303 | |
21,786,816 | |||
TOTAL CAPITAL MARKETS | 53,743,064 | ||
COMMERCIAL BANKS - 13.4% | |||
Diversified Banks - 8.8% | |||
ICICI Bank Ltd. sponsored ADR | 22,500 | 997,200 | |
Mizrahi Tefahot Bank Ltd. | 28,800 | 203,026 | |
U.S. Bancorp, Delaware | 128,800 | 3,857,560 | |
Wachovia Corp. | 148,098 | 6,991,707 | |
Wells Fargo & Co. | 507,200 | 17,128,144 | |
29,177,637 | |||
Regional Banks - 4.6% | |||
Cathay General Bancorp | 62,121 | 1,901,524 | |
Center Financial Corp., California | 57,600 | 855,936 | |
Colonial Bancgroup, Inc. | 39,300 | 857,133 | |
Commerce Bancorp, Inc. | 37,100 | 1,240,995 | |
Nara Bancorp, Inc. | 36,359 | 536,659 | |
PNC Financial Services Group, Inc. | 88,100 | 5,871,865 | |
SVB Financial Group (a) | 49,978 | 2,632,841 | |
Wintrust Financial Corp. | 2,800 | 110,348 | |
Zions Bancorp | 15,500 | 1,155,525 | |
15,162,826 | |||
TOTAL COMMERCIAL BANKS | 44,340,463 | ||
Shares | Value | ||
CONSUMER FINANCE - 3.9% | |||
Consumer Finance - 3.9% | |||
American Express Co. | 141,500 | $ 8,283,410 | |
Capital One Financial Corp. (d) | 37,230 | 2,634,395 | |
Discover Financial Services (a) | 40,700 | 938,135 | |
Dollar Financial Corp. (a) | 46,862 | 1,174,362 | |
13,030,302 | |||
DIVERSIFIED FINANCIAL SERVICES - 18.4% | |||
Multi-Sector Holdings - 0.1% | |||
Compass Diversified Trust | 19,800 | 306,702 | |
Other Diversifed Financial Services - 15.6% | |||
Bank of America Corp. | 366,072 | 17,359,134 | |
Citigroup, Inc. | 365,469 | 17,019,891 | |
JPMorgan Chase & Co. | 390,794 | 17,198,844 | |
51,577,869 | |||
Specialized Finance - 2.7% | |||
CME Group, Inc. | 8,725 | 4,820,563 | |
Deutsche Boerse AG | 14,800 | 1,730,903 | |
MarketAxess Holdings, Inc. (a) | 133,200 | 2,212,452 | |
8,763,918 | |||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 60,648,489 | ||
HOUSEHOLD DURABLES - 0.0% | |||
Homebuilding - 0.0% | |||
D.R. Horton, Inc. | 200 | 3,264 | |
INSURANCE - 31.6% | |||
Insurance Brokers - 0.9% | |||
National Financial Partners Corp. (d) | 48,200 | 2,234,552 | |
Willis Group Holdings Ltd. | 20,740 | 841,837 | |
3,076,389 | |||
Life & Health Insurance - 6.3% | |||
AFLAC, Inc. | 76,700 | 3,997,604 | |
MetLife, Inc. | 137,800 | 8,298,316 | |
Principal Financial Group, Inc. | 49,500 | 2,791,305 | |
Prudential Financial, Inc. | 63,100 | 5,592,553 | |
20,679,778 | |||
Multi-Line Insurance - 7.8% | |||
American International Group, Inc. | 308,460 | 19,796,961 | |
Assurant, Inc. | 25,100 | 1,273,072 | |
Hartford Financial Services Group, Inc. | 51,500 | 4,731,305 | |
25,801,338 | |||
Property & Casualty Insurance - 8.6% | |||
ACE Ltd. | 208,400 | 12,028,848 | |
Argonaut Group, Inc. | 56,600 | 1,558,198 | |
Aspen Insurance Holdings Ltd. | 121,900 | 2,980,455 | |
Axis Capital Holdings Ltd. | 81,900 | 3,018,015 | |
MBIA, Inc. | 49,700 | 2,788,170 | |
The Travelers Companies, Inc. | 73,700 | 3,742,486 | |
Common Stocks - continued | |||
Shares | Value | ||
INSURANCE - CONTINUED | |||
Property & Casualty Insurance - continued | |||
United America Indemnity Ltd. | 24,600 | $ 528,408 | |
XL Capital Ltd. Class A | 22,800 | 1,775,208 | |
28,419,788 | |||
Reinsurance - 8.0% | |||
Endurance Specialty Holdings Ltd. | 191,370 | 7,157,238 | |
Everest Re Group Ltd. | 23,500 | 2,308,875 | |
Greenlight Capital Re, Ltd. | 600 | 12,600 | |
IPC Holdings Ltd. | 74,966 | 1,859,906 | |
Max Capital Group Ltd. | 118,862 | 3,103,487 | |
Montpelier Re Holdings Ltd. | 37,300 | 591,205 | |
PartnerRe Ltd. | 14,500 | 1,029,935 | |
Platinum Underwriters Holdings Ltd. | 313,700 | 10,414,840 | |
26,478,086 | |||
TOTAL INSURANCE | 104,455,379 | ||
REAL ESTATE INVESTMENT TRUSTS - 4.5% | |||
Mortgage REITs - 0.3% | |||
Annaly Capital Management, Inc. | 63,600 | 919,020 | |
Residential REITs - 1.1% | |||
Equity Lifestyle Properties, Inc. | 43,000 | 1,950,480 | |
UDR, Inc. | 69,600 | 1,607,064 | |
3,557,544 | |||
Retail REITs - 3.1% | |||
CBL & Associates Properties, Inc. | 24,292 | 774,672 | |
Developers Diversified Realty Corp. | 80,400 | 3,859,200 | |
General Growth Properties, Inc. | 80,100 | 3,843,198 | |
Simon Property Group, Inc. | 21,500 | 1,860,395 | |
10,337,465 | |||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 14,814,029 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.1% | |||
Real Estate Management & Development - 1.1% | |||
Mitsubishi Estate Co. Ltd. | 147,000 | 3,739,662 | |
THRIFTS & MORTGAGE FINANCE - 8.9% | |||
Thrifts & Mortgage Finance - 8.9% | |||
BankUnited Financial Corp. Class A (d) | 83,800 | 1,411,192 | |
Countrywide Financial Corp. | 158,236 | 4,457,508 | |
Shares | Value | ||
Fannie Mae | 183,735 | $ 10,994,702 | |
Freddie Mac | 124,900 | 7,153,023 | |
Hudson City Bancorp, Inc. | 158,875 | 1,941,453 | |
MGIC Investment Corp. | 9,100 | 351,806 | |
Radian Group, Inc. | 41,900 | 1,412,449 | |
Washington Mutual, Inc. | 45,900 | 1,722,627 | |
29,444,760 | |||
TOTAL COMMON STOCKS (Cost $261,133,698) | 324,219,412 | ||
Money Market Funds - 1.3% | |||
Fidelity Cash Central Fund, 5.38% (b) | 46,709 | 46,709 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 4,359,050 | 4,359,050 | |
TOTAL MONEY MARKET FUNDS (Cost $4,405,759) | 4,405,759 | ||
TOTAL INVESTMENT PORTFOLIO - 99.4% (Cost $265,539,457) | 328,625,171 |
NET OTHER ASSETS - 0.6% | 2,053,549 | ||
NET ASSETS - 100% | $ 330,678,720 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $756,840 or 0.2% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 89,959 |
Fidelity Securities Lending Cash Central Fund | 55,029 |
Total | $ 144,988 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 81.8% |
Bermuda | 10.3% |
Cayman Islands | 3.8% |
Switzerland | 1.8% |
Japan | 1.1% |
Others (individually less than 1%) | 1.2% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $4,174,120) - See accompanying schedule: Unaffiliated issuers (cost $261,133,698) | $ 324,219,412 | |
Fidelity Central Funds (cost $4,405,759) | 4,405,759 | |
Total Investments (cost $265,539,457) | $ 328,625,171 | |
Receivable for investments sold | 21,852,974 | |
Receivable for fund shares sold | 434,683 | |
Dividends receivable | 365,403 | |
Distributions receivable from Fidelity Central Funds | 6,019 | |
Prepaid expenses | 1,960 | |
Other receivables | 118 | |
Total assets | 351,286,328 | |
Liabilities | ||
Payable for investments purchased | $ 14,633,849 | |
Payable for fund shares redeemed | 1,122,679 | |
Accrued management fee | 167,188 | |
Distribution fees payable | 177,601 | |
Other affiliated payables | 101,864 | |
Other payables and accrued expenses | 45,377 | |
Collateral on securities loaned, at value | 4,359,050 | |
Total liabilities | 20,607,608 | |
Net Assets | $ 330,678,720 | |
Net Assets consist of: | ||
Paid in capital | $ 245,239,320 | |
Undistributed net investment income | 1,282,613 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 21,074,598 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 63,082,189 | |
Net Assets | $ 330,678,720 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 21.02 | |
Maximum offering price per share (100/94.25 of $21.02) | $ 22.30 | |
Class T: | $ 20.94 | |
Maximum offering price per share (100/96.50 of $20.94) | $ 21.70 | |
Class B: | $ 20.44 | |
Class C: | $ 20.40 | |
Institutional Class: | $ 21.32 | |
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
Advisor Financial Services Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 8,566,078 | |
Interest | 31 | |
Income from Fidelity Central Funds | 144,988 | |
Total income | 8,711,097 | |
Expenses | ||
Management fee | $ 2,198,530 | |
Transfer agent fees | 1,179,816 | |
Distribution fees | 2,451,390 | |
Accounting and security lending fees | 159,668 | |
Custodian fees and expenses | 26,340 | |
Independent trustees' compensation | 1,297 | |
Registration fees | 73,263 | |
Audit | 54,439 | |
Legal | 6,439 | |
Miscellaneous | 77,045 | |
Total expenses before reductions | 6,228,227 | |
Expense reductions | (21,657) | 6,206,570 |
Net investment income (loss) | 2,504,527 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $42,189) | 49,122,620 | |
Foreign currency transactions | 52,264 | |
Total net realized gain (loss) | 49,174,884 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (30,971,580) | |
Assets and liabilities in foreign currencies | (3,153) | |
Total change in net unrealized appreciation (depreciation) | (30,974,733) | |
Net gain (loss) | 18,200,151 | |
Net increase (decrease) in net assets resulting from operations | $ 20,704,678 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 2,504,527 | $ 1,896,820 |
Net realized gain (loss) | 49,174,884 | 35,867,755 |
Change in net unrealized appreciation (depreciation) | (30,974,733) | 1,112,137 |
Net increase (decrease) in net assets resulting from operations | 20,704,678 | 38,876,712 |
Distributions to shareholders from net investment income | (1,993,507) | (1,881,748) |
Distributions to shareholders from net realized gain | (54,831,267) | (29,223,665) |
Total distributions | (56,824,774) | (31,105,413) |
Share transactions - net increase (decrease) | (19,915,758) | (47,322,942) |
Redemption fees | 2,369 | 8,919 |
Total increase (decrease) in net assets | (56,033,485) | (39,542,724) |
Net Assets | ||
Beginning of period | 386,712,205 | 426,254,929 |
End of period (including undistributed net investment income of $1,282,613 and undistributed net investment income of $1,145,387, respectively) | $ 330,678,720 | $ 386,712,205 |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.34 | $ 23.01 | $ 22.17 | $ 19.98 | $ 17.83 |
Income from Investment Operations | |||||
Net investment income (loss) C | .23 | .20 | .19 | .14 | .16 |
Net realized and unrealized gain (loss) | .92 | 2.02 | 2.48 | 2.20 | 2.07 |
Total from investment operations | 1.15 | 2.22 | 2.67 | 2.34 | 2.23 |
Distributions from net investment income | (.22) | (.26) | (.07) | (.15) | (.08) |
Distributions from net realized gain | (3.25) | (1.63) | (1.76) | - | - |
Total distributions | (3.47) H | (1.89) | (1.83) | (.15) | (.08) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 | $ 19.98 |
Total Return A,B | 4.54% | 10.32% | 12.60% | 11.76% | 12.57% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.23% | 1.25% | 1.26% | 1.27% | 1.31% |
Expenses net of fee waivers, if any | 1.23% | 1.25% | 1.26% | 1.27% | 1.31% |
Expenses net of all reductions | 1.22% | 1.23% | 1.23% | 1.25% | 1.27% |
Net investment income (loss) | 1.01% | .87% | .88% | .63% | .89% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 106,722 | $ 85,356 | $ 68,012 | $ 58,222 | $ 57,255 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.47 per share is comprised of distributions from net investment income of $.223 and distributions from net realized gain of $3.250 per share.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.26 | $ 22.87 | $ 22.07 | $ 19.90 | $ 17.77 |
Income from Investment Operations | |||||
Net investment income (loss) C | .18 | .15 | .14 | .09 | .12 |
Net realized and unrealized gain (loss) | .91 | 2.02 | 2.47 | 2.19 | 2.07 |
Total from investment operations | 1.09 | 2.17 | 2.61 | 2.28 | 2.19 |
Distributions from net investment income | (.16) | (.15) | (.05) | (.11) | (.06) |
Distributions from net realized gain | (3.25) | (1.63) | (1.76) | - | - |
Total distributions | (3.41) H | (1.78) | (1.81) | (.11) | (.06) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 | $ 19.90 |
Total Return A,B | 4.25% | 10.11% | 12.37% | 11.49% | 12.37% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.46% | 1.47% | 1.48% | 1.50% | 1.53% |
Expenses net of fee waivers, if any | 1.46% | 1.47% | 1.48% | 1.50% | 1.53% |
Expenses net of all reductions | 1.46% | 1.46% | 1.46% | 1.48% | 1.49% |
Net investment income (loss) | .77% | .65% | .66% | .41% | .67% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 95,426 | $ 113,344 | $ 128,388 | $ 144,887 | $ 157,238 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.41 per share is comprised of distributions from net investment income of $.156 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.75 | $ 22.33 | $ 21.65 | $ 19.53 | $ 17.50 |
Income from Investment Operations | |||||
Net investment income (loss) C | .06 | .03 | .03 | (.02) | .03 |
Net realized and unrealized gain (loss) | .89 | 1.97 | 2.41 | 2.16 | 2.03 |
Total from investment operations | .95 | 2.00 | 2.44 | 2.14 | 2.06 |
Distributions from net investment income | (.02) | (.01) | - | (.02) | (.03) |
Distributions from net realized gain | (3.25) | (1.57) | (1.76) | - | - |
Total distributions | (3.26) H | (1.58) | (1.76) | (.02) | (.03) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 | $ 19.53 |
Total Return A,B | 3.71% | 9.52% | 11.78% | 10.96% | 11.80% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.98% | 1.99% | 2.00% | 2.02% | 2.03% |
Expenses net of fee waivers, if any | 1.98% | 1.99% | 2.00% | 2.02% | 2.03% |
Expenses net of all reductions | 1.98% | 1.98% | 1.98% | 2.00% | 1.99% |
Net investment income (loss) | .25% | .13% | .14% | (.11)% | .17% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 64,837 | $ 113,652 | $ 145,046 | $ 179,873 | $ 193,373 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.26 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $3.247 per share.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.74 | $ 22.34 | $ 21.65 | $ 19.53 | $ 17.49 |
Income from Investment Operations | |||||
Net investment income (loss) C | .06 | .04 | .04 | (.01) | .04 |
Net realized and unrealized gain (loss) | .90 | 1.98 | 2.42 | 2.15 | 2.03 |
Total from investment operations | .96 | 2.02 | 2.46 | 2.14 | 2.07 |
Distributions from net investment income | (.05) | (.02) | (.01) | (.02) | (.03) |
Distributions from net realized gain | (3.25) | (1.60) | (1.76) | - | - |
Total distributions | (3.30) H | (1.62) | (1.77) | (.02) | (.03) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 | $ 19.53 |
Total Return A,B | 3.75% | 9.58% | 11.88% | 10.96% | 11.86% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.94% | 1.94% | 1.95% | 1.97% | 1.99% |
Expenses net of fee waivers, if any | 1.94% | 1.94% | 1.95% | 1.97% | 1.99% |
Expenses net of all reductions | 1.94% | 1.93% | 1.92% | 1.95% | 1.95% |
Net investment income (loss) | .29% | .18% | .19% | (.06)% | .22% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 55,219 | $ 62,469 | $ 72,181 | $ 86,199 | $ 97,434 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.30 per share is comprised of distributions from net investment income of $.049 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.63 | $ 23.29 | $ 22.37 | $ 20.17 | $ 17.95 |
Income from Investment Operations | |||||
Net investment income (loss) B | .31 | .29 | .29 | .23 | .24 |
Net realized and unrealized gain (loss) | .93 | 2.05 | 2.50 | 2.21 | 2.09 |
Total from investment operations | 1.24 | 2.34 | 2.79 | 2.44 | 2.33 |
Distributions from net investment income | (.30) | (.37) | (.11) | (.24) | (.11) |
Distributions from net realized gain | (3.25) | (1.63) | (1.76) | - | - |
Total distributions | (3.55) G | (2.00) | (1.87) | (.24) | (.11) |
Redemption fees added to paid in capital B | - F | - F | - F | - F | - F |
Net asset value, end of period | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 | $ 20.17 |
Total Return A | 4.88% | 10.78% | 13.06% | 12.18% | 13.07% |
Ratios to Average Net Assets C,E | |||||
Expenses before reductions | .89% | .86% | .86% | .88% | .88% |
Expenses net of fee waivers, if any | .89% | .86% | .86% | .88% | .88% |
Expenses net of all reductions | .88% | .85% | .84% | .85% | .84% |
Net investment income (loss) | 1.34% | 1.26% | 1.28% | 1.03% | 1.32% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,474 | $ 11,892 | $ 12,629 | $ 13,008 | $ 14,539 |
Portfolio turnover rate D | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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.
G Total distributions of $3.55 per share is comprised of distributions from net investment income of $.298 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claimed a portion of the payment made to redeeming shareholders as a distribution 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, certain foreign taxes, partnerships, 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 | $ 71,434,069 | |
Unrealized depreciation | (9,334,444) | |
Net unrealized appreciation (depreciation) | 62,099,625 | |
Undistributed ordinary income | 1,925,236 | |
Undistributed long-term capital gain | 17,960,028 | |
Cost for federal income tax purposes | $ 266,525,546 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 3,815,559 | $ 4,156,447 |
Long-term Capital Gains | 53,009,215 | 26,948,966 |
Total | $ 56,824,774 | $ 31,105,413 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Financial Services
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $202,427,940 and $280,526,573, respectively.
6. 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 .26% 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 .56% 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% | $ 259,586 | $ 7,782 |
Class T | .25% | .25% | 566,902 | 4,582 |
Class B | .75% | .25% | 976,364 | 736,511 |
Class C | .75% | .25% | 648,538 | 29,243 |
$ 2,451,390 | $ 778,118 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 26,241 |
Class T | 9,670 |
Class B* | 116,047 |
Class C* | 3,652 |
$ 155,610 |
* 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 | $ 325,105 | .31 |
Class T | 337,616 | .30 |
Class B | 311,050 | .32 |
Class C | 179,832 | .28 |
Institutional Class | 26,213 | .22 |
$ 1,179,816 |
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.
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 $1,508 for the period.
7. 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, which amounted to $749 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $55,029.
Financial Services
9. 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 $11,784 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 1,943 | |
Class B | 443 | |
$ 2,386 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to each of the Funds is not anticipated to have a material impact on such Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 867,686 | $ 793,007 |
Class T | 765,107 | 784,601 |
Class B | 69,445 | 62,350 |
Class C | 139,125 | 47,101 |
Institutional Class | 152,144 | 194,689 |
Total | $ 1,993,507 | $ 1,881,748 |
From net realized gain | ||
Class A | $ 12,753,057 | $ 4,952,004 |
Class T | 15,966,933 | 8,720,889 |
Class B | 15,271,397 | 9,718,109 |
Class C | 9,173,101 | 4,968,829 |
Institutional Class | 1,666,779 | 863,834 |
Total | $ 54,831,267 | $ 29,223,665 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 2,132,186 | 1,351,439 | $ 48,786,912 | $ 31,220,975 |
Reinvestment of distributions | 548,319 | 234,688 | 12,292,012 | 5,118,429 |
Shares redeemed | (1,259,845) | (885,268) | (28,919,491) | (20,266,228) |
Net increase (decrease) | 1,420,660 | 700,859 | $ 32,159,433 | $ 16,073,176 |
Class T | ||||
Shares sold | 372,346 | 426,844 | $ 8,558,636 | $ 9,717,059 |
Reinvestment of distributions | 703,948 | 409,216 | 15,750,996 | 8,897,438 |
Shares redeemed | (1,393,386) | (1,576,453) | (31,851,718) | (35,989,546) |
Net increase (decrease) | (317,092) | (740,393) | $ (7,542,086) | $ (17,375,049) |
Class B | ||||
Shares sold | 242,400 | 302,265 | $ 5,428,899 | $ 6,677,115 |
Reinvestment of distributions | 609,690 | 394,522 | 13,365,246 | 8,409,188 |
Shares redeemed | (2,676,523) | (2,197,220) | (59,803,637) | (49,213,763) |
Net increase (decrease) | (1,824,433) | (1,500,433) | $ (41,009,492) | $ (34,127,460) |
Class C | ||||
Shares sold | 284,897 | 241,582 | $ 6,372,368 | $ 5,385,733 |
Reinvestment of distributions | 345,073 | 190,165 | 7,545,497 | 4,051,037 |
Shares redeemed | (670,985) | (915,599) | (14,937,683) | (20,422,653) |
Net increase (decrease) | (41,015) | (483,852) | $ (1,019,818) | $ (10,985,883) |
Institutional Class | ||||
Shares sold | 75,332 | 67,105 | $ 1,755,195 | $ 1,572,188 |
Reinvestment of distributions | 56,949 | 34,641 | 1,292,278 | 762,982 |
Shares redeemed | (238,050) | (140,689) | (5,551,268) | (3,242,896) |
Net increase (decrease) | (105,769) | (38,943) | $ (2,503,795) | $ (907,726) |
Financial Services
Advisor Health Care 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 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, 2007 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | 2.30% | 8.09% | 7.36% |
Class T (incl. 3.50% sales charge) | 4.46% | 8.33% | 7.35% |
Class B (incl. contingent deferred sales charge) A | 2.86% | 8.27% | 7.43% |
Class C (incl. contingent deferred sales charge) B | 6.79% | 8.63% | 7.21% |
A Class B shares bear a 1.00% 12b-1 fee. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns prior to November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years 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 Health Care Fund - Class T on July 31, 2007, 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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Matthew Sabel, who became Portfolio Manager of Fidelity® Advisor Health Care Fund on May 1, 2007
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the year ending July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 8.54%, 8.25%, 7.66% and 7.75%, respectively (excluding sales charges), compared with a gain of 8.15% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Health Care Index, and an advance of 7.72% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund lagged the S&P 500. For the first two months of the period, the fund trailed the Goldman Sachs index due to unfavorable security selection and an overweighting in health care services, as well as less-than-successful stock selection in health care facilities. Conversely, positive stock selection and an underweighting in health care equipment helped relative returns. Detractors during the two-month time frame included disease management company Healthways, biotechnology firm Celgene and underweighted positions in pharmaceutical giant Pfizer and managed health care company Cigna. Contributions came from three health care equipment stocks: medical device makers Boston Scientific and Medtronic - where we benefited from underweighted exposures - and a strong-performing out-of-benchmark position in Stereotaxis, which manufactures cardiac-care equipment. For the last 10 months of the period, the fund outperformed its new MSCI benchmark. Favorable security selection and an underweighting in pharmaceutical stocks were the main factors behind this outperformance. A small out-of-benchmark stake in fertilizers/agricultural chemicals and an overweighting in health care technology also helped. Conversely, the fund was hurt by disappointing stock selection in health care facilities and managed health care, as well as by modest out-of-index exposure to personal products companies. Top contributions to performance during the 10-month period came from a significant underweighting in Pfizer, as well as investments in health care information technology firm Cerner, diagnostic-test manufacturers Inverness Medical Innovations and Biosite - which Inverness acquired during the period - and biotech firm Celgene. Among the detractors were Healthways, pharmaceutical supplier Inyx, assisted living company Brookdale Senior Living and an underweighted position in pharmaceutical firm Schering-Plough. Some of the stocks mentioned here were not held at period end.
For the year ending July 31, 2007, the fund's Institutional Class shares returned 8.90%, compared with a gain of 8.15% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Health Care Index, and an advance of 7.72% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund lagged the S&P 500. For the first two months of the period, the fund trailed the Goldman Sachs index due to unfavorable security selection and an overweighting in health care services, as well as less-than-successful stock selection in health care facilities. Conversely, positive stock selection and an underweighting in health care equipment helped relative returns. Detractors during the two-month time frame included disease management company Healthways, biotechnology firm Celgene and underweighted positions in pharmaceutical giant Pfizer and managed health care company Cigna. Contributions came from three health care equipment stocks: medical device makers Boston Scientific and Medtronic - where we benefited from underweighted exposures - and a strong-performing out-of-benchmark position in Stereotaxis, which manufactures cardiac-care equipment. For the last 10 months of the period, the fund outperformed its new MSCI benchmark. Favorable security selection and an underweighting in pharmaceutical stocks were the main factors behind this outperformance. A small out-of-benchmark stake in fertilizers/agricultural chemicals and an overweighting in health care technology also helped. Conversely, the fund was hurt by disappointing stock selection in health care facilities and managed health care, as well as by modest out-of-index exposure to personal products companies. Top contributions to performance during the 10-month period came from a significant underweighting in Pfizer, as well as investments in health care information technology firm Cerner, diagnostic-test manufacturers Inverness Medical Innovations and Biosite - which Inverness acquired during the period - and biotech firm Celgene. Among the detractors were Healthways, pharmaceutical supplier Inyx, assisted living company Brookdale Senior Living and an underweighted position in pharmaceutical firm Schering-Plough. Some of the stocks mentioned here were not held at period end.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Health Care Index, which returned 3.65% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Health Care Index, which returned 3.92% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 7.72%.
Annual Report
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Health Care
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 997.80 | $ 5.75 |
HypotheticalA | $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | |||
Actual | $ 1,000.00 | $ 996.40 | $ 6.98 |
HypotheticalA | $ 1,000.00 | $ 1,017.80 | $ 7.05 |
Class B | |||
Actual | $ 1,000.00 | $ 993.50 | $ 9.34 |
HypotheticalA | $ 1,000.00 | $ 1,015.42 | $ 9.44 |
Class C | |||
Actual | $ 1,000.00 | $ 993.90 | $ 9.39 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.49 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 999.20 | $ 4.21 |
HypotheticalA | $ 1,000.00 | $ 1,020.58 | $ 4.26 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.16% |
Class T | 1.41% |
Class B | 1.89% |
Class C | 1.90% |
Institutional Class | .85% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Merck & Co., Inc. | 7.6 | 5.8 |
Johnson & Johnson | 7.3 | 10.9 |
UnitedHealth Group, Inc. | 4.2 | 3.1 |
Schering-Plough Corp. | 3.6 | 0.0 |
Bristol-Myers Squibb Co. | 3.2 | 0.0 |
Becton, Dickinson & Co. | 3.1 | 2.4 |
Allergan, Inc. | 2.7 | 4.2 |
Thermo Fisher Scientific, Inc. | 2.3 | 0.0 |
C.R. Bard, Inc. | 2.2 | 3.8 |
McKesson Corp. | 1.9 | 1.2 |
38.1 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Pharmaceuticals | 33.6% | |
| Health Care Providers & Services | 19.7% | |
| Health Care Equipment & Supplies | 15.5% | |
| Biotechnology | 11.3% | |
| Life Sciences Tools & Services | 9.8% | |
| All Others* | 10.1% | |
As of January 31, 2007 | |||
| Pharmaceuticals | 30.3% | |
| Health Care Providers & Services | 23.7% | |
| Health Care Equipment & Supplies | 18.9% | |
| Biotechnology | 11.7% | |
| Health Care Technology | 5.0% | |
| All Others* | 10.4% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
BIOTECHNOLOGY - 11.3% | |||
Biotechnology - 11.3% | |||
3SBio, Inc. sponsored ADR | 182,700 | $ 1,638,819 | |
Alexion Pharmaceuticals, Inc. (a) | 12,100 | 703,736 | |
Alnylam Pharmaceuticals, Inc. (a) | 138,400 | 3,336,824 | |
Altus Pharmaceuticals, Inc. (a) | 50,100 | 511,020 | |
Amgen, Inc. (a) | 191,700 | 10,301,958 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 56,500 | 2,627,815 | |
Arena Pharmaceuticals, Inc. (a) | 36,600 | 418,338 | |
Biogen Idec, Inc. (a) | 89,227 | 5,044,895 | |
Celgene Corp. (a) | 166,207 | 10,065,496 | |
Cephalon, Inc. (a) | 36,800 | 2,765,152 | |
Cleveland Biolabs, Inc. (d) | 11,900 | 113,526 | |
CSL Ltd. | 50,400 | 3,820,257 | |
CytRx Corp. (a) | 163,200 | 494,496 | |
deCODE genetics, Inc. (a)(d) | 171,562 | 607,329 | |
Genentech, Inc. (a) | 30,286 | 2,252,673 | |
Genmab AS (a) | 5,600 | 349,109 | |
Genomic Health, Inc. (a) | 7,000 | 139,300 | |
Gilead Sciences, Inc. (a) | 325,800 | 12,129,534 | |
Grifols SA | 23,723 | 503,151 | |
GTx, Inc. (a) | 162,417 | 2,496,349 | |
Human Genome Sciences, Inc. (a) | 57,800 | 448,528 | |
Indevus Pharmaceuticals, Inc. (a) | 51,965 | 368,432 | |
Isis Pharmaceuticals, Inc. (a)(d) | 127,800 | 1,330,398 | |
MannKind Corp. (a) | 14,200 | 149,952 | |
Medarex, Inc. (a)(d) | 105,900 | 1,499,544 | |
Memory Pharmaceuticals Corp. (a) | 716,999 | 1,441,168 | |
Molecular Insight Pharmaceuticals, Inc. (d) | 80,400 | 651,240 | |
Omrix Biopharmaceuticals, Inc. (a) | 25,655 | 735,785 | |
ONYX Pharmaceuticals, Inc. (a) | 13,700 | 380,997 | |
OREXIGEN Therapeutics, Inc. | 15,100 | 223,933 | |
OSI Pharmaceuticals, Inc. (a) | 58,605 | 1,889,425 | |
PDL BioPharma, Inc. (a) | 53,400 | 1,254,366 | |
Regeneron Pharmaceuticals, Inc. (a) | 4,200 | 62,538 | |
Theravance, Inc. (a) | 45,200 | 1,210,004 | |
Titan Pharmaceuticals, Inc. (a) | 85,800 | 199,914 | |
Transition Therapeutics, Inc. (a) | 28,788 | 375,942 | |
Vertex Pharmaceuticals, Inc. (a) | 59,100 | 1,908,930 | |
Zymogenetics, Inc. (a) | 23,700 | 273,972 | |
74,724,845 | |||
CAPITAL MARKETS - 0.2% | |||
Asset Management & Custody Banks - 0.2% | |||
Fortress Investment Group LLC (d) | 75,300 | 1,428,441 | |
CHEMICALS - 3.4% | |||
Diversified Chemicals - 2.1% | |||
Bayer AG | 80,900 | 5,725,315 | |
Bayer AG sponsored ADR | 118,100 | 8,357,937 | |
14,083,252 | |||
Shares | Value | ||
Fertilizers & Agricultural Chemicals - 1.1% | |||
Agrium, Inc. | 58,500 | $ 2,459,665 | |
Monsanto Co. | 70,100 | 4,517,945 | |
6,977,610 | |||
Specialty Chemicals - 0.2% | |||
Ecolab, Inc. | 16,600 | 699,026 | |
Novozymes AS Series B | 4,000 | 476,659 | |
1,175,685 | |||
TOTAL CHEMICALS | 22,236,547 | ||
CONTAINERS & PACKAGING - 0.2% | |||
Metal & Glass Containers - 0.2% | |||
Ess Dee Aluminium Ltd. | 121,609 | 1,604,912 | |
DIVERSIFIED CONSUMER SERVICES - 0.1% | |||
Specialized Consumer Services - 0.1% | |||
Service Corp. International | 57,400 | 695,688 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Agilent Technologies, Inc. (a) | 18,900 | 721,035 | |
Mettler-Toledo International, Inc. (a) | 3,500 | 333,060 | |
1,054,095 | |||
FOOD & STAPLES RETAILING - 0.6% | |||
Drug Retail - 0.6% | |||
CVS Caremark Corp. | 106,600 | 3,751,254 | |
FOOD PRODUCTS - 1.7% | |||
Agricultural Products - 0.7% | |||
Bunge Ltd. | 22,500 | 2,038,725 | |
Nutreco Holding NV | 31,100 | 2,329,924 | |
4,368,649 | |||
Packaged Foods & Meats - 1.0% | |||
BioMar Holding AS | 12,500 | 686,163 | |
Cermaq ASA | 161,600 | 3,008,098 | |
Leroy Seafood Group ASA | 18,400 | 438,787 | |
Marine Harvest ASA (a) | 2,184,000 | 2,761,474 | |
6,894,522 | |||
TOTAL FOOD PRODUCTS | 11,263,171 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 15.4% | |||
Health Care Equipment - 12.3% | |||
American Medical Systems Holdings, Inc. (a)(d) | 89,100 | 1,628,748 | |
ArthroCare Corp. (a) | 70,800 | 3,583,896 | |
Aspect Medical Systems, Inc. (a) | 237,900 | 3,237,819 | |
Baxter International, Inc. | 131,030 | 6,892,178 | |
Becton, Dickinson & Co. | 268,700 | 20,517,932 | |
BioLase Technology, Inc. (a)(d) | 53,000 | 373,650 | |
C.R. Bard, Inc. | 183,479 | 14,397,597 | |
Cytyc Corp. (a) | 40,500 | 1,705,050 | |
Electro-Optical Sciences, Inc. (a) | 177,923 | 1,161,837 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES - CONTINUED | |||
Health Care Equipment - continued | |||
Electro-Optical Sciences, Inc. warrants 11/2/11 (a)(f) | 60,018 | $ 202,068 | |
Gen-Probe, Inc. (a) | 129,600 | 8,166,096 | |
Golden Meditech Co. Ltd. (a) | 288,000 | 145,714 | |
Gyrus Group PLC (a) | 37,800 | 331,528 | |
Hologic, Inc. (a) | 17,600 | 911,680 | |
I-Flow Corp. (a)(d) | 145,523 | 2,577,212 | |
Integra LifeSciences Holdings Corp. (a) | 7,100 | 352,515 | |
Intuitive Surgical, Inc. (a)(d) | 5,388 | 1,145,543 | |
IRIS International, Inc. (a) | 28,800 | 458,208 | |
Kyphon, Inc. (a) | 37,700 | 2,473,874 | |
Mentor Corp. | 27,500 | 1,082,125 | |
Minrad International, Inc. (a) | 61,300 | 291,175 | |
NeuroMetrix, Inc. (a) | 64,400 | 540,960 | |
Northstar Neuroscience, Inc. | 171,400 | 1,756,850 | |
Orthofix International NV (a) | 7,700 | 331,562 | |
Phonak Holding AG | 9,351 | 907,471 | |
Quidel Corp. (a) | 19,900 | 296,112 | |
Respironics, Inc. (a) | 74,800 | 3,422,100 | |
Sirona Dental Systems, Inc. (a) | 29,435 | 1,040,822 | |
The Spectranetics Corp. (a) | 64,309 | 836,660 | |
ThermoGenesis Corp. (a) | 123,934 | 293,724 | |
Varian Medical Systems, Inc. (a) | 8,900 | 363,120 | |
William Demant Holding AS (a) | 3,800 | 380,849 | |
81,806,675 | |||
Health Care Supplies - 3.1% | |||
Cooper Companies, Inc. | 19,043 | 954,626 | |
DJO, Inc. (a) | 43,241 | 2,053,083 | |
Immucor, Inc. (a) | 25,500 | 794,580 | |
Inverness Medical Innovations, Inc. (a) | 243,787 | 11,801,729 | |
Lifecore Biomedical, Inc. (a) | 3,900 | 59,631 | |
Microtek Medical Holdings, Inc. (a) | 291,753 | 1,426,672 | |
Omega Pharma SA | 14,854 | 1,287,009 | |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 260,000 | 645,704 | |
West Pharmaceutical Services, Inc. | 33,200 | 1,536,496 | |
20,559,530 | |||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 102,366,205 | ||
HEALTH CARE PROVIDERS & SERVICES - 19.7% | |||
Health Care Distributors & Services - 2.9% | |||
Chindex International, Inc. (a) | 3,600 | 77,832 | |
Henry Schein, Inc. (a) | 29,400 | 1,597,596 | |
McKesson Corp. | 215,600 | 12,453,056 | |
Profarma Distribuidora de Produtos Farmaceuticos SA | 253,000 | 4,800,313 | |
18,928,797 | |||
Shares | Value | ||
Health Care Facilities - 4.5% | |||
Acibadem Saglik Hizmetleri AS | 325,923 | $ 2,283,973 | |
Apollo Hospitals Enterprise Ltd. | 98,866 | 1,191,238 | |
Bangkok Dusit Medical Service PCL (For. Reg.) | 633,900 | 853,453 | |
Brookdale Senior Living, Inc. (d) | 283,950 | 11,360,840 | |
Bumrungrad Hospital PCL (For. Reg.) | 1,807,100 | 2,553,307 | |
Community Health Systems, Inc. (a) | 40,200 | 1,563,780 | |
Emeritus Corp. (a) | 137,890 | 3,378,305 | |
Five Star Quality Care, Inc. (a)(d) | 99,800 | 738,520 | |
HealthSouth Corp. (a)(d) | 30,000 | 474,000 | |
LifePoint Hospitals, Inc. (a) | 500 | 14,775 | |
Raffles Medical Group Ltd. | 38,000 | 39,354 | |
Southern Cross Healthcare Group | 32,600 | 357,608 | |
Sun Healthcare Group, Inc. (a) | 280,000 | 3,785,600 | |
VCA Antech, Inc. (a) | 30,520 | 1,200,657 | |
29,795,410 | |||
Health Care Services - 5.3% | |||
Diagnosticos da America SA | 273,300 | 6,576,490 | |
Emergency Medical Services Corp. | 100 | 3,901 | |
Express Scripts, Inc. (a) | 145,300 | 7,283,889 | |
HAPC, Inc. unit (a) | 215,800 | 1,361,698 | |
Health Grades, Inc. (a) | 338,105 | 2,106,394 | |
Healthways, Inc. (a)(d) | 27,233 | 1,190,082 | |
HMS Holdings Corp. (a) | 68,200 | 1,297,846 | |
LHC Group, Inc. (a) | 157,265 | 3,808,958 | |
Lincare Holdings, Inc. (a) | 46,100 | 1,645,309 | |
Nighthawk Radiology Holdings, Inc. (a) | 194,800 | 4,018,724 | |
Omnicare, Inc. | 168,729 | 5,595,054 | |
Rural/Metro Corp. (a) | 13,331 | 59,990 | |
34,948,335 | |||
Managed Health Care - 7.0% | |||
Health Net, Inc. (a) | 42,500 | 2,105,450 | |
Healthspring, Inc. (a) | 19,300 | 330,030 | |
Humana, Inc. (a) | 124,400 | 7,972,796 | |
UnitedHealth Group, Inc. | 579,509 | 28,065,621 | |
WellPoint, Inc. (a) | 108,800 | 8,173,056 | |
46,646,953 | |||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 130,319,495 | ||
HEALTH CARE TECHNOLOGY - 1.6% | |||
Health Care Technology - 1.6% | |||
Allscripts Healthcare Solutions, Inc. (a)(d) | 146,647 | 3,336,219 | |
Cerner Corp. (a) | 82,400 | 4,356,488 | |
Eclipsys Corp. (a) | 98,967 | 2,150,553 | |
Vital Images, Inc. (a) | 35,900 | 699,691 | |
10,542,951 | |||
HOTELS, RESTAURANTS & LEISURE - 0.1% | |||
Leisure Facilities - 0.1% | |||
Life Time Fitness, Inc. (a)(d) | 19,000 | 976,980 | |
Common Stocks - continued | |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
WebMD Health Corp. Class A (a) | 42,289 | $ 1,936,413 | |
LIFE SCIENCES TOOLS & SERVICES - 9.8% | |||
Life Sciences Tools & Services - 9.8% | |||
AMAG Pharmaceuticals, Inc. (a) | 83,701 | 4,493,907 | |
Applera Corp. - Applied Biosystems Group | 113,600 | 3,546,592 | |
Bruker BioSciences Corp. (a) | 422,223 | 3,306,006 | |
Covance, Inc. (a) | 23,700 | 1,672,509 | |
Exelixis, Inc. (a) | 342,797 | 3,321,703 | |
Illumina, Inc. (a) | 47,272 | 2,154,185 | |
Luminex Corp. (a)(d) | 75,400 | 900,276 | |
Medivation, Inc. (a) | 17,600 | 288,816 | |
Millipore Corp. (a)(d) | 115,470 | 9,077,097 | |
PerkinElmer, Inc. | 441,300 | 12,281,379 | |
Pharmaceutical Product Development, Inc. | 39,400 | 1,319,900 | |
QIAGEN NV (a) | 126,500 | 2,175,800 | |
Thermo Fisher Scientific, Inc. (a) | 287,100 | 14,989,491 | |
Third Wave Technologies, Inc. (a) | 46,900 | 341,901 | |
Waters Corp. (a) | 89,800 | 5,231,748 | |
65,101,310 | |||
MACHINERY - 0.0% | |||
Industrial Machinery - 0.0% | |||
Pall Corp. | 9,100 | 377,832 | |
PERSONAL PRODUCTS - 0.9% | |||
Personal Products - 0.9% | |||
Bare Escentuals, Inc. | 138,692 | 3,912,501 | |
Hengan International Group Co. Ltd. | 656,000 | 2,204,930 | |
6,117,431 | |||
PHARMACEUTICALS - 33.6% | |||
Pharmaceuticals - 33.6% | |||
Adams Respiratory Therapeutics, Inc. (a)(d) | 135,700 | 5,022,257 | |
Akorn, Inc. (a) | 47,000 | 318,660 | |
Allergan, Inc. (d) | 306,220 | 17,800,569 | |
Aurobindo Pharma Ltd. | 14,696 | 237,974 | |
Barr Pharmaceuticals, Inc. (a) | 117,400 | 6,013,228 | |
BioMimetic Therapeutics, Inc. | 331,162 | 4,778,668 | |
Bristol-Myers Squibb Co. (d) | 751,200 | 21,341,592 | |
Cadence Pharmaceuticals, Inc. (d) | 33,446 | 411,386 | |
China Shineway Pharmaceutical Group Ltd. | 1,608,000 | 1,155,553 | |
Collagenex Pharmaceuticals, Inc. (a) | 72,600 | 846,516 | |
Eczacibasi ILAC Sanayi TAS (a) | 82,000 | 351,164 | |
Elan Corp. PLC sponsored ADR (a) | 78,100 | 1,462,813 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 41,500 | 1,411,415 | |
Eurand NV | 52,068 | 746,655 | |
Forest Laboratories, Inc. (a) | 45,300 | 1,821,060 | |
Shares | Value | ||
Inspire Pharmaceuticals, Inc. (a) | 65,500 | $ 360,250 | |
Jazz Pharmaceuticals, Inc. (a) | 34,787 | 493,628 | |
Johnson & Johnson | 799,458 | 48,367,209 | |
Merck & Co., Inc. | 1,011,500 | 50,220,970 | |
Nexmed, Inc. (a) | 156,500 | 259,790 | |
Novo Nordisk AS Series B sponsored ADR | 3,200 | 335,712 | |
Pfizer, Inc. | 496,820 | 11,680,238 | |
Schering-Plough Corp. | 824,700 | 23,536,938 | |
Shire PLC sponsored ADR | 112,600 | 8,308,754 | |
Sirtris Pharmaceuticals, Inc. | 3,400 | 42,364 | |
Stada Arzneimittel AG | 14,100 | 922,819 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 8,100 | 340,362 | |
Wyeth | 238,942 | 11,593,466 | |
Xenoport, Inc. (a) | 53,000 | 2,262,570 | |
222,444,580 | |||
SOFTWARE - 0.2% | |||
Systems Software - 0.2% | |||
Quality Systems, Inc. | 27,648 | 1,071,084 | |
TOTAL COMMON STOCKS (Cost $569,972,738) | 658,013,234 | ||
Convertible Bonds - 0.1% | ||||
Principal Amount | ||||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% | ||||
Health Care Supplies - 0.1% | ||||
Inverness Medical Innovations, Inc. 3% 5/15/16 (e) | $ 719,000 | 852,015 | ||
Money Market Funds - 5.8% | |||
Shares | |||
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 38,199,751 | 38,199,751 | |
TOTAL INVESTMENT PORTFOLIO - 105.2% (Cost $608,891,489) | 697,065,000 |
NET OTHER ASSETS - (5.2)% | (34,704,034) | ||
NET ASSETS - 100% | $ 662,360,966 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $852,015 or 0.1% of net assets. |
(f) 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 $202,068 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Electro-Optical Sciences, Inc. warrants 11/2/11 | 11/1/06 | $ 6 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 215,043 |
Fidelity Securities Lending Cash Central Fund | 219,537 |
Total | $ 434,580 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.5% |
Germany | 2.2% |
Brazil | 1.7% |
United Kingdom | 1.4% |
Others (individually less than 1%) | 6.2% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $36,931,789) - See accompanying schedule: Unaffiliated issuers (cost $570,691,738) | $ 658,865,249 | |
Fidelity Central Funds (cost $38,199,751) | 38,199,751 | |
Total Investments (cost $608,891,489) | $ 697,065,000 | |
Receivable for investments sold | 23,440,698 | |
Receivable for fund shares sold | 556,030 | |
Dividends receivable | 300,696 | |
Interest receivable | 4,554 | |
Distributions receivable from Fidelity Central Funds | 65,357 | |
Prepaid expenses | 1,347 | |
Other receivables | 18,724 | |
Total assets | 721,452,406 | |
Liabilities | ||
Payable to custodian bank | $ 1,121,602 | |
Payable for investments purchased | 16,601,639 | |
Payable for fund shares redeemed | 2,243,497 | |
Accrued management fee | 322,082 | |
Distribution fees payable | 324,409 | |
Other affiliated payables | 194,064 | |
Other payables and accrued expenses | 84,396 | |
Collateral on securities loaned, at value | 38,199,751 | |
Total liabilities | 59,091,440 | |
Net Assets | $ 662,360,966 | |
Net Assets consist of: | ||
Paid in capital | $ 526,959,442 | |
Accumulated net investment loss | (199) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 47,267,140 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 88,134,583 | |
Net Assets | $ 662,360,966 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 22.90 | |
Maximum offering price per share (100/94.25 of $22.90) | $ 24.30 | |
Class T: | $ 22.39 | |
Maximum offering price per share (100/96.50 of $22.39) | $ 23.20 | |
Class B: | $ 21.29 | |
Class C: | $ 21.29 | |
Institutional Class: | $ 23.62 | |
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
Fund Name
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 7,225,654 | |
Interest | 8,234 | |
Income from Fidelity Central Funds | 434,580 | |
Total income | 7,668,468 | |
Expenses | ||
Management fee | $ 4,031,988 | |
Transfer agent fees | 2,310,550 | |
Distribution fees | 4,245,973 | |
Accounting and security lending fees | 264,496 | |
Custodian fees and expenses | 38,150 | |
Independent trustees' compensation | 2,379 | |
Registration fees | 87,759 | |
Audit | 53,006 | |
Legal | 11,793 | |
Miscellaneous | 170,794 | |
Total expenses before reductions | 11,216,888 | |
Expense reductions | (87,066) | 11,129,822 |
Net investment income (loss) | (3,461,354) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 78,376,128 | |
Foreign currency transactions | (66,522) | |
Total net realized gain (loss) | 78,309,606 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $37,025) | (16,375,226) | |
Assets and liabilities in foreign currencies | (1,912) | |
Total change in net unrealized appreciation (depreciation) | (16,377,138) | |
Net gain (loss) | 61,932,468 | |
Net increase (decrease) in net assets resulting from operations | $ 58,471,114 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (3,461,354) | $ (6,125,419) |
Net realized gain (loss) | 78,309,606 | 99,186,502 |
Change in net unrealized appreciation (depreciation) | (16,377,138) | (66,787,109) |
Net increase (decrease) in net assets resulting from operations | 58,471,114 | 26,273,974 |
Distributions to shareholders from net realized gain | (83,314,166) | (1,408,688) |
Share transactions - net increase (decrease) | (46,973,972) | (90,540,183) |
Redemption fees | 16,966 | 29,238 |
Total increase (decrease) in net assets | (71,800,058) | (65,645,659) |
Net Assets | ||
Beginning of period | 734,161,024 | 799,806,683 |
End of period (including accumulated net investment loss of $199 and accumulated net investment loss of $327, respectively) | $ 662,360,966 | $ 734,161,024 |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.77 | $ 22.94 | $ 18.91 | $ 18.29 | $ 16.51 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.03) | (.09) | (.05) | (.05) | - G |
Net realized and unrealized gain (loss) | 1.91 | .96 | 4.08 | .67 | 1.78 |
Total from investment operations | 1.88 | .87 | 4.03 | .62 | 1.78 |
Distributions from net realized gain | (2.75) | (.04) | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 | $ 18.29 |
Total Return A,B | 8.54% | 3.79% | 21.31% | 3.39% | 10.78% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.22% | 1.25% | 1.28% | 1.32% | 1.34% |
Expenses net of fee waivers, if any | 1.22% | 1.25% | 1.28% | 1.32% | 1.34% |
Expenses net of all reductions | 1.21% | 1.21% | 1.26% | 1.29% | 1.27% |
Net investment income (loss) | (.14)% | (.38)% | (.22)% | (.26)% | (.01)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 234,656 | $ 199,221 | $ 139,158 | $ 104,258 | $ 108,692 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.26 | $ 22.50 | $ 18.60 | $ 18.03 | $ 16.31 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.15) | (.09) | (.09) | (.04) |
Net realized and unrealized gain (loss) | 1.87 | .95 | 3.99 | .66 | 1.76 |
Total from investment operations | 1.78 | .80 | 3.90 | .57 | 1.72 |
Distributions from net realized gain | (2.65) | (.04) | - | - | - |
Redemption fees added to paid in capital C | -G | -G | -G | -G | - G |
Net asset value, end of period | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 | $ 18.03 |
Total Return A,B | 8.25% | 3.55% | 20.97% | 3.16% | 10.55% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.48% | 1.50% | 1.53% | 1.56% | 1.59% |
Expenses net of fee waivers, if any | 1.48% | 1.50% | 1.53% | 1.56% | 1.59% |
Expenses net of all reductions | 1.47% | 1.47% | 1.51% | 1.53% | 1.51% |
Net investment income (loss) | (.40)% | (.63)% | (.47)% | (.51)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 186,628 | $ 218,280 | $ 243,353 | $ 243,176 | $ 264,115 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.17 | $ 21.55 | $ 17.91 | $ 17.45 | $ 15.86 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.20) | (.25) | (.19) | (.18) | (.12) |
Net realized and unrealized gain (loss) | 1.79 | .91 | 3.83 | .64 | 1.71 |
Total from investment operations | 1.59 | .66 | 3.64 | .46 | 1.59 |
Distributions from net realized gain | (2.47) | (.04) | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | -G |
Net asset value, end of period | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 | $ 17.45 |
Total Return A,B | 7.66% | 3.06% | 20.32% | 2.64% | 10.03% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.99% | 2.01% | 2.04% | 2.06% | 2.05% |
Expenses net of fee waivers, if any | 1.99% | 2.01% | 2.04% | 2.06% | 2.05% |
Expenses net of all reductions | 1.98% | 1.98% | 2.01% | 2.03% | 1.98% |
Net investment income (loss) | (.91)% | (1.14)% | (.98)% | (1.01)% | (.73)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 113,384 | $ 180,364 | $ 266,319 | $ 285,299 | $ 317,906 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.24 | $ 21.61 | $ 17.94 | $ 17.47 | $ 15.87 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.19) | (.24) | (.17) | (.17) | (.11) |
Net realized and unrealized gain (loss) | 1.79 | .91 | 3.84 | .64 | 1.71 |
Total from investment operations | 1.60 | .67 | 3.67 | .47 | 1.60 |
Distributions from net realized gain | (2.55) | (.04) | - | - | - |
Redemption fees added to paid in capital C | -G | -G | -G | - G | - G |
Net asset value, end of period | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 | $ 17.47 |
Total Return A,B | 7.75% | 3.10% | 20.46% | 2.69% | 10.08% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.94% | 1.94% | 1.97% | 2.00% | 2.00% |
Expenses net of fee waivers, if any | 1.94% | 1.94% | 1.97% | 2.00% | 2.00% |
Expenses net of all reductions | 1.93% | 1.91% | 1.94% | 1.97% | 1.92% |
Net investment income (loss) | (.86)% | (1.07)% | (.91)% | (.95)% | (.67)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 105,519 | $ 115,644 | $ 131,277 | $ 130,184 | $ 150,576 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Health Care
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 24.43 | $ 23.48 | $ 19.28 | $ 18.58 | $ 16.70 |
Income from Investment Operations | |||||
Net investment income (loss) B | .05 | - F | .04 | .03 | .06 |
Net realized and unrealized gain (loss) | 1.96 | .99 | 4.16 | .67 | 1.82 |
Total from investment operations | 2.01 | .99 | 4.20 | .70 | 1.88 |
Distributions from net realized gain | (2.82) | (.04) | - | - | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | - F |
Net asset value, end of period | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 | $ 18.58 |
Total Return A | 8.90% | 4.21% | 21.78% | 3.77% | 11.26% |
Ratios to Average Net Assets C,E | |||||
Expenses before reductions | .88% | .86% | .88% | .91% | .96% |
Expenses net of fee waivers, if any | .88% | .86% | .88% | .91% | .96% |
Expenses net of all reductions | .87% | .83% | .85% | .88% | .88% |
Net investment income (loss) | .19% | .01% | .18% | .14% | .37% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 22,174 | $ 20,652 | $ 19,698 | $ 20,358 | $ 23,364 |
Portfolio turnover rate D | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Health Care Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income and capital gain distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, deferred trustees compensation 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 | $ 106,392,713 | |
Unrealized depreciation | (19,142,336) | |
Net unrealized appreciation (depreciation) | 87,250,377 | |
Undistributed ordinary income | 6,698,838 | |
Undistributed long-term capital gain | 37,019,576 | |
Cost for federal income tax purposes | $ 609,814,623 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 9,215,258 | $ - |
Long-term Capital Gains | 74,098,908 | 1,408,688 |
Total | $ 83,314,166 | $ 1,408,688 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
Health Care
3. Significant Accounting Policies - continued
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,004,019,333 and $1,136,601,966, respectively.
6. 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 .26% 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 .56% 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% | $ 560,826 | $ 25,284 |
Class T | .25% | .25% | 1,042,480 | 8,440 |
Class B | .75% | .25% | 1,498,719 | 1,129,920 |
Class C | .75% | .25% | 1,143,948 | 68,529 |
$ 4,245,973 | $ 1,232,173 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 57,177 |
Class T | 24,588 |
Class B* | 214,242 |
Class C* | 5,686 |
$ 301,693 |
* 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 | $ 725,923 | .32 |
Class T | 685,061 | .33 |
Class B | 514,752 | .34 |
Class C | 335,870 | .29 |
Institutional Class | 48,944 | .24 |
$ 2,310,550 |
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.
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 $4,268 for the period.
7. 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, which amounted to $1,365 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $219,537.
Health Care
9. 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 $55,299 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 15,349 | |
Class B | 505 | |
Class C | 1,600 | |
Institutional Class | 273 | |
$ 17,727 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to each of the Funds is not anticipated to have a material impact on such Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net realized gain | ||
Class A | $ 23,887,113 | $ 268,383 |
Class T | 24,697,844 | 418,518 |
Class B | 18,914,669 | 451,789 |
Class C | 13,345,526 | 237,307 |
Institutional Class | 2,469,014 | 32,691 |
Total | $ 83,314,166 | $ 1,408,688 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 3,628,491 | 4,246,771 | $ 84,047,399 | $ 100,545,647 |
Reinvestment of distributions | 919,326 | 9,593 | 20,489,356 | 231,281 |
Shares redeemed | (2,679,409) | (1,943,098) | (62,216,884) | (45,790,984) |
Net increase (decrease) | 1,868,408 | 2,313,266 | $ 42,319,871 | $ 54,985,944 |
Class T | ||||
Shares sold | 811,354 | 1,483,213 | $ 18,411,031 | $ 34,397,018 |
Reinvestment of distributions | 1,065,004 | 16,686 | 23,268,418 | 394,126 |
Shares redeemed | (2,924,887) | (2,931,043) | (66,315,193) | (67,817,881) |
Net increase (decrease) | (1,048,529) | (1,431,144) | $ (24,635,744) | $ (33,026,737) |
Class B | ||||
Shares sold | 416,759 | 602,620 | $ 8,968,832 | $ 13,347,616 |
Reinvestment of distributions | 800,087 | 17,559 | 16,715,113 | 396,669 |
Shares redeemed | (4,028,295) | (4,838,970) | (87,078,801) | (107,126,893) |
Net increase (decrease) | (2,811,449) | (4,218,791) | $ (61,394,856) | $ (93,382,608) |
Class C | ||||
Shares sold | 498,290 | 622,433 | $ 10,716,280 | $ 13,817,015 |
Reinvestment of distributions | 508,339 | 8,336 | 10,614,471 | 188,806 |
Shares redeemed | (1,249,593) | (1,506,077) | (26,990,765) | (33,350,524) |
Net increase (decrease) | (242,964) | (875,308) | $ (5,660,014) | $ (19,344,703) |
Institutional Class | ||||
Shares sold | 415,448 | 197,168 | $ 10,086,881 | $ 4,832,048 |
Reinvestment of distributions | 77,688 | 990 | 1,779,821 | 24,473 |
Shares redeemed | (399,590) | (191,717) | (9,469,931) | (4,628,600) |
Net increase (decrease) | 93,546 | 6,441 | $ 2,396,771 | $ 227,921 |
Health Care
Advisor Industrials 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 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, 2007 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | 17.94% | 17.85% | 9.75% |
Class T (incl. 3.50% sales charge) | 20.45% | 18.12% | 9.77% |
Class B (incl. contingent deferred sales charge) A | 19.18% | 18.14% | 9.82% |
Class C (incl. contingent deferred sales charge) B | 23.25% | 18.39% | 9.58% |
A Class B shares bear a 1.00% 12b-1 fee. Class B shares contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns prior to November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years 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 Industrials Fund - Class T on July 31, 1997, 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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 25.13%, 24.82%, 24.18% and 24.25%, respectively (excluding sales charges), trailing the 26.68% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Industrials Index and the 26.28% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Cyclical Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly lagged the Goldman Sachs index during the first two months of the period. An overweighting and unfavorable stock selection in the construction and engineering group worked against the fund, along with mediocre stock picking in heavy electrical equipment and diversified chemicals. Conversely, stock picking in three groups - auto manufacturers, steel, and construction and farm machinery/heavy trucks - was beneficial. Among individual holdings, engineering and construction holdings Fluor and Netherlands-based Chicago Bridge & Iron were weak, as falling energy prices threatened the cancellation of some of the companies' projects. On the positive side, not owning weak-performing auto manufacturer and major index component DaimlerChrysler during this two-month stretch aided our results. During the final 10 months of the period, the fund's return fell slightly short of the MSCI index. Stock selection in industrial conglomerates dragged down our performance, along with a sizable underweighting in the strong-performing construction and farm machinery/heavy trucks segment. On the positive side, the fund's performance benefited from an overweighting and effective stock selection in construction and engineering. Additionally, our picks in heavy electrical equipment added value. Among individual holdings, overweighting US Airways was a mistake. This stock was hampered by difficult earnings comparisons from the prior year, as well as by investors' disappointment over unfulfilled hopes for industry consolidation, rising fuel costs and the increasing number of airline shares available for purchase due to another carrier's emergence from bankruptcy. An underweighting and untimely ownership of heavy equipment maker Caterpillar also detracted, as did shying away from commercial aircraft maker and index component Boeing. Looking at contributors, Shaw Group and Foster Wheeler both rode strong global markets in commercial construction. Switzerland-based ABB, a provider of power transmission and automation equipment for utility and industrial customers, also contributed to performance. Caterpillar and Foster Wheeler were sold by period end.
During the past year, the fund's Institutional Class shares returned 25.53%, trailing the 26.68% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Industrials Index and the 26.28% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Cyclical Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly lagged the Goldman Sachs index during the first two months of the period. An overweighting and unfavorable stock selection in the construction and engineering group worked against the fund, along with mediocre stock picking in heavy electrical equipment and diversified chemicals. Conversely, stock picking in three groups - auto manufacturers, steel, and construction and farm machinery/heavy trucks - was beneficial. Among individual holdings, engineering and construction holdings Fluor and Netherlands-based Chicago Bridge & Iron were weak, as falling energy prices threatened the cancellation of some of the companies' projects. On the positive side, not owning weak-performing auto manufacturer and major index component DaimlerChrysler during this two-month stretch aided our results. During the final 10 months of the period, the fund's return fell slightly short of the MSCI index. Stock selection in industrial conglomerates dragged down our performance, along with a sizable underweighting in the strong-performing construction and farm machinery/heavy trucks segment. On the positive side, the fund's performance benefited from an overweighting and effective stock selection in construction and engineering. Additionally, our picks in heavy electrical equipment added value. Among individual holdings, overweighting US Airways was a mistake. This stock was hampered by difficult earnings comparisons from the prior year as well as by investors' disappointment over unfulfilled hopes for industry consolidation, rising fuel costs and the increasing number of airline shares available for purchase due to another carrier's emergence from bankruptcy. An underweighting and untimely ownership of heavy equipment maker Caterpillar also detracted, as did shying away from commercial aircraft maker and index component Boeing. Looking at contributors, Shaw Group and Foster Wheeler both rode strong global markets in commercial construction. Switzerland-based ABB, a provider of power transmission and automation equipment for utility and industrial customers, also contributed to performance. Caterpillar and Foster Wheeler were sold by period end.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Cyclical Industries Index, which returned 4.40% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Industrials Index, which returned 20.97% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 26.28%.
Annual Report
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Industrials
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,107.30 | $ 6.11 |
HypotheticalA | $ 1,000.00 | $ 1,018.99 | $ 5.86 |
Class T | |||
Actual | $ 1,000.00 | $ 1,105.90 | $ 7.41 |
HypotheticalA | $ 1,000.00 | $ 1,017.75 | $ 7.10 |
Class B | |||
Actual | $ 1,000.00 | $ 1,103.10 | $ 10.17 |
HypotheticalA | $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Class C | |||
Actual | $ 1,000.00 | $ 1,103.20 | $ 9.96 |
HypotheticalA | $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,109.00 | $ 4.71 |
HypotheticalA | $ 1,000.00 | $ 1,020.33 | $ 4.51 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.17% |
Class T | 1.42% |
Class B | 1.95% |
Class C | 1.91% |
Institutional Class | .90% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
General Electric Co. | 9.8 | 20.0 |
United Technologies Corp. | 7.2 | 7.8 |
Honeywell International, Inc. | 4.0 | 5.6 |
3M Co. | 3.6 | 2.3 |
Emerson Electric Co. | 3.0 | 3.1 |
Danaher Corp. | 2.6 | 3.5 |
Union Pacific Corp. | 2.5 | 1.9 |
Burlington Northern Santa Fe Corp. | 2.3 | 2.8 |
Illinois Tool Works, Inc. | 2.3 | 2.4 |
Lockheed Martin Corp. | 2.3 | 0.0 |
39.6 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Aerospace & Defense | 18.8% | |
| Machinery | 17.7% | |
| Industrial Conglomerates | 16.5% | |
| Road & Rail | 8.4% | |
| Electrical Equipment | 8.1% | |
| All Others* | 30.5% | |
As of January 31, 2007 | |||
| Industrial Conglomerates | 28.8% | |
| Aerospace & Defense | 18.6% | |
| Machinery | 13.9% | |
| Road & Rail | 8.6% | |
| Electrical Equipment | 6.6% | |
| All Others* | 23.5% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 18.8% | |||
Aerospace & Defense - 18.8% | |||
General Dynamics Corp. | 84,600 | $ 6,646,176 | |
Honeywell International, Inc. | 247,500 | 14,233,725 | |
Lockheed Martin Corp. | 81,900 | 8,065,512 | |
Raytheon Co. | 145,600 | 8,060,416 | |
Rockwell Collins, Inc. | 27,100 | 1,861,770 | |
Spirit AeroSystems Holdings, Inc. Class A | 63,600 | 2,308,680 | |
United Technologies Corp. | 351,500 | 25,648,955 | |
66,825,234 | |||
AIR FREIGHT & LOGISTICS - 1.1% | |||
Air Freight & Logistics - 1.1% | |||
C.H. Robinson Worldwide, Inc. | 50,400 | 2,451,960 | |
Panalpina Welttransport Holding AG | 6,800 | 1,341,889 | |
3,793,849 | |||
AIRLINES - 2.3% | |||
Airlines - 2.3% | |||
Delta Air Lines, Inc. (a)(d) | 104,147 | 1,855,900 | |
Northwest Airlines Corp. (a) | 27,100 | 472,353 | |
UAL Corp. (a)(d) | 57,700 | 2,546,878 | |
US Airways Group, Inc. (a) | 110,000 | 3,411,100 | |
8,286,231 | |||
AUTO COMPONENTS - 1.0% | |||
Auto Parts & Equipment - 1.0% | |||
Johnson Controls, Inc. | 31,800 | 3,598,170 | |
AUTOMOBILES - 1.0% | |||
Automobile Manufacturers - 1.0% | |||
DaimlerChrysler AG | 40,800 | 3,702,600 | |
BUILDING PRODUCTS - 1.9% | |||
Building Products - 1.9% | |||
American Standard Companies, Inc. | 35,900 | 1,940,395 | |
Masco Corp. | 181,800 | 4,946,778 | |
6,887,173 | |||
CHEMICALS - 3.4% | |||
Fertilizers & Agricultural Chemicals - 1.0% | |||
Agrium, Inc. | 85,400 | 3,590,691 | |
Industrial Gases - 1.4% | |||
Airgas, Inc. | 108,400 | 5,062,280 | |
Specialty Chemicals - 1.0% | |||
Ecolab, Inc. | 40,700 | 1,713,877 | |
Minerals Technologies, Inc. | 27,800 | 1,797,826 | |
3,511,703 | |||
TOTAL CHEMICALS | 12,164,674 | ||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 5.5% | |||
Diversified Commercial & Professional Services - 1.6% | |||
Equifax, Inc. | 20,300 | $ 821,338 | |
The Brink's Co. | 78,800 | 4,818,620 | |
5,639,958 | |||
Environmental & Facility Services - 3.9% | |||
Allied Waste Industries, Inc. (a) | 481,600 | 6,198,192 | |
Casella Waste Systems, Inc. Class A (a) | 8,400 | 93,492 | |
Covanta Holding Corp. (a) | 13,600 | 308,448 | |
Waste Connections, Inc. (a) | 41,400 | 1,283,400 | |
Waste Management, Inc. | 155,100 | 5,898,453 | |
13,781,985 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 19,421,943 | ||
CONSTRUCTION & ENGINEERING - 6.5% | |||
Construction & Engineering - 6.5% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 53,900 | 2,188,340 | |
Fluor Corp. | 47,800 | 5,521,378 | |
Granite Construction, Inc. | 31,500 | 2,047,185 | |
Infrasource Services, Inc. (a) | 21,000 | 727,020 | |
Jacobs Engineering Group, Inc. (a) | 37,600 | 2,317,288 | |
Outotec Oyj | 13,600 | 816,215 | |
Quanta Services, Inc. (a) | 48,700 | 1,384,541 | |
Shaw Group, Inc. (a) | 150,950 | 8,033,559 | |
23,035,526 | |||
ELECTRICAL EQUIPMENT - 8.1% | |||
Electrical Components & Equipment - 5.0% | |||
AMETEK, Inc. | 58,000 | 2,263,160 | |
Cooper Industries Ltd. Class A | 92,300 | 4,884,516 | |
Emerson Electric Co. | 224,200 | 10,553,094 | |
Prysmian SpA | 3,900 | 106,838 | |
17,807,608 | |||
Heavy Electrical Equipment - 3.1% | |||
ABB Ltd. sponsored ADR | 257,700 | 6,202,839 | |
Alstom SA | 11,700 | 2,142,097 | |
Suzlon Energy Ltd. | 34,129 | 1,079,365 | |
Vestas Wind Systems AS (a) | 20,400 | 1,380,546 | |
10,804,847 | |||
TOTAL ELECTRICAL EQUIPMENT | 28,612,455 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.7% | |||
Electronic Equipment & Instruments - 0.7% | |||
Itron, Inc. (a)(d) | 30,100 | 2,390,843 | |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.4% | |||
Independent Power Producers & Energy Traders - 0.4% | |||
NRG Energy, Inc. (a) | 33,900 | 1,306,845 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIAL CONGLOMERATES - 16.5% | |||
Industrial Conglomerates - 16.5% | |||
3M Co. (d) | 146,100 | $ 12,991,212 | |
General Electric Co. | 897,300 | 34,779,348 | |
Siemens AG sponsored ADR | 38,200 | 4,837,266 | |
Tyco International Ltd. | 127,125 | 6,011,741 | |
58,619,567 | |||
MACHINERY - 17.7% | |||
Construction & Farm Machinery & Heavy Trucks - 4.6% | |||
Bucyrus International, Inc. Class A | 59,800 | 3,800,888 | |
Cummins, Inc. | 63,366 | 7,521,544 | |
Navistar International Corp. (a) | 13,500 | 850,500 | |
Oshkosh Truck Co. | 72,408 | 4,145,358 | |
16,318,290 | |||
Industrial Machinery - 13.1% | |||
Danaher Corp. | 125,600 | 9,379,808 | |
Donaldson Co., Inc. | 61,100 | 2,223,429 | |
Dover Corp. | 104,100 | 5,309,100 | |
Eaton Corp. | 44,800 | 4,353,664 | |
Flowserve Corp. | 58,600 | 4,235,022 | |
IDEX Corp. | 70,300 | 2,545,563 | |
Illinois Tool Works, Inc. | 148,000 | 8,147,400 | |
Ingersoll-Rand Co. Ltd. Class A | 89,400 | 4,498,608 | |
SPX Corp. | 51,200 | 4,806,144 | |
Sulzer AG (Reg.) | 651 | 868,000 | |
46,366,738 | |||
TOTAL MACHINERY | 62,685,028 | ||
MARINE - 0.9% | |||
Marine - 0.9% | |||
Kirby Corp. (a) | 79,600 | 3,224,596 | |
METALS & MINING - 3.2% | |||
Diversified Metals & Mining - 1.0% | |||
Titanium Metals Corp. (a) | 108,600 | 3,629,412 | |
Steel - 2.2% | |||
Carpenter Technology Corp. | 19,000 | 2,255,110 | |
Reliance Steel & Aluminum Co. | 71,600 | 3,761,864 | |
Steel Dynamics, Inc. | 40,700 | 1,706,551 | |
7,723,525 | |||
TOTAL METALS & MINING | 11,352,937 | ||
OIL, GAS & CONSUMABLE FUELS - 0.7% | |||
Coal & Consumable Fuels - 0.7% | |||
Massey Energy Co. | 68,800 | 1,468,880 | |
Peabody Energy Corp. | 21,200 | 895,912 | |
2,364,792 | |||
Shares | Value | ||
ROAD & RAIL - 8.4% | |||
Railroads - 4.8% | |||
Burlington Northern Santa Fe Corp. | 100,000 | $ 8,214,000 | |
Union Pacific Corp. | 74,700 | 8,899,758 | |
17,113,758 | |||
Trucking - 3.6% | |||
Hertz Global Holdings, Inc. | 90,500 | 2,026,295 | |
Landstar System, Inc. | 64,226 | 2,919,714 | |
Old Dominion Freight Lines, Inc. (a) | 118,136 | 3,409,405 | |
Ryder System, Inc. | 78,000 | 4,240,860 | |
12,596,274 | |||
TOTAL ROAD & RAIL | 29,710,032 | ||
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Trading Companies & Distributors - 0.5% | |||
Rush Enterprises, Inc. Class A (a) | 64,970 | 1,815,912 | |
TOTAL COMMON STOCKS (Cost $309,449,857) | 349,798,407 | ||
Nonconvertible Bonds - 0.1% | ||||
Principal Amount | ||||
AIRLINES - 0.1% | ||||
Airlines - 0.1% | ||||
Delta Air Lines, Inc. 8.3% 12/15/29 (a) | $ 2,690,000 | 174,850 | ||
Money Market Funds - 4.3% | |||
Shares | |||
Fidelity Cash Central Fund, 5.38% (b) | 4,425,923 | 4,425,923 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 10,826,000 | 10,826,000 | |
TOTAL MONEY MARKET FUNDS (Cost $15,251,923) | 15,251,923 | ||
TOTAL INVESTMENT PORTFOLIO - 103.0% (Cost $324,779,530) | 365,225,180 |
NET OTHER ASSETS - (3.0)% | (10,554,466) | ||
NET ASSETS - 100% | $ 354,670,714 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 255,049 |
Fidelity Securities Lending Cash Central Fund | 42,601 |
Total | $ 297,650 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.9% |
Bermuda | 3.1% |
Switzerland | 2.5% |
Germany | 2.4% |
Canada | 1.0% |
Others (individually less than 1%) | 2.1% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $10,404,564) - See accompanying schedule: Unaffiliated issuers (cost $309,527,607) | $ 349,973,257 | |
Fidelity Central Funds (cost $15,251,923) | 15,251,923 | |
Total Investments (cost $324,779,530) | $ 365,225,180 | |
Receivable for investments sold | 2,183,677 | |
Receivable for fund shares sold | 1,526,465 | |
Dividends receivable | 110,857 | |
Distributions receivable from Fidelity Central Funds | 21,886 | |
Prepaid expenses | 464 | |
Other receivables | 400 | |
Total assets | 369,068,929 | |
Liabilities | ||
Payable for investments purchased | $ 2,714,643 | |
Payable for fund shares redeemed | 409,349 | |
Accrued management fee | 168,773 | |
Distribution fees payable | 153,288 | |
Other affiliated payables | 87,866 | |
Other payables and accrued expenses | 38,296 | |
Collateral on securities loaned, at value | 10,826,000 | |
Total liabilities | 14,398,215 | |
Net Assets | $ 354,670,714 | |
Net Assets consist of: | ||
Paid in capital | $ 286,208,806 | |
Distributions in excess of net investment income | (6) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 28,016,324 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 40,445,590 | |
Net Assets | $ 354,670,714 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 25.49 | |
Maximum offering price per share (100/94.25 of $25.49) | $ 27.05 | |
Class T: | $ 25.17 | |
Maximum offering price per share (100/96.50 of $25.17) | $ 26.08 | |
Class B: | $ 24.19 | |
Class C: | $ 24.26 | |
Institutional Class: | $ 26.26 | |
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
Fund Name
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 4,558,254 | |
Interest | 1,796 | |
Income from Fidelity Central Funds | 297,650 | |
Total income | 4,857,700 | |
Expenses | ||
Management fee | $ 1,719,635 | |
Transfer agent fees | 867,389 | |
Distribution fees | 1,583,822 | |
Accounting and security lending fees | 125,061 | |
Custodian fees and expenses | 11,611 | |
Independent trustees' compensation | 962 | |
Registration fees | 89,463 | |
Audit | 48,257 | |
Legal | 4,217 | |
Miscellaneous | 69,453 | |
Total expenses before reductions | 4,519,870 | |
Expense reductions | (10,308) | 4,509,562 |
Net investment income (loss) | 348,138 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 35,393,475 | |
Foreign currency transactions | (5,404) | |
Total net realized gain (loss) | 35,388,071 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $60) | 31,234,023 | |
Assets and liabilities in foreign currencies | (114) | |
Total change in net unrealized appreciation (depreciation) | 31,233,909 | |
Net gain (loss) | 66,621,980 | |
Net increase (decrease) in net assets resulting from operations | $ 66,970,118 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 348,138 | $ 67,497 |
Net realized gain (loss) | 35,388,071 | 16,800,474 |
Change in net unrealized appreciation (depreciation) | 31,233,909 | (9,655,014) |
Net increase (decrease) in net assets resulting from operations | 66,970,118 | 7,212,957 |
Distributions to shareholders from net investment income | (473,352) | - |
Distributions to shareholders from net realized gain | (21,383,547) | (7,122,799) |
Total distributions | (21,856,899) | (7,122,799) |
Share transactions - net increase (decrease) | 61,861,883 | 109,957,564 |
Redemption fees | 14,915 | 25,597 |
Total increase (decrease) in net assets | 106,990,017 | 110,073,319 |
Net Assets | ||
Beginning of period | 247,680,697 | 137,607,378 |
End of period (including distributions in excess of net investment income of $6 and undistributed net investment income of $65,095, respectively) | $ 354,670,714 | $ 247,680,697 |
See accompanying notes which are an integral part of the financial statements.
Industrials
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.16 | $ 21.53 | $ 18.10 | $ 14.15 | $ 12.75 |
Income from Investment Operations | |||||
Net investment income (loss) C | .09 | .08 | .02 | (.02) | .06 |
Net realized and unrealized gain (loss) | 5.11 | 1.63 | 4.35 | 3.96 | 1.36 |
Total from investment operations | 5.20 | 1.71 | 4.37 | 3.94 | 1.42 |
Distributions from net investment income | (.06) | - | - | - | (.02) |
Distributions from net realized gain | (1.81) | (1.08) | (.94) | - | - |
Total distributions | (1.87) | (1.08) | (.94) | - | (.02) |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 | $ 14.15 |
Total Return A,B | 25.13% | 8.40% | 25.04% | 27.92% | 11.16% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.21% | 1.26% | 1.34% | 1.65% | 1.99% |
Expenses net of fee waivers, if any | 1.21% | 1.26% | 1.34% | 1.50% | 1.53% |
Expenses net of all reductions | 1.21% | 1.24% | 1.29% | 1.47% | 1.46% |
Net investment income (loss) | .38% | .34% | .09% | (.12)% | .46% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 157,451 | $ 99,255 | $ 40,264 | $ 12,612 | $ 4,272 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.86 | $ 21.27 | $ 17.90 | $ 14.02 | $ 12.66 |
Income from Investment Operations | |||||
Net investment income (loss) C | .03 | .02 | (.03) | (.06) | .03 |
Net realized and unrealized gain (loss) | 5.05 | 1.61 | 4.31 | 3.93 | 1.34 |
Total from investment operations | 5.08 | 1.63 | 4.28 | 3.87 | 1.37 |
Distributions from net investment income | (.03) | - | - | - | (.01) |
Distributions from net realized gain | (1.74) | (1.04) | (.91) | - | - |
Total distributions | (1.77) | (1.04) | (.91) | - | (.01) |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 | $ 14.02 |
Total Return A,B | 24.82% | 8.13% | 24.78% | 27.67% | 10.84% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.46% | 1.49% | 1.57% | 1.90% | 2.25% |
Expenses net of fee waivers, if any | 1.46% | 1.49% | 1.57% | 1.75% | 1.78% |
Expenses net of all reductions | 1.46% | 1.47% | 1.52% | 1.72% | 1.71% |
Net investment income (loss) | .13% | .11% | (.14)% | (.36)% | .22% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 75,530 | $ 55,936 | $ 40,126 | $ 13,089 | $ 5,493 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.02 | $ 20.55 | $ 17.27 | $ 13.61 | $ 12.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.09) | (.13) | (.14) | (.03) |
Net realized and unrealized gain (loss) | 4.87 | 1.55 | 4.17 | 3.79 | 1.31 |
Total from investment operations | 4.78 | 1.46 | 4.04 | 3.65 | 1.28 |
Distributions from net realized gain | (1.61) | (.99) | (.76) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 | $ 13.61 |
Total Return A,B | 24.18% | 7.54% | 24.12% | 26.89% | 10.38% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 2.00% | 2.04% | 2.11% | 2.37% | 2.68% |
Expenses net of fee waivers, if any | 2.00% | 2.04% | 2.11% | 2.25% | 2.25% |
Expenses net of all reductions | 2.00% | 2.02% | 2.07% | 2.22% | 2.18% |
Net investment income (loss) | (.41)% | (.44)% | (.68)% | (.87)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 44,330 | $ 37,082 | $ 32,242 | $ 14,722 | $ 9,005 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.16 | $ 20.68 | $ 17.36 | $ 13.67 | $ 12.39 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.08) | (.08) | (.12) | (.14) | (.03) |
Net realized and unrealized gain (loss) | 4.88 | 1.56 | 4.19 | 3.82 | 1.31 |
Total from investment operations | 4.80 | 1.48 | 4.07 | 3.68 | 1.28 |
Distributions from net realized gain | (1.70) | (1.00) | (.75) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 | $ 13.67 |
Total Return A,B | 24.25% | 7.59% | 24.16% | 26.99% | 10.33% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.94% | 1.99% | 2.07% | 2.28% | 2.57% |
Expenses net of fee waivers, if any | 1.94% | 1.99% | 2.07% | 2.25% | 2.25% |
Expenses net of all reductions | 1.94% | 1.97% | 2.02% | 2.22% | 2.18% |
Net investment income (loss) | (.35)% | (.38)% | (.64)% | (.87)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 57,862 | $ 42,363 | $ 20,595 | $ 9,507 | $ 5,307 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Industrials
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.77 | $ 22.06 | $ 18.48 | $ 14.41 | $ 12.96 |
Income from Investment Operations | |||||
Net investment income (loss) B | .16 | .16 | .07 | .02 | .09 |
Net realized and unrealized gain (loss) | 5.27 | 1.66 | 4.46 | 4.04 | 1.39 |
Total from investment operations | 5.43 | 1.82 | 4.53 | 4.06 | 1.48 |
Distributions from net investment income | (.13) | - | - | - | (.03) |
Distributions from net realized gain | (1.81) | (1.11) | (.95) | - | - |
Total distributions | (1.94) | (1.11) | (.95) | - | (.03) |
Redemption fees added to paid in capital B | - F | - F | - F | .01 | - F |
Net asset value, end of period | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 | $ 14.41 |
Total Return A | 25.53% | 8.73% | 25.41% | 28.24% | 11.46% |
Ratios to Average Net Assets C,E | |||||
Expenses before reductions | .92% | .91% | 1.06% | 1.38% | 1.55% |
Expenses net of fee waivers, if any | .92% | .91% | 1.06% | 1.25% | 1.25% |
Expenses net of all reductions | .91% | .89% | 1.01% | 1.22% | 1.18% |
Net investment income (loss) | .67% | .69% | .37% | .13% | .74% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 19,498 | $ 13,043 | $ 4,379 | $ 1,490 | $ 1,156 |
Portfolio turnover rate D | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Industrials Fund (the Fund) (formerly Fidelity Advisor Cyclical Industries) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, deferred trustees compensation 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 | $ 46,153,238 | |
Unrealized depreciation | (5,803,704) | |
Net unrealized appreciation (depreciation) | 40,349,534 | |
Undistributed ordinary income | 12,422,062 | |
Undistributed long-term capital gain | 13,584,256 | |
Cost for federal income tax purposes | $ 324,875,646 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 8,244,210 | $ 2,645,179 |
Long-term Capital Gains | 13,612,689 | 4,477,620 |
Total | $ 21,856,899 | $ 7,122,799 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Industrials
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $423,041,427 and $387,371,157, respectively.
6. 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 .26% 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 .56% 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% | $ 330,340 | $ 30,569 |
Class T | .25% | .25% | 329,136 | 812 |
Class B | .75% | .25% | 412,704 | 311,355 |
Class C | .75% | .25% | 511,642 | 218,738 |
$ 1,583,822 | $ 561,474 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 181,480 |
Class T | 20,555 |
Class B* | 64,543 |
Class C* | 18,873 |
$ 285,451 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 373,182 | .28 |
Class T | 185,704 | .28 |
Class B | 133,809 | .32 |
Class C | 136,524 | .27 |
Institutional Class | 38,170 | .24 |
$ 867,389 |
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.
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 $785 for the period.
7. 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, which amounted to $533 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $42,601.
9. 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 $6,077 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 $31.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the
Industrials
10. Other - continued
conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 317,175 | $ - |
Class T | 81,458 | - |
Institutional Class | 74,719 | - |
Total | $ 473,352 | $ - |
From net realized gain | ||
Class A | $ 9,177,798 | $ 2,209,329 |
Class T | 4,598,164 | 1,993,493 |
Class B | 2,897,402 | 1,595,001 |
Class C | 3,663,404 | 1,032,683 |
Institutional Class | 1,046,779 | 292,293 |
Total | $ 21,383,547 | $ 7,122,799 |
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 3,210,590 | 3,250,873 | $ 74,239,252 | $ 73,798,607 |
Reinvestment of distributions | 397,118 | 97,417 | 8,609,345 | 1,982,904 |
Shares redeemed | (1,910,674) | (738,421) | (44,327,457) | (16,310,331) |
Net increase (decrease) | 1,697,034 | 2,609,869 | $ 38,521,140 | $ 59,471,180 |
Class T | ||||
Shares sold | 851,649 | 1,053,819 | $ 19,483,528 | $ 23,194,479 |
Reinvestment of distributions | 204,709 | 95,171 | 4,388,662 | 1,914,595 |
Shares redeemed | (614,792) | (476,485) | (14,036,675) | (10,217,427) |
Net increase (decrease) | 441,566 | 672,505 | $ 9,835,515 | $ 14,891,647 |
Class B | ||||
Shares sold | 490,419 | 691,509 | $ 10,776,085 | $ 14,823,678 |
Reinvestment of distributions | 118,628 | 68,369 | 2,452,560 | 1,329,447 |
Shares redeemed | (540,505) | (564,827) | (11,926,256) | (11,906,215) |
Net increase (decrease) | 68,542 | 195,051 | $ 1,302,389 | $ 4,246,910 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions - continued
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class C | ||||
Shares sold | 809,623 | 1,219,100 | $ 17,844,285 | $ 26,650,232 |
Reinvestment of distributions | 135,846 | 42,653 | 2,814,613 | 834,597 |
Shares redeemed | (562,223) | (255,670) | (12,468,615) | (5,350,637) |
Net increase (decrease) | 383,246 | 1,006,083 | $ 8,190,283 | $ 22,134,192 |
Institutional Class | ||||
Shares sold | 466,987 | 685,802 | $ 11,092,441 | $ 16,202,741 |
Reinvestment of distributions | 33,033 | 7,337 | 737,185 | 152,999 |
Shares redeemed | (330,519) | (318,752) | (7,817,070) | (7,142,105) |
Net increase (decrease) | 169,501 | 374,387 | $ 4,012,556 | $ 9,213,635 |
Industrials
Advisor Technology 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 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, 2007 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | 24.24% | 14.19% | 4.19% |
Class T (incl. 3.50% sales charge) | 26.88% | 14.47% | 4.18% |
Class B (incl. contingent deferred sales charge) A | 25.91% | 14.49% | 4.23% |
Class C (incl. contingent deferred sales charge) B | 29.83% | 14.74% | 4.03% |
A Class B shares bear a 1.00% 12b-1 fee. Class B shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns prior to November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years 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 Technology Fund - Class T on July 31, 1997, 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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 31.82%, 31.48%, 30.91% and 30.83%, respectively (excluding sales charges), topping both the 29.40% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Information Technology Index and the 29.87% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly trailed the Goldman Sachs index during the first two months of the period. Unfavorable stock picking in communications equipment undermined our results, more than offsetting what we gained from heavily overweighting the group, which performed well. An underweighting and unrewarding stock selection in systems software further hurt performance. On the positive side, my picks in Internet software and services and in computer hardware added value, as did an underweighting in the weak-performing data processing and outsourced services segment. Among individual holdings, not owning two major index components - networking equipment maker Cisco Systems and systems software provider Oracle - during the two-month period was detrimental. Both of these large-caps had become relatively cheap, while their business fundamentals improved, resulting in strong stock price gains. Our overweighted position in wireless infrastructure stock QUALCOMM also hurt. On the positive side, Freescale Semiconductor was a contributor to fund performance, rising sharply after receiving a buyout offer from a group of private-equity firms. I sold Freescale shortly thereafter to lock in profits. Chip maker Broadcom proved rewarding as well. During the period's final 10 months, the fund outperformed the MSCI index, mainly due to systems software, where both favorable stock selection and a sizable underweighting aided our results. My picks in communications equipment also helped. Counterbalancing those benefits to some extent was an underweighting in computer hardware, which was one of the best-performing subsectors in the index. At the stock level, the fund was helped by Canada-based Research In Motion (RIM), maker of the BlackBerry handheld messaging device. During the period, concerns eased about the company's stock options policies, and a solid second-quarter earnings report also helped propel the stock higher. Another Canadian contributor, Sandvine, advanced sharply due to rapid earnings and market share growth, together with an attractive valuation. Juniper Networks helped as well. Both RIM and Sandvine were out-of-index positions. Conversely, insufficient exposure to two strong-performing, large-cap index components held back the fund's returns. Specifically, not owning computer hardware giant International Business Machines and carrying a large underweighting in Cisco Systems detracted from performance.
During the past year, the fund's Institutional Class shares returned 32.30%, topping both the 29.40% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Information Technology Index and the 29.87% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly trailed the Goldman Sachs index during the first two months of the period. Unfavorable stock picking in communications equipment undermined our results, more than offsetting what we gained from heavily overweighting the group, which performed well. An underweighting and unrewarding stock selection in systems software further hurt performance. On the positive side, my picks in Internet software and services and in computer hardware added value, as did an underweighting in the weak-performing data processing and outsourced services segment. Among individual holdings, not owning two major index components - networking equipment maker Cisco Systems and systems software provider Oracle - during the two-month period was detrimental. Both of these large-caps had become relatively cheap, while their business fundamentals improved, resulting in strong stock price gains. Our overweighted position in wireless infrastructure stock QUALCOMM also hurt. On the positive side, Freescale Semiconductor was a contributor to fund performance, rising sharply after receiving a buyout offer from a group of private-equity firms. I sold Freescale shortly thereafter to lock in profits. Chip maker Broadcom proved rewarding as well. During the period's final 10 months, the fund outperformed the MSCI index, mainly due to systems software, where both favorable stock selection and a sizable underweighting aided our results. My picks in communications equipment also helped. Counterbalancing those benefits to some extent was an underweighting in computer hardware, which was one of the best-performing subsectors in the index. At the stock level, the fund was helped by Canada-based Research In Motion (RIM), maker of the BlackBerry handheld messaging device. During the period, concerns eased about the company's stock options policies, and a solid second-quarter earnings report also helped propel the stock higher. Another Canadian contributor, Sandvine, advanced sharply due to rapid earnings and market share growth, together with an attractive valuation. Juniper Networks helped as well. Both RIM and Sandvine were out-of-index positions. Conversely, insufficient exposure to two strong-performing, large-cap index components held back the fund's returns. Specifically, not owning computer hardware giant International Business Machines and carrying a large underweighting in Cisco Systems detracted from performance.
Annual Report
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Technology Index, which returned 12.15% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Information Technology Index, which returned 15.80% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 29.87%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Technology
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,119.30 | $ 6.10 |
HypotheticalA | $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | |||
Actual | $ 1,000.00 | $ 1,118.00 | $ 7.35 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class B | |||
Actual | $ 1,000.00 | $ 1,115.70 | $ 9.81 |
HypotheticalA | $ 1,000.00 | $ 1,015.52 | $ 9.35 |
Class C | |||
Actual | $ 1,000.00 | $ 1,115.10 | $ 9.96 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.49 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,120.70 | $ 4.68 |
HypotheticalA | $ 1,000.00 | $ 1,020.38 | $ 4.46 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.16% |
Class T | 1.40% |
Class B | 1.87% |
Class C | 1.90% |
Institutional Class | .89% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Google, Inc. Class A (sub. vtg.) | 5.9 | 4.6 |
Marvell Technology Group Ltd. | 5.1 | 4.1 |
Apple, Inc. | 4.3 | 5.4 |
Intel Corp. | 3.5 | 3.4 |
Broadcom Corp. Class A | 3.1 | 2.4 |
Juniper Networks, Inc. | 3.0 | 1.8 |
QUALCOMM, Inc. | 2.8 | 4.8 |
Cisco Systems, Inc. | 2.8 | 3.3 |
Research In Motion Ltd. | 2.5 | 5.4 |
F5 Networks, Inc. | 2.1 | 2.0 |
35.1 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 32.0% | |
| Communications Equipment | 24.9% | |
| Computers & Peripherals | 12.0% | |
| Internet Software | 9.5% | |
| Software | 9.1% | |
| All Others* | 12.5% | |
As of January 31, 2007 | |||
| Communications Equipment | 30.1% | |
| Semiconductors & Semiconductor Equipment | 25.6% | |
| Computers & Peripherals | 14.1% | |
| Software | 12.5% | |
| Internet Software | 8.4% | |
| All Others* | 9.3% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Diversified Commercial & Professional Services - 0.1% | |||
Equifax, Inc. | 10,300 | $ 416,738 | |
Human Resource & Employment Services - 0.1% | |||
Kenexa Corp. (a) | 20,400 | 729,912 | |
Taleo Corp. Class A (a) | 4,200 | 90,342 | |
820,254 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,236,992 | ||
COMMUNICATIONS EQUIPMENT - 24.7% | |||
Communications Equipment - 24.7% | |||
AAC Acoustic Technology Holdings, Inc. (a) | 3,518,000 | 4,166,112 | |
Adtran, Inc. | 98,100 | 2,559,429 | |
ADVA AG Optical Networking (a) | 298,245 | 2,979,156 | |
Airvana, Inc. | 274,600 | 1,938,676 | |
Alcatel-Lucent SA sponsored ADR | 632,000 | 7,331,200 | |
AudioCodes Ltd. (a) | 591,750 | 3,290,130 | |
Avocent Corp. (a) | 212,615 | 5,815,020 | |
Balda AG | 111,500 | 1,325,842 | |
Cisco Systems, Inc. (a) | 742,200 | 21,457,002 | |
Comtech Group, Inc. (a) | 420,719 | 5,982,624 | |
Comverse Technology, Inc. (a) | 237,900 | 4,584,333 | |
Corning, Inc. | 305,000 | 7,271,200 | |
Extreme Networks, Inc. (a) | 372,900 | 1,513,974 | |
F5 Networks, Inc. (a) | 192,300 | 16,670,487 | |
Finisar Corp. (a) | 1,025,471 | 3,722,460 | |
Foundry Networks, Inc. (a) | 112,600 | 1,980,634 | |
Foxconn International Holdings Ltd. (a) | 1,490,000 | 4,265,990 | |
Harris Stratex Networks, Inc. (a) | 233,300 | 3,970,766 | |
Infinera Corp. | 2,000 | 45,600 | |
Ixia (a) | 372,500 | 3,486,600 | |
JDS Uniphase Corp. (a) | 49,700 | 712,201 | |
Juniper Networks, Inc. (a) | 770,246 | 23,076,570 | |
Mogem Co. Ltd. | 309,043 | 3,189,999 | |
Motorola, Inc. | 111,800 | 1,899,482 | |
Nokia Corp. sponsored ADR | 137,100 | 3,926,544 | |
Opnext, Inc. | 199,491 | 2,435,785 | |
OZ Optics Ltd. unit (a)(f) | 68,000 | 1,003,000 | |
Powerwave Technologies, Inc. (a) | 844,300 | 5,521,722 | |
QUALCOMM, Inc. | 528,500 | 22,012,025 | |
Research In Motion Ltd. (a) | 90,570 | 19,381,980 | |
Riverbed Technology, Inc. | 27,200 | 1,201,152 | |
Sonus Networks, Inc. (a) | 620,500 | 4,244,220 | |
Starent Networks Corp. | 900 | 16,308 | |
192,978,223 | |||
COMPUTERS & PERIPHERALS - 12.0% | |||
Computer Hardware - 6.9% | |||
Apple, Inc. (a) | 253,255 | 33,368,879 | |
Concurrent Computer Corp. (a) | 1,723,664 | 2,637,206 | |
Diebold, Inc. | 46,600 | 2,361,222 | |
Shares | Value | ||
High Tech Computer Corp. | 62,000 | $ 1,135,725 | |
Palm, Inc. (a) | 231,300 | 3,450,996 | |
Sun Microsystems, Inc. (a) | 2,201,300 | 11,226,630 | |
54,180,658 | |||
Computer Storage & Peripherals - 5.1% | |||
ASUSTeK Computer, Inc. | 456,000 | 1,302,301 | |
EMC Corp. (a) | 532,200 | 9,851,022 | |
Isilon Systems, Inc. (d) | 44,900 | 428,795 | |
Netezza Corp. | 89,200 | 1,360,300 | |
Network Appliance, Inc. (a) | 331,600 | 9,397,544 | |
SanDisk Corp. (a) | 281,400 | 15,091,482 | |
STEC, Inc. (a) | 320,100 | 2,352,735 | |
39,784,179 | |||
TOTAL COMPUTERS & PERIPHERALS | 93,964,837 | ||
DIVERSIFIED CONSUMER SERVICES - 0.7% | |||
Education Services - 0.7% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR | 106,400 | 5,508,328 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.1% | |||
Alternative Carriers - 0.0% | |||
Aruba Networks, Inc. (d) | 9,800 | 196,784 | |
Integrated Telecommunication Services - 0.1% | |||
NeuStar, Inc. Class A (a) | 12,300 | 354,732 | |
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 551,516 | ||
ELECTRICAL EQUIPMENT - 1.0% | |||
Electrical Components & Equipment - 1.0% | |||
Evergreen Solar, Inc. (a)(d) | 379,297 | 3,159,544 | |
Q-Cells AG | 1,200 | 106,239 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 99,300 | 4,004,769 | |
Superior Essex, Inc. (a) | 20,300 | 707,455 | |
7,978,007 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.7% | |||
Electronic Equipment & Instruments - 2.1% | |||
Chi Mei Optoelectronics Corp. | 1,723,920 | 1,930,996 | |
China Security & Surveillance Tech, Inc. (a) | 336,100 | 5,948,970 | |
Chunghwa Picture Tubes LTD. (a) | 5,891,000 | 1,684,220 | |
Cognex Corp. | 13,600 | 286,008 | |
Cyntec Co. Ltd. | 504,637 | 936,706 | |
Motech Industries, Inc. | 183,000 | 2,286,873 | |
Motech Industries, Inc. GDR (a)(e) | 77,787 | 968,448 | |
National Instruments Corp. | 13,100 | 423,785 | |
Tektronix, Inc. | 58,200 | 1,911,870 | |
16,377,876 | |||
Electronic Manufacturing Services - 2.3% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 662,453 | 5,492,006 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - CONTINUED | |||
Electronic Manufacturing Services - continued | |||
Jabil Circuit, Inc. | 271,300 | $ 6,112,389 | |
KEMET Corp. (a) | 324,168 | 2,282,143 | |
Molex, Inc. | 111,200 | 3,151,408 | |
Trimble Navigation Ltd. (a) | 22,400 | 739,872 | |
17,777,818 | |||
Technology Distributors - 0.3% | |||
Mellanox Technologies Ltd. | 800 | 15,496 | |
Wolfson Microelectronics PLC (a) | 383,900 | 2,175,794 | |
2,191,290 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 36,346,984 | ||
HEALTH CARE TECHNOLOGY - 0.0% | |||
Health Care Technology - 0.0% | |||
Cerner Corp. (a) | 2,000 | 105,740 | |
HOUSEHOLD DURABLES - 0.8% | |||
Consumer Electronics - 0.8% | |||
Directed Electronics, Inc. (a) | 90,928 | 686,506 | |
Merry Electronics Co. Ltd. | 194,579 | 687,956 | |
Tele Atlas NV (a)(d) | 161,206 | 4,601,429 | |
5,975,891 | |||
Household Appliances - 0.0% | |||
iRobot Corp. (a) | 1,400 | 25,032 | |
TOTAL HOUSEHOLD DURABLES | 6,000,923 | ||
INTERNET & CATALOG RETAIL - 0.0% | |||
Catalog Retail - 0.0% | |||
Acorn International, Inc. sponsored ADR | 1,300 | 22,958 | |
INTERNET SOFTWARE & SERVICES - 9.5% | |||
Internet Software & Services - 9.5% | |||
Equinix, Inc. (a) | 35,200 | 3,059,232 | |
Google, Inc. Class A (sub. vtg.) (a) | 90,850 | 46,333,500 | |
Liquidity Services, Inc. (a) | 67,900 | 1,049,734 | |
LivePerson, Inc. (a) | 454,600 | 2,382,104 | |
Marchex, Inc. Class B | 144,260 | 1,944,625 | |
Omniture, Inc. (d) | 222,668 | 5,087,964 | |
Openwave Systems, Inc. | 378,093 | 1,988,769 | |
SAVVIS, Inc. (a) | 76,400 | 2,869,584 | |
Switch & Data Facilities Co., Inc. | 2,600 | 41,080 | |
TechTarget, Inc. | 3,900 | 52,572 | |
Visual Sciences, Inc. (a)(d) | 359,095 | 6,108,206 | |
Yahoo!, Inc. (a) | 142,600 | 3,315,450 | |
74,232,820 | |||
IT SERVICES - 3.3% | |||
Data Processing & Outsourced Services - 1.1% | |||
ExlService Holdings, Inc. | 59,700 | 1,009,527 | |
Shares | Value | ||
The Western Union Co. | 244,600 | $ 4,879,770 | |
WNS Holdings Ltd. ADR | 114,500 | 2,862,500 | |
8,751,797 | |||
IT Consulting & Other Services - 2.2% | |||
Cognizant Technology Solutions Corp. Class A (a) | 169,600 | 13,734,208 | |
RightNow Technologies, Inc. (a)(d) | 226,948 | 2,995,714 | |
16,729,922 | |||
TOTAL IT SERVICES | 25,481,719 | ||
MACHINERY - 0.3% | |||
Industrial Machinery - 0.3% | |||
Hi-P International Ltd. | 2,622,000 | 1,444,175 | |
Shin Zu Shing Co. Ltd. | 135,000 | 923,756 | |
2,367,931 | |||
MEDIA - 1.1% | |||
Advertising - 1.1% | |||
Focus Media Holding Ltd. ADR (a)(d) | 207,700 | 8,580,087 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Management & Development - 0.1% | |||
Move, Inc. (a) | 295,625 | 990,344 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 32.0% | |||
Semiconductor Equipment - 2.3% | |||
Applied Materials, Inc. | 188,100 | 4,145,724 | |
ASML Holding NV (NY Shares) (a) | 185,600 | 5,486,336 | |
Eagle Test Systems, Inc. (a) | 106,800 | 1,600,932 | |
FormFactor, Inc. (a) | 61,200 | 2,349,468 | |
Global Unichip Corp. | 260,807 | 3,084,310 | |
ICOS Vision Systems NV (a) | 9,100 | 411,040 | |
PDF Solutions, Inc. (a) | 18,300 | 202,947 | |
Rudolph Technologies, Inc. (a) | 42,920 | 671,698 | |
17,952,455 | |||
Semiconductors - 29.7% | |||
Advanced Analog Technology, Inc. | 450,000 | 4,430,187 | |
Advanced Micro Devices, Inc. (a)(d) | 1,089,536 | 14,752,317 | |
Altera Corp. | 199,500 | 4,628,400 | |
AMIS Holdings, Inc. (a) | 288,000 | 2,969,280 | |
Applied Micro Circuits Corp. (a) | 1,428,800 | 4,172,096 | |
Atheros Communications, Inc. (a) | 259,900 | 7,246,012 | |
Atmel Corp. (a) | 825,500 | 4,449,445 | |
AuthenTec, Inc. | 154,900 | 1,871,192 | |
Broadcom Corp. Class A (a) | 729,422 | 23,932,336 | |
Cavium Networks, Inc. (d) | 148,322 | 3,522,648 | |
Cypress Semiconductor Corp. (a) | 273,700 | 6,858,922 | |
Diodes, Inc. (a) | 29,100 | 773,187 | |
Global Mixed-Mode Tech, Inc. | 305,900 | 3,333,209 | |
Hittite Microwave Corp. (a) | 99,500 | 4,001,890 | |
Ikanos Communications, Inc. (a) | 439,739 | 3,166,121 | |
Infineon Technologies AG sponsored ADR (a) | 681,000 | 11,147,970 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Integrated Device Technology, Inc. (a) | 254,500 | $ 4,140,715 | |
Intel Corp. | 1,167,200 | 27,569,264 | |
Lanoptics Ltd. (a) | 152,600 | 2,307,312 | |
Lattice Semiconductor Corp. (a) | 379,600 | 1,795,508 | |
LSI Corp. (a) | 385,208 | 2,773,498 | |
Marvell Technology Group Ltd. (a) | 2,212,000 | 39,816,000 | |
Maxim Integrated Products, Inc. | 306,900 | 9,728,730 | |
Micrel, Inc. | 67,100 | 694,485 | |
Microsemi Corp. (a) | 35,800 | 834,498 | |
Mindspeed Technologies, Inc. (a) | 2,138,253 | 3,891,620 | |
Monolithic Power Systems, Inc. (a) | 127,100 | 2,125,112 | |
MoSys, Inc. (a) | 32,100 | 269,961 | |
Omnivision Technologies, Inc. (a) | 95,700 | 1,643,169 | |
Pericom Semiconductor Corp. (a) | 37,400 | 399,432 | |
PixArt Imaging, Inc. | 184,000 | 2,355,451 | |
PLX Technology, Inc. (a) | 45,400 | 501,216 | |
PMC-Sierra, Inc. (a) | 466,365 | 3,553,701 | |
Richtek Technology Corp. | 435,850 | 6,250,341 | |
Semtech Corp. (a) | 185,700 | 3,017,625 | |
Silicon Laboratories, Inc. (a) | 78,576 | 2,736,802 | |
SiRF Technology Holdings, Inc. (a)(d) | 213,000 | 4,992,720 | |
Spreadtrum Communications, Inc. ADR | 10,700 | 151,940 | |
Supertex, Inc. (a) | 76,800 | 2,681,088 | |
Taiwan Semiconductor Co. Ltd. | 704,000 | 1,538,505 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 4,449 | 8,814 | |
Volterra Semiconductor Corp. (a) | 106,900 | 1,228,281 | |
Xilinx, Inc. | 144,700 | 3,617,500 | |
231,878,500 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 249,830,955 | ||
SOFTWARE - 9.1% | |||
Application Software - 5.2% | |||
Ansys, Inc. (a) | 137,000 | 3,567,480 | |
BEA Systems, Inc. (a) | 203,000 | 2,513,140 | |
BladeLogic, Inc. | 28,600 | 736,450 | |
Concur Technologies, Inc. (a)(d) | 52,800 | 1,259,808 | |
Global Digital Creations Holdings Ltd. (a) | 884,000 | 375,351 | |
Informatica Corp. (a) | 191,650 | 2,671,601 | |
NAVTEQ Corp. (a) | 170,456 | 9,226,783 | |
Salesforce.com, Inc. (a) | 255,600 | 9,932,616 | |
Smith Micro Software, Inc. (a)(d) | 511,400 | 6,980,610 | |
Ulticom, Inc. (a) | 410,126 | 3,342,527 | |
40,606,366 | |||
Home Entertainment Software - 1.5% | |||
Nintendo Co. Ltd. | 21,400 | 10,486,000 | |
Shares | Value | ||
Perfect World Co. Ltd. sponsored ADR Class B | 2,400 | $ 57,840 | |
THQ, Inc. (a) | 37,900 | 1,090,004 | |
11,633,844 | |||
Systems Software - 2.4% | |||
Double-Take Software, Inc. | 100 | 1,526 | |
Oracle Corp. (a) | 100,400 | 1,919,648 | |
Red Hat, Inc. (a) | 285,793 | 5,950,210 | |
Sandvine Corp. (a) | 979,700 | 5,510,640 | |
Sandvine Corp. (U.K.) (a) | 982,200 | 5,387,151 | |
Sourcefire, Inc. | 1,300 | 15,795 | |
18,784,970 | |||
TOTAL SOFTWARE | 71,025,180 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.3% | |||
Wireless Telecommunication Services - 0.3% | |||
American Tower Corp. Class A (a) | 28,400 | 1,183,144 | |
Crown Castle International Corp. (a) | 32,600 | 1,181,750 | |
2,364,894 | |||
TOTAL COMMON STOCKS (Cost $771,190,533) | 779,568,438 | ||
Convertible Bonds - 0.2% | ||||
Principal Amount | ||||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 1,270,000 | 1,320,260 | ||
Money Market Funds - 4.8% | |||
Shares | |||
Fidelity Cash Central Fund, 5.38% (b) | 7,735,356 | 7,735,356 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 29,452,386 | 29,452,386 | |
TOTAL MONEY MARKET FUNDS (Cost $37,187,742) | 37,187,742 | ||
TOTAL INVESTMENT PORTFOLIO - 104.9% (Cost $809,648,275) | 818,076,440 |
NET OTHER ASSETS - (4.9)% | (37,893,093) | ||
NET ASSETS - 100% | $ 780,183,347 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $968,448 or 0.1% of net assets. |
(f) 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 $1,003,000 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
OZ Optics Ltd. unit | 8/18/00 | $ 1,003,680 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 268,801 |
Fidelity Securities Lending Cash Central Fund | 303,499 |
Total | $ 572,300 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 74.4% |
Bermuda | 5.1% |
Taiwan | 5.0% |
Canada | 4.0% |
Cayman Islands | 2.2% |
Germany | 2.0% |
Japan | 1.4% |
Netherlands | 1.3% |
China | 1.1% |
Others (individually less than 1%) | 3.5% |
100.0% |
Income Tax Information |
At July 31, 2007, the fund had a capital loss carryforward of approximately $1,419,316,323 of which $919,509,540 and $499,806,783 will expire on July 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $28,529,325) - See accompanying schedule: Unaffiliated issuers (cost $772,460,533) | $ 780,888,698 | |
Fidelity Central Funds (cost $37,187,742) | 37,187,742 | |
Total Investments (cost $809,648,275) | $ 818,076,440 | |
Receivable for investments sold | 14,553,415 | |
Receivable for fund shares sold | 1,381,856 | |
Dividends receivable | 140,340 | |
Interest receivable | 785 | |
Distributions receivable from Fidelity Central Funds | 26,150 | |
Prepaid expenses | 1,383 | |
Other receivables | 21,231 | |
Total assets | 834,201,600 | |
Liabilities | ||
Payable for investments purchased | $ 20,619,168 | |
Payable for fund shares redeemed | 2,948,927 | |
Accrued management fee | 377,283 | |
Distribution fees payable | 345,764 | |
Other affiliated payables | 215,945 | |
Other payables and accrued expenses | 58,780 | |
Collateral on securities loaned, at value | 29,452,386 | |
Total liabilities | 54,018,253 | |
Net Assets | $ 780,183,347 | |
Net Assets consist of: | ||
Paid in capital | $ 2,195,995,249 | |
Accumulated net investment loss | (288) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,424,241,310) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 8,429,696 | |
Net Assets | $ 780,183,347 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 20.55 | |
Maximum offering price per share (100/94.25 of $20.55) | $ 21.80 | |
Class T: | $ 20.09 | |
Maximum offering price per share (100/96.50 of $20.09) | $ 20.82 | |
Class B: | $ 19.10 | |
Class C: | $ 19.18 | |
Institutional Class: | $ 21.26 | |
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
Advisor Technology Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 2,010,038 | |
Interest | 17,430 | |
Income from Fidelity Central Funds (including $303,499 from security lending) | 572,300 | |
Total income | 2,599,768 | |
Expenses | ||
Management fee | $ 4,410,027 | |
Transfer agent fees | 2,657,408 | |
Distribution fees | 4,421,239 | |
Accounting and security lending fees | 286,014 | |
Custodian fees and expenses | 78,616 | |
Independent trustees' compensation | 2,570 | |
Registration fees | 95,509 | |
Audit | 54,386 | |
Legal | 12,987 | |
Interest | 27,912 | |
Miscellaneous | 265,473 | |
Total expenses before reductions | 12,312,141 | |
Expense reductions | (115,917) | 12,196,224 |
Net investment income (loss) | (9,596,456) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 101,172,062 | |
Foreign currency transactions | (32,896) | |
Total net realized gain (loss) | 101,139,166 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 120,840,676 | |
Assets and liabilities in foreign currencies | 980 | |
Total change in net unrealized appreciation (depreciation) | 120,841,656 | |
Net gain (loss) | 221,980,822 | |
Net increase (decrease) in net assets resulting from operations | $ 212,384,366 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (9,596,456) | $ (11,357,485) |
Net realized gain (loss) | 101,139,166 | 133,807,053 |
Change in net unrealized appreciation (depreciation) | 120,841,656 | (146,818,598) |
Net increase (decrease) in net assets resulting from operations | 212,384,366 | (24,369,030) |
Share transactions - net increase (decrease) | (169,547,974) | (128,197,659) |
Redemption fees | 20,415 | 46,191 |
Total increase (decrease) in net assets | 42,856,807 | (152,520,498) |
Net Assets | ||
Beginning of period | 737,326,540 | 889,847,038 |
End of period (including accumulated net investment loss of $288 and accumulated net investment loss of $473, respectively) | $ 780,183,347 | $ 737,326,540 |
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.59 | $ 16.16 | $ 13.98 | $ 13.36 | $ 10.03 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.17) | (.15) | .02 F | (.17) | (.11) |
Net realized and unrealized gain (loss) | 5.13 | (.42) | 2.24 | .79 | 3.44 |
Total from investment operations | 4.96 | (.57) | 2.26 | .62 | 3.33 |
Distributions from net investment income | - | - | (.08) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 | $ 13.36 |
Total Return A,B | 31.82% | (3.53)% | 16.20% | 4.64% | 33.20% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.25% | 1.30% | 1.37% | 1.44% | 1.70% |
Expenses net of fee waivers, if any | 1.25% | 1.30% | 1.37% | 1.44% | 1.59% |
Expenses net of all reductions | 1.24% | 1.20% | 1.26% | 1.35% | 1.38% |
Net investment income (loss) | (.91)% | (.88)% | .12% F | (1.10)% | (1.03)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 309,105 | $ 189,054 | $ 144,970 | $ 123,389 | $ 123,604 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.87)%.
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. Expenses net of fee 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 T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.28 | $ 15.88 | $ 13.76 | $ 13.17 | $ 9.91 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.21) | (.19) | (.02) F | (.19) | (.14) |
Net realized and unrealized gain (loss) | 5.02 | (.41) | 2.21 | .78 | 3.40 |
Total from investment operations | 4.81 | (.60) | 2.19 | .59 | 3.26 |
Distributions from net investment income | - | - | (.07) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 | $ 13.17 |
Total Return A,B | 31.48% | (3.78)% | 15.94% | 4.48% | 32.90% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.51% | 1.55% | 1.60% | 1.62% | 1.85% |
Expenses net of fee waivers, if any | 1.51% | 1.55% | 1.60% | 1.62% | 1.83% |
Expenses net of all reductions | 1.49% | 1.44% | 1.48% | 1.53% | 1.63% |
Net investment income (loss) | (1.16)% | (1.13)% | (.11)% F | (1.28)% | (1.28)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 260,339 | $ 260,966 | $ 315,930 | $ 363,399 | $ 367,257 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.10)%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.59 | $ 15.24 | $ 13.25 | $ 12.76 | $ 9.64 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.28) | (.27) | (.09) F | (.27) | (.17) |
Net realized and unrealized gain (loss) | 4.79 | (.38) | 2.12 | .76 | 3.29 |
Total from investment operations | 4.51 | (.65) | 2.03 | .49 | 3.12 |
Distributions from net investment income | - | - | (.04) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 | $ 12.76 |
Total Return A,B | 30.91% | (4.27)% | 15.33% | 3.84% | 32.37% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 2.01% | 2.05% | 2.13% | 2.21% | 2.38% |
Expenses net of fee waivers, if any | 2.01% | 2.05% | 2.13% | 2.21% | 2.25% |
Expenses net of all reductions | 2.00% | 1.94% | 2.02% | 2.12% | 2.05% |
Net investment income (loss) | (1.67)% | (1.63)% | (.65)% F | (1.87)% | (1.69)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 102,655 | $ 192,790 | $ 309,020 | $ 355,927 | $ 391,832 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.64)%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.66 | $ 15.31 | $ 13.31 | $ 12.80 | $ 9.67 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.29) | (.27) | (.08) F | (.26) | (.17) |
Net realized and unrealized gain (loss) | 4.81 | (.38) | 2.12 | .77 | 3.30 |
Total from investment operations | 4.52 | (.65) | 2.04 | .51 | 3.13 |
Distributions from net investment income | - | - | (.04) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 | $ 12.80 |
Total Return A,B | 30.83% | (4.25)% | 15.34% | 3.98% | 32.37% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 2.01% | 2.05% | 2.10% | 2.13% | 2.28% |
Expenses net of fee waivers, if any | 2.01% | 2.05% | 2.10% | 2.13% | 2.25% |
Expenses net of all reductions | 1.99% | 1.94% | 1.99% | 2.04% | 2.05% |
Net investment income (loss) | (1.66)% | (1.63)% | (.61)% F | (1.79)% | (1.69)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 86,974 | $ 82,835 | $ 108,287 | $ 125,926 | $ 139,654 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
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. Expenses net of fee 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.
Technology
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.07 | $ 16.60 | $ 14.32 | $ 13.61 | $ 10.15 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.11) | (.09) | .09 E | (.09) | (.05) |
Net realized and unrealized gain (loss) | 5.30 | (.44) | 2.30 | .80 | 3.51 |
Total from investment operations | 5.19 | (.53) | 2.39 | .71 | 3.46 |
Distributions from net investment income | - | - | (.11) | - | - |
Redemption fees added to paid in capital B | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 | $ 13.61 |
Total Return A | 32.30% | (3.19)% | 16.73% | 5.22% | 34.09% |
Ratios to Average Net Assets C,F | |||||
Expenses before reductions | .93% | .90% | .92% | .93% | .99% |
Expenses net of fee waivers, if any | .93% | .90% | .92% | .93% | .99% |
Expenses net of all reductions | .92% | .80% | .81% | .84% | .79% |
Net investment income (loss) | (.59)% | (.49)% | .57% E | (.59)% | (.43)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 21,111 | $ 11,681 | $ 11,640 | $ 10,984 | $ 11,511 |
Portfolio turnover rate D | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.42)%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income and capital gain distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 68,788,299 | |
Unrealized depreciation | (65,283,562) | |
Net unrealized appreciation (depreciation) | 3,504,737 | |
Capital loss carryforward | (1,419,316,323) | |
Cost for federal income tax purposes | $ 814,571,703 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Technology
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,608,479,872 and $1,790,613,658, respectively.
6. 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 .26% 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 .56% 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% | $ 644,282 | $ 44,835 |
Class T | .25% | .25% | 1,346,192 | 7,898 |
Class B | .75% | .25% | 1,545,100 | 1,162,780 |
Class C | .75% | .25% | 885,665 | 50,228 |
$ 4,421,239 | $ 1,265,741 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 30,734 |
Class T | 26,991 |
Class B* | 210,237 |
Class C* | 6,377 |
$ 274,339 |
* 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
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
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 | $ 866,525 | .34 |
Class T | 916,127 | .34 |
Class B | 533,526 | .35 |
Class C | 300,737 | .34 |
Institutional Class | 40,493 | .27 |
$ 2,657,408 |
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.
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 $50,241 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 5,313,457 | 5.40% | $ 27,912 |
7. 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, which amounted to $1,476 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. 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 $100,745 for the period. In addition, through arrangements with the each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced
Technology
9. Expense Reductions - continued
each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 8,049 | |
Class B | 1,907 | |
Class C | 2,925 | |
Institutional Class | 11 | |
$ 12,892 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to each of the Funds is not anticipated to have a material impact on such Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 7,888,385 | 5,933,920 | $ 145,922,304 | $ 105,071,198 |
Shares redeemed | (4,978,587) | (2,775,104) | (92,460,573) | (47,788,058) |
Net increase (decrease) | 2,909,798 | 3,158,816 | $ 53,461,731 | $ 57,283,140 |
Class T | ||||
Shares sold | 1,926,573 | 3,384,477 | $ 34,966,338 | $ 58,748,287 |
Shares redeemed | (6,053,307) | (6,198,789) | (109,073,221) | (105,287,546) |
Net increase (decrease) | (4,126,734) | (2,814,312) | $ (74,106,883) | $ (46,539,259) |
Class B | ||||
Shares sold | 357,014 | 539,586 | $ 6,182,320 | $ 8,903,373 |
Shares redeemed | (8,194,716) | (7,601,103) | (140,978,328) | (125,479,671) |
Net increase (decrease) | (7,837,702) | (7,061,517) | $ (134,796,008) | $ (116,576,298) |
Class C | ||||
Shares sold | 490,290 | 570,438 | $ 8,483,174 | $ 9,501,649 |
Shares redeemed | (1,608,094) | (1,991,739) | (27,833,773) | (32,610,461) |
Net increase (decrease) | (1,117,804) | (1,421,301) | $ (19,350,599) | $ (23,108,812) |
Institutional Class | ||||
Shares sold | 640,632 | 258,108 | $ 12,507,491 | $ 4,843,216 |
Shares redeemed | (374,535) | (232,556) | (7,263,706) | (4,099,646) |
Net increase (decrease) | 266,097 | 25,552 | $ 5,243,785 | $ 743,570 |
Annual Report
Advisor Utilities 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 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, 2007 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | 15.11% | 19.29% | 7.68% |
Class T (incl. 3.50% sales charge) | 17.48% | 19.54% | 7.67% |
Class B (incl. contingent deferred sales charge) A | 16.18% | 19.62% | 7.75% |
Class C (incl. contingent deferred sales charge) B | 20.23% | 19.89% | 7.57% |
A Class B shares bear a 1.00% 12b-1 fee. Class B shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on November 3, 1997. Returns prior to November 3, 1997 are those of Class B shares and reflect Class B shares' 1.00% 12b-1 fee. Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years 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 Utilities Fund - Class T on July 31, 1997, 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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the year ending July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 22.14%, 21.74%, 21.18% and 21.23%, respectively (excluding sales charges), compared with a gain of 15.12% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Utilities Index, and an advance of 18.45% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Utilities Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund also beat the S&P 500. For the first two months of the period, the fund outperformed the Goldman Sachs benchmark due its overweighting of integrated telecommunication services stocks, positive security selection and an overweighting in alternative carriers, and underweighting of multi-utilities stocks. Conversely, less-successful security selection in wireless telecom services and underweighting broadcasting and cable TV hurt relative returns. Four telecommunications stocks - Level 3 Communications, BellSouth, Verizon Communications and AT&T - were the top contributors during this two-month time frame. Not owning two index components that fared well - - Canadian integrated telecom services provider BCE and satellite TV company DirecTV - held back our results along with underweighting another Canadian telecom stock, Telus. The fund's outperformance of its new MSCI benchmark during the last 10 months of the period resulted from strong stock selection in electric utilities, as well as positive security selection and an underweighting in multi-utilities. Detractors during this 10-month time frame included weak-performing out-of-benchmark holdings in both oil and gas storage/transport stocks and integrated telecom services. The telecom positions had been acquired prior to the fund's restructuring on October 1, 2006, when it began focusing on utilities only, at which point the telecom stocks were all sold from the portfolio. Top contributors to the fund's outperformance of the MSCI index during the last 10 months of the period included power generator and utility operator Constellation Energy Group, multi-utility Public Service Enterprise Group, electric utility Entergy and an underweighted position in electric utility Southern Company. Among the detractors were oil and gas storage/transport firm Spectra Energy - no longer held - global power infrastructure player AES and an underweighted position in power producer Mirant.
For the year ending July 31, 2007, the fund's Institutional Class shares returned 22.54%, compared with a gain of 15.12% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Utilities Index, and an advance of 18.45% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Utilities Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund also beat the S&P 500. For the first two months of the period, the fund outperformed the Goldman Sachs benchmark due its overweighting of integrated telecommunication services stocks, positive security selection and an overweighting in alternative carriers, and underweighting of multi-utilities stocks. Conversely, less-successful security selection in wireless telecom services and underweighting broadcasting and cable TV hurt relative returns. Four telecommunications stocks - Level 3 Communications, BellSouth, Verizon Communications and AT&T - were the top contributors during this two-month time frame. Not owning two index components that fared well - Canadian integrated telecom services provider BCE and satellite TV company DirecTV - held back our results, along with underweighting another Canadian telecom stock, Telus. The fund's outperformance of its new MSCI benchmark during the last 10 months of the period resulted from strong stock selection in electric utilities, as well as positive security selection and an underweighting in multi-utilities. Detractors during this 10-month time frame included weak-performing out-of-benchmark holdings in both oil and gas storage/transport stocks and integrated telecom services. The telecom positions had been acquired prior to the fund's restructuring on October 1, 2006, when it began focusing on utilities only, at which point the telecom stocks were all sold from the portfolio. Top contributors to the fund's outperformance of the MSCI index during the last 10 months of the period included power generator and utility operator Constellation Energy Group, multi-utility Public Service Enterprise Group, electric utility Entergy and an underweighted position in electric utility Southern Company. Among the detractors were oil and gas storage/transport firm Spectra Energy - no longer held - global power infrastructure player AES and an underweighted position in power producer Mirant.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Utilities Index, which returned 3.55% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Utilities Index, which returned 14.39% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 18.45%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,071.80 | $ 6.22 |
HypotheticalA | $ 1,000.00 | $ 1,018.79 | $ 6.06 |
Class T | |||
Actual | $ 1,000.00 | $ 1,070.80 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,017.60 | $ 7.25 |
Class B | |||
Actual | $ 1,000.00 | $ 1,068.10 | $ 9.90 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | |||
Actual | $ 1,000.00 | $ 1,068.10 | $ 9.95 |
HypotheticalA | $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,073.80 | $ 4.63 |
HypotheticalA | $ 1,000.00 | $ 1,020.33 | $ 4.51 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.21% |
Class T | 1.45% |
Class B | 1.93% |
Class C | 1.94% |
Institutional Class | .90% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
TXU Corp. | 9.5 | 4.5 |
Exelon Corp. | 8.1 | 5.3 |
Constellation Energy Group, Inc. | 5.8 | 6.4 |
AES Corp. | 5.4 | 5.3 |
Public Service Enterprise Group, Inc. | 5.3 | 5.0 |
Dominion Resources, Inc. | 5.2 | 0.0 |
PPL Corp. | 5.2 | 2.9 |
Entergy Corp. | 5.0 | 6.1 |
Southern Co. | 4.3 | 0.0 |
Sempra Energy | 4.1 | 5.2 |
57.9 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Electric Utilities | 42.4% | |
| Multi-utilities | 26.6% | |
| Independent Power Producers & Energy Traders | 26.0% | |
| Gas Utilities | 4.3% | |
| Water Utilities | 0.6% | |
| All Others* | 0.1% | |
As of January 31, 2007 | |||
| Electric Utilities | 45.7% | |
| Multi-utilities | 24.2% | |
| Independent Power Producers & Energy Traders | 19.1% | |
| Gas Utilities | 4.0% | |
| Oil, Gas & Consumable Fuels | 3.9% | |
| All Others* | 3.1% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 42.4% | |||
Electric Utilities - 42.4% | |||
Allegheny Energy, Inc. (a) | 80,100 | $ 4,183,623 | |
American Electric Power Co., Inc. | 174,600 | 7,593,354 | |
Cleco Corp. | 27,400 | 650,750 | |
DPL, Inc. | 50,500 | 1,342,290 | |
Duke Energy Corp. | 193,400 | 3,293,602 | |
Edison International | 59,600 | 3,152,244 | |
Entergy Corp. | 129,400 | 12,934,824 | |
Exelon Corp. | 295,900 | 20,757,385 | |
FirstEnergy Corp. | 134,800 | 8,189,100 | |
FPL Group, Inc. | 168,700 | 9,739,051 | |
Great Plains Energy, Inc. | 37,300 | 1,035,448 | |
ITC Holdings Corp. | 45,800 | 1,925,890 | |
Northeast Utilities | 70,100 | 1,916,534 | |
Pepco Holdings, Inc. | 103,900 | 2,812,573 | |
PPL Corp. | 282,200 | 13,302,908 | |
Reliant Energy, Inc. (a) | 135,600 | 3,482,208 | |
Sierra Pacific Resources | 106,500 | 1,692,285 | |
Southern Co. | 330,600 | 11,121,384 | |
109,125,453 | |||
GAS UTILITIES - 4.3% | |||
Gas Utilities - 4.3% | |||
Equitable Resources, Inc. | 62,000 | 2,920,820 | |
ONEOK, Inc. | 51,000 | 2,588,250 | |
Questar Corp. | 83,400 | 4,294,266 | |
Southern Union Co. | 45,200 | 1,395,776 | |
11,199,112 | |||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 26.0% | |||
Independent Power Producers & Energy Traders - 26.0% | |||
AES Corp. (a) | 710,200 | 13,955,430 | |
Constellation Energy Group, Inc. | 177,400 | 14,866,120 | |
Dynegy, Inc. Class A (a) | 175,400 | 1,562,814 | |
Mirant Corp. (a) | 121,500 | 4,596,345 | |
NRG Energy, Inc. (a) | 191,800 | 7,393,890 | |
TXU Corp. | 376,300 | 24,553,575 | |
66,928,174 | |||
MULTI-UTILITIES - 26.6% | |||
Multi-Utilities - 26.6% | |||
Alliant Energy Corp. | 72,200 | 2,667,790 | |
Ameren Corp. | 109,000 | 5,229,820 | |
CenterPoint Energy, Inc. (d) | 162,500 | 2,678,000 | |
Shares | Value | ||
CMS Energy Corp. | 185,590 | $ 2,999,134 | |
Dominion Resources, Inc. | 158,300 | 13,332,026 | |
DTE Energy Co. (d) | 31,900 | 1,479,522 | |
Integrys Energy Group, Inc. | 32,100 | 1,588,629 | |
MDU Resources Group, Inc. | 74,400 | 2,028,144 | |
NiSource, Inc. | 123,600 | 2,357,052 | |
PG&E Corp. (d) | 156,900 | 6,716,889 | |
Public Service Enterprise Group, Inc. | 157,300 | 13,551,395 | |
Puget Energy, Inc. | 32,900 | 761,635 | |
Sempra Energy | 202,100 | 10,654,712 | |
Wisconsin Energy Corp. | 55,600 | 2,386,908 | |
68,431,656 | |||
WATER UTILITIES - 0.6% | |||
Water Utilities - 0.6% | |||
Aqua America, Inc. (d) | 68,200 | 1,492,216 | |
TOTAL COMMON STOCKS (Cost $235,462,313) | 257,176,611 | ||
Money Market Funds - 3.0% | |||
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 7,689,350 | 7,689,350 | |
TOTAL INVESTMENT PORTFOLIO - 102.9% (Cost $243,151,663) | 264,865,961 | ||
NET OTHER ASSETS - (2.9)% | (7,472,956) | ||
NET ASSETS - 100% | $ 257,393,005 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 206,614 |
Fidelity Securities Lending Cash Central Fund | 55,343 |
Total | $ 261,957 |
Income Tax Information |
At July 31, 2007, the fund had a capital loss carryforward of approximately $248,189,753 of which $93,777,221 and $154,412,532 will expire on July 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $7,449,338) - See accompanying schedule: Unaffiliated issuers (cost $235,462,313) | $ 257,176,611 | |
Fidelity Central Funds (cost $7,689,350) | 7,689,350 | |
Total Investments (cost $243,151,663) | $ 264,865,961 | |
Receivable for investments sold | 13,511,415 | |
Receivable for fund shares sold | 430,230 | |
Dividends receivable | 158,727 | |
Distributions receivable from Fidelity Central Funds | 5,110 | |
Prepaid expenses | 352 | |
Other receivables | 1,862 | |
Total assets | 278,973,657 | |
Liabilities | ||
Payable to custodian bank | $ 408,424 | |
Payable for investments purchased | 12,080,232 | |
Payable for fund shares redeemed | 1,025,938 | |
Accrued management fee | 130,505 | |
Distribution fees payable | 128,484 | |
Other affiliated payables | 80,730 | |
Other payables and accrued expenses | 36,989 | |
Collateral on securities loaned, at value | 7,689,350 | |
Total liabilities | 21,580,652 | |
Net Assets | $ 257,393,005 | |
Net Assets consist of: | ||
Paid in capital | $ 482,813,379 | |
Undistributed net investment income | 1,153,544 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (248,288,216) | |
Net unrealized appreciation (depreciation) on investments | 21,714,298 | |
Net Assets | $ 257,393,005 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 20.74 | |
Maximum offering price per share (100/94.25 of $20.74) | $ 22.01 | |
Class T: | $ 20.71 | |
Maximum offering price per share (100/96.50 of $20.71) | $ 21.46 | |
Class B: | $ 20.40 | |
Class C: | $ 20.38 | |
Institutional Class: | $ 20.95 | |
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
Advisor Utilities Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 5,515,889 | |
Interest | 53 | |
Income from Fidelity Central Funds | 261,957 | |
Total income | 5,777,899 | |
Expenses | ||
Management fee | $ 1,409,020 | |
Transfer agent fees | 825,887 | |
Distribution fees | 1,514,377 | |
Accounting and security lending fees | 103,110 | |
Custodian fees and expenses | 8,603 | |
Independent trustees' compensation | 787 | |
Registration fees | 78,067 | |
Audit | 47,726 | |
Legal | 3,460 | |
Interest | 6,154 | |
Miscellaneous | 69,807 | |
Total expenses before reductions | 4,066,998 | |
Expense reductions | (4,899) | 4,062,099 |
Net investment income (loss) | 1,715,800 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 44,239,668 | |
Foreign currency transactions | 3,147 | |
Total net realized gain (loss) | 44,242,815 | |
Change in net unrealized appreciation (depreciation) on investment securities | (2,387,149) | |
Net gain (loss) | 41,855,666 | |
Net increase (decrease) in net assets resulting from operations | $ 43,571,466 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 1,715,800 | $ 1,994,007 |
Net realized gain (loss) | 44,242,815 | 26,815,933 |
Change in net unrealized appreciation (depreciation) | (2,387,149) | (2,675,823) |
Net increase (decrease) in net assets resulting from operations | 43,571,466 | 26,134,117 |
Distributions to shareholders from net investment income | (1,795,359) | (1,886,398) |
Share transactions - net increase (decrease) | 17,609,310 | (30,269,037) |
Redemption fees | 19,962 | 5,377 |
Total increase (decrease) in net assets | 59,405,379 | (6,015,941) |
Net Assets | ||
Beginning of period | 197,987,626 | 204,003,567 |
End of period (including undistributed net investment income of $1,153,544 and undistributed net investment income of $1,237,487, respectively) | $ 257,393,005 | $ 197,987,626 |
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.20 | $ 15.17 | $ 12.09 | $ 10.37 | $ 8.74 |
Income from Investment Operations | |||||
Net investment income (loss) C | .21 | .24 | .28 F | .10 | .13 |
Net realized and unrealized gain (loss) | 3.56 | 2.06 | 3.01 | 1.72 | 1.69 |
Total from investment operations | 3.77 | 2.30 | 3.29 | 1.82 | 1.82 |
Distributions from net investment income | (.23) | (.27) | (.21) | (.10) | (.19) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 | $ 10.37 |
Total Return A,B | 22.14% | 15.38% | 27.48% | 17.67% | 21.22% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.27% | 1.34% | 1.39% | 1.51% | 1.67% |
Expenses net of fee waivers, if any | 1.27% | 1.34% | 1.39% | 1.50% | 1.58% |
Expenses net of all reductions | 1.26% | 1.32% | 1.36% | 1.45% | 1.47% |
Net investment income (loss) | 1.04% | 1.51% | 2.03% F | .87% | 1.46% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 94,842 | $ 40,599 | $ 29,150 | $ 21,987 | $ 21,761 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.39%.
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. Expenses net of fee 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 T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.18 | $ 15.10 | $ 12.04 | $ 10.33 | $ 8.68 |
Income from Investment Operations | |||||
Net investment income (loss) C | .15 | .19 | .24 F | .07 | .11 |
Net realized and unrealized gain (loss) | 3.56 | 2.08 | 2.99 | 1.72 | 1.68 |
Total from investment operations | 3.71 | 2.27 | 3.23 | 1.79 | 1.79 |
Distributions from net investment income | (.18) | (.19) | (.17) | (.08) | (.14) |
Redemption fees added to paid in capital C | - H | - H | - H | -H | - H |
Net asset value, end of period | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 | $ 10.33 |
Total Return A,B | 21.74% | 15.20% | 27.03% | 17.42% | 20.91% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.54% | 1.60% | 1.67% | 1.79% | 1.94% |
Expenses net of fee waivers, if any | 1.54% | 1.60% | 1.67% | 1.75% | 1.83% |
Expenses net of all reductions | 1.54% | 1.58% | 1.64% | 1.70% | 1.72% |
Net investment income (loss) | .76% | 1.25% | 1.76% F | .62% | 1.21% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 62,592 | $ 52,128 | $ 55,683 | $ 53,255 | $ 55,510 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.12%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.90 | $ 14.83 | $ 11.82 | $ 10.15 | $ 8.49 |
Income from Investment Operations | |||||
Net investment income (loss) C | .05 | .12 | .17 F | .01 | .07 |
Net realized and unrealized gain (loss) | 3.52 | 2.03 | 2.95 | 1.69 | 1.65 |
Total from investment operations | 3.57 | 2.15 | 3.12 | 1.70 | 1.72 |
Distributions from net investment income | (.07) | (.08) | (.11) | (.03) | (.06) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 | $ 10.15 |
Total Return A,B | 21.18% | 14.57% | 26.51% | 16.79% | 20.37% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 2.04% | 2.09% | 2.14% | 2.25% | 2.32% |
Expenses net of fee waivers, if any | 2.04% | 2.09% | 2.14% | 2.25% | 2.25% |
Expenses net of all reductions | 2.03% | 2.06% | 2.11% | 2.20% | 2.13% |
Net investment income (loss) | .27% | .76% | 1.28% F | .12% | .79% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 43,845 | $ 65,959 | $ 82,577 | $ 84,742 | $ 87,868 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .64%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.91 | $ 14.84 | $ 11.84 | $ 10.16 | $ 8.50 |
Income from Investment Operations | |||||
Net investment income (loss) C | .06 | .13 | .18 F | .02 | .07 |
Net realized and unrealized gain (loss) | 3.51 | 2.04 | 2.94 | 1.70 | 1.65 |
Total from investment operations | 3.57 | 2.17 | 3.12 | 1.72 | 1.72 |
Distributions from net investment income | (.10) | (.10) | (.12) | (.04) | (.06) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 | $ 10.16 |
Total Return A,B | 21.23% | 14.72% | 26.48% | 16.98% | 20.35% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.99% | 2.02% | 2.07% | 2.17% | 2.23% |
Expenses net of fee waivers, if any | 1.99% | 2.02% | 2.07% | 2.17% | 2.23% |
Expenses net of all reductions | 1.99% | 2.00% | 2.04% | 2.12% | 2.12% |
Net investment income (loss) | .32% | .83% | 1.36% F | .21% | .80% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 43,292 | $ 32,823 | $ 34,827 | $ 35,038 | $ 37,530 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividends, the ratio of net investment income (loss) to average net assets would have been .72%.
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. Expenses net of fee 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.
Utilities
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.38 | $ 15.31 | $ 12.20 | $ 10.47 | $ 8.86 |
Income from Investment Operations | |||||
Net investment income (loss) B | .29 | .30 | .33 E | .15 | .18 |
Net realized and unrealized gain (loss) | 3.58 | 2.10 | 3.03 | 1.73 | 1.71 |
Total from investment operations | 3.87 | 2.40 | 3.36 | 1.88 | 1.89 |
Distributions from net investment income | (.30) | (.33) | (.25) | (.15) | (.28) |
Redemption fees added to paid in capital B | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 | $ 10.47 |
Total Return A | 22.54% | 15.95% | 27.88% | 18.14% | 21.94% |
Ratios to Average Net Assets C,F | |||||
Expenses before reductions | .92% | .94% | .99% | 1.09% | 1.06% |
Expenses net of fee waivers, if any | .92% | .94% | .99% | 1.09% | 1.06% |
Expenses net of all reductions | .92% | .92% | .96% | 1.04% | .94% |
Net investment income (loss) | 1.39% | 1.91% | 2.44% E | 1.29% | 1.98% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,822 | $ 6,479 | $ 1,766 | $ 2,254 | $ 2,891 |
Portfolio turnover rate D | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.80%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Utilities Fund (the Fund) (formerly Fidelity Advisor Telecommunications & Utilities Growth Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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 foreign currency transactions, deferred trustees compensation, 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 | $ 27,851,494 |
Unrealized depreciation | (6,238,807) |
Net unrealized appreciation (depreciation) | 21,612,687 |
Undistributed ordinary income | 1,156,741 |
Capital loss carryforward | (248,189,753) |
Cost for federal income tax purposes | $ 243,253,274 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 1,795,359 | $ 1,886,398 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
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4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $315,034,135 and $291,003,084, respectively.
6. 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 .26% 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 .56% 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% | $ 181,993 | $ 6,767 |
Class T | .25% | .25% | 315,786 | 3,058 |
Class B | .75% | .25% | 595,186 | 449,574 |
Class C | .75% | .25% | 421,412 | 61,839 |
$ 1,514,377 | $ 521,238 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 84,821 |
Class T | 22,450 |
Class B* | 59,315 |
Class C* | 8,988 |
$ 175,574 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 238,880 | .33 |
Class T | 222,763 | .35 |
Class B | 206,830 | .35 |
Class C | 126,421 | .30 |
Institutional Class | 30,993 | .23 |
$ 825,887 |
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.
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 $394 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 4,871,571 | 5.41% | $ 5,125 |
7. 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, which amounted to $420 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $55,343.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $2,241,000. The weighted average interest rate was 5.51%. The interest expense amounted to $1,029 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
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10. 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 $942 for the period. In addition, through arrangements with the Fund's each class' transfer agent, 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 transfer agent expense as noted in the table below.
Transfer Agent | |
Class A | $ 194 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 644,012 | $ 515,686 |
Class T | 560,438 | 679,149 |
Class B | 253,871 | 428,719 |
Class C | 209,022 | 227,882 |
Institutional Class | 128,016 | 34,962 |
Total | $ 1,795,359 | $ 1,886,398 |
Annual Report
Notes to Financial Statements - continued
13. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 3,629,587 | 1,157,742 | $ 74,211,808 | $ 18,299,828 |
Reinvestment of distributions | 31,700 | 29,809 | 573,106 | 453,431 |
Shares redeemed | (1,448,205) | (749,911) | (30,175,903) | (11,656,126) |
Net increase (decrease) | 2,213,082 | 437,640 | $ 44,609,011 | $ 7,097,133 |
Class T | ||||
Shares sold | 1,035,618 | 427,549 | $ 20,689,420 | $ 6,679,626 |
Reinvestment of distributions | 29,413 | 41,716 | 530,959 | 634,275 |
Shares redeemed | (1,078,012) | (1,121,239) | (22,011,808) | (17,325,224) |
Net increase (decrease) | (12,981) | (651,974) | $ (791,429) | $ (10,011,323) |
Class B | ||||
Shares sold | 496,053 | 164,555 | $ 9,866,415 | $ 2,522,243 |
Reinvestment of distributions | 12,604 | 24,747 | 221,292 | 371,052 |
Shares redeemed | (2,262,406) | (1,855,539) | (44,828,420) | (28,512,346) |
Net increase (decrease) | (1,753,749) | (1,666,237) | $ (34,740,713) | $ (25,619,051) |
Class C | ||||
Shares sold | 1,008,161 | 246,869 | $ 20,364,886 | $ 3,819,729 |
Reinvestment of distributions | 8,956 | 11,397 | 157,448 | 170,983 |
Shares redeemed | (834,201) | (663,040) | (16,902,583) | (10,076,221) |
Net increase (decrease) | 182,916 | (404,774) | $ 3,619,751 | $ (6,085,509) |
Institutional Class | ||||
Shares sold | 1,116,023 | 292,241 | $ 24,167,100 | $ 4,893,596 |
Reinvestment of distributions | 2,016 | 1,223 | 36,805 | 18,745 |
Shares redeemed | (878,823) | (36,084) | (19,291,215) | (562,628) |
Net increase (decrease) | 239,216 | 257,380 | $ 4,912,690 | $ 4,349,713 |
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Report of Independent Registered Public Accounting Firm
To the Trustees of Advisor Series VII and the Shareholders of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund (formerly Developing Communications), Fidelity Advisor Consumer Discretionary Fund (formerly Consumer Industries), Fidelity Advisor Electronics Fund, Fidelity Advisor Energy Fund (formerly Natural Resources), Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund (formerly Cyclical Industries), Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (formerly Telecommunications & Utilities Growth)
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund (formerly Developing Communications), Fidelity Advisor Consumer Discretionary Fund (formerly Consumer Industries), Fidelity Advisor Electronics Fund, Fidelity Advisor Energy Fund (formerly Natural Resources), Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund (formerly Cyclical Industries), Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (formerly Telecommunications & Utilities Growth) (collectively, the "Funds"), including the schedules of investments, as of July 31, 2007, 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 audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2007, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. 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 Communications Equipment Fund (formerly Developing Communications), Fidelity Advisor Consumer Discretionary Fund (formerly Consumer Industries), Fidelity Advisor Electronics Fund, Fidelity Advisor Energy Fund (formerly Natural Resources), Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund (formerly Cyclical Industries), Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (formerly Telecommunications & Utilities Growth) as of July 31, 2007, 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 20, 2007
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 James C. Curvey, each of the Trustees oversees 353 funds advised by FMR or an affiliate. Mr. Curvey oversees 317 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. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. 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 may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (77) | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR Corp.; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of Fidelity International Limited (FIL). | |
James C. Curvey (72) | |
Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is Vice Chairman (2006-present) and Director of FMR Corp. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR Corp. (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). | |
* 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.
Independent Trustees:
Correspondence intended for each Independent 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 | |
Dennis J. Dirks (59) | |
Year of Election or Appointment: 2005 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). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). | |
Albert R. Gamper, Jr. (65) | |
Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. | |
George H. Heilmeier (71) | |
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), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). 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), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. | |
James H. Keyes (66) | |
Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). | |
Marie L. Knowles (60) | |
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-present). 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 (63) | |
Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). 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. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. | |
Cornelia M. Small (63) | |
Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) 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 (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
William S. Stavropoulos (68) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus 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), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. 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. | |
Kenneth L. Wolfe (68) | |
Year of Election or Appointment: 2005 Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993-2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003-present), Bausch & Lomb, Inc., and Revlon Inc. (2004-present). | |
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Mauriello 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 | |
Peter S. Lynch (63) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. | |
Joseph Mauriello (62) | |
Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd., (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc., (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). | |
Kimberley H. Monasterio (43) | |
Year of Election or Appointment: 2007 President and Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). 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). | |
Boyce I. Greer (51) | |
Year of Election or Appointment: 2005 Vice President of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Greer also serves as Vice President of certain Equity Funds (2005-present), certain Asset Allocation Funds (2005-present), Fixed-Income Funds (2006-present), and Money Market Funds (2006-present). Mr. Greer is also a Trustee of other investment companies advised by FMR (2003-present). He is an Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005-present), and Senior Vice President of Fidelity Investments Money Management, Inc. (2006-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005), and Executive Vice President (2000-2002) and Money Market Group Leader (1997-2002) of the Fidelity Investments Fixed Income Division. He also served as Vice President of Fidelity's Money Market Funds (1997-2002), Senior Vice President of FMR (1997-2002), and Vice President of FIMM (1998-2002). | |
Eric D. Roiter (58) | |
Year of Election or Appointment: 1998 or 2000 Secretary of Advisor Biotechnology (2000), Advisor Communications Equipment (2000), Advisor Consumer Discretionary (1998), Advisor Electronics (2000), Advisor Energy (1998), Advisor Financial Services (1998), Advisor Health Care (1998), Advisor Industrials (1998), Advisor Technology (1998), and Advisor Utilities (1998). He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). | |
Scott C. Goebel (39) | |
Year of Election or Appointment: 2007 Assistant Secretary of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Goebel also serves as Assistant Secretary of other Fidelity funds (2007-present), Vice President and Secretary of FDC (2006-present), and is an employee of FMR. | |
R. Stephen Ganis (41) | |
Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR Corp. (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). | |
Joseph B. Hollis (59) | |
Year of Election or Appointment: 2006 Chief Financial Officer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). | |
Kenneth A. Rathgeber (60) | |
Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). | |
Bryan A. Mehrmann (46) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). | |
Kenneth B. Robins (37) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). 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). | |
Robert G. Byrnes (40) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). | |
Peter L. Lydecker (53) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. | |
Gary W. Ryan (48) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). | |
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:
Pay Date | Record Date | Dividends | Capital Gains | |
Fidelity Advisor Biotechnology Fund | ||||
Class A | 09/17/07 | 09/14/07 | $0.000 | $0.360 |
Class T | 09/17/07 | 09/14/07 | $0.000 | $0.360 |
Class B | 09/17/07 | 09/14/07 | $0.000 | $0.360 |
Class C | 09/17/07 | 09/14/07 | $0.000 | $0.360 |
Fidelity Advisor Communications Equipment Fund | ||||
Class A | 09/17/07 | 09/14/07 | $0.000 | $0.135 |
Class T | 09/17/07 | 09/14/07 | $0.000 | $0.135 |
Class B | 09/17/07 | 09/14/07 | $0.000 | $0.135 |
Class C | 09/17/07 | 09/14/07 | $0.000 | $0.135 |
Fidelity Consumer Discretionary Fund | ||||
Class A | 09/17/07 | 09/14/07 | $0.000 | $1.319 |
Class T | 09/17/07 | 09/14/07 | $0.000 | $1.300 |
Class B | 09/17/07 | 09/14/07 | $0.000 | $1.238 |
Class C | 09/17/07 | 09/14/07 | $0.000 | $1.249 |
Fidelity Advisor Energy Fund | ||||
Class A | 09/10/07 | 09/07/07 | $0.000 | $1.898 |
Class T | 09/10/07 | 09/07/07 | $0.000 | $1.778 |
Class B | 09/10/07 | 09/07/07 | $0.000 | $1.740 |
Class C | 09/10/07 | 09/07/07 | $0.000 | $1.740 |
Fidelity Advisor Financial Services Fund | ||||
Class A | 09/17/07 | 09/14/07 | $0.143 | $1.230 |
Class T | 09/17/07 | 09/14/07 | $0.096 | $1.230 |
Class B | 09/17/07 | 09/14/07 | $0.000 | $1.205 |
Class C | 09/17/07 | 09/14/07 | $0.031 | $1.230 |
Fidelity Advisor Health Care Fund | ||||
Class A | 09/10/07 | 09/07/07 | $0.000 | $1.556 |
Class T | 09/10/07 | 09/07/07 | $0.000 | $1.508 |
Class B | 09/10/07 | 09/07/07 | $0.000 | $1.412 |
Class C | 09/10/07 | 09/07/07 | $0.000 | $1.443 |
Fidelity Advisor Industrials Fund | ||||
Class A | 09/17/07 | 09/14/07 | $0.000 | $1.822 |
Class T | 09/17/07 | 09/14/07 | $0.000 | $1.783 |
Class B | 09/17/07 | 09/14/07 | $0.000 | $1.711 |
Class C | 09/17/07 | 09/14/07 | $0.000 | $1.727 |
Fidelity Advisor Utilities Fund | ||||
Class A | 09/17/07 | 09/14/07 | $0.153 | $0.000 |
Class T | 09/17/07 | 09/14/07 | $0.106 | $0.000 |
Class B | 09/17/07 | 09/14/07 | $0.000 | $0.000 |
Class C | 09/17/07 | 09/14/07 | $0.048 | $0.000 |
Annual Report
Distributions - continued
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended July 31, 2007, or, if subsequently determined to be different, the net capital gain of such year.
Fidelity Advisor Biotechnology Fund | $2,585,750 |
Fidelity Advisor Communications Equipment Fund | $145,205 |
Fidelity Advisor Consumer Discretionary Fund | $3,931,159 |
Fidelity Advisor Energy Fund | $59,721,177 |
Fidelity Advisor Financial Services Fund | $44,655,094 |
Fidelity Advisor Health Care Fund | $62,659,668 |
Fidelity Advisor Industrials Fund | $19,549,423 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
September 2006 | December 2006 | |
Fidelity Advisor Consumer Discretionary Fund | ||
Class A | -% | 32% |
Class T | -% | 34% |
Class B | -% | 37% |
Class C | -% | 37% |
Fidelity Advisor Energy Fund | ||
Class A | 8% | -% |
Class T | 8% | -% |
Class B | 9% | -% |
Class C | 9% | -% |
Fidelity Advisor Financial Services Fund | ||
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Fidelity Advisor Health Care Fund | ||
Class A | 46% | 67% |
Class T | 60% | 67% |
Class B | 100% | 100% |
Class C | 90% | 67% |
Fidelity Advisor Industrials Fund | ||
Class A | 27% | 100% |
Class T | 30% | 100% |
Class B | 38% | 100% |
Class C | 32% | 100% |
Fidelity Advisor Utilities Fund | ||
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Annual Report
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
September 2006 | December 2006 | |
Fidelity Advisor Consumer Discretionary Fund | ||
Class A | -% | 33% |
Class T | -% | 35% |
Class B | -% | 38% |
Class C | -% | 38% |
Fidelity Advisor Energy Fund | ||
Class A | 11% | -% |
Class T | 11% | -% |
Class B | 12% | -% |
Class C | 12% | -% |
Fidelity Advisor Financial Services Fund | ||
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Fidelity Advisor Health Care Fund | ||
Class A | 48% | 69% |
Class T | 63% | 69% |
Class B | 100% | 100% |
Class C | 94% | 69% |
Fidelity Advisor Industrials Fund | ||
Class A | 32% | 100% |
Class T | 37% | 100% |
Class B | 46% | 100% |
Class C | 38% | 100% |
Fidelity Advisor Utilities Fund | ||
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
The funds will notify shareholders in January 2008 of amounts for use in preparing 2007 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on September 28, 2006 and September 30, 2006. The results of votes taken among shareholders on the 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 elect a Board of Trustees. A, C | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 2,206,930,035.62 | 96.925 |
Withheld | 70,013,151.28 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 2,206,929,647.55 | 96.925 |
Withheld | 70,013,539.35 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Robert M. Gates | ||
Affirmative | 2,205,212,761.55 | 96.850 |
Withheld | 71,730,425.35 | 3.150 |
TOTAL | 2,276,943,186.90 | 100.000 |
George H. Heilmeier | ||
Affirmative | 2,204,247,730.70 | 96.807 |
Withheld | 72,695,456.20 | 3.193 |
TOTAL | 2,276,943,186.90 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 2,203,739,123.67 | 96.785 |
Withheld | 73,204,063.23 | 3.215 |
TOTAL | 2,276,943,186.90 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 2,207,154,045.47 | 96.935 |
Withheld | 69,789,141.43 | 3.065 |
TOTAL | 2,276,943,186.90 | 100.000 |
James H. KeyesB | ||
Affirmative | 2,205,258,024.08 | 96.852 |
Withheld | 71,685,162.82 | 3.148 |
TOTAL | 2,276,943,186.90 | 100.000 |
Marie L. Knowles | ||
Affirmative | 2,205,892,060.16 | 96.880 |
Withheld | 71,051,126.74 | 3.120 |
TOTAL | 2,276,943,186.90 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 2,205,297,807.97 | 96.853 |
Withheld | 71,645,378.93 | 3.147 |
TOTAL | 2,276,943,186.90 | 100.000 |
William O. McCoy | ||
Affirmative | 2,204,396,505.93 | 96.814 |
Withheld | 72,546,680.97 | 3.186 |
TOTAL | 2,276,943,186.90 | 100.000 |
# of | % of | |
Robert L. Reynolds | ||
Affirmative | 2,206,981,118.77 | 96.927 |
Withheld | 69,962,068.13 | 3.073 |
TOTAL | 2,276,943,186.90 | 100.000 |
Cornelia M. Small | ||
Affirmative | 2,206,379,820.44 | 96.901 |
Withheld | 70,563,366.46 | 3.099 |
TOTAL | 2,276,943,186.90 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 2,205,403,278.90 | 96.858 |
Withheld | 71,539,908.00 | 3.142 |
TOTAL | 2,276,943,186.90 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 2,205,707,840.10 | 96.871 |
Withheld | 71,235,346.80 | 3.129 |
TOTAL | 2,276,943,186.90 | 100.000 |
PROPOSAL 2A | ||
To modify the fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments) of Fidelity Advisor Consumer Discretionary Fund.D | ||
# of | % of | |
Affirmative | 25,052,022.13 | 70.939 |
Against | 1,507,700.50 | 4.269 |
Abstain | 2,181,277.38 | 6.177 |
Broker Non-Votes | 6,573,990.16 | 18.615 |
TOTAL | 35,314,990.17 | 100.000 |
PROPOSAL 2B | ||
To modify the fundamental concentration policy of Fidelity Advisor Consumer Discretionary Fund.D | ||
# of | % of | |
Affirmative | 24,468,395.75 | 69.286 |
Against | 1,941,580.95 | 5.498 |
Abstain | 2,331,023.31 | 6.601 |
Broker Non-Votes | 6,573,990.16 | 18.615 |
TOTAL | 35,314,990.17 | 100.000 |
PROPOSAL 3A | ||
To modify the fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments) of Fidelity Advisor Industrials Fund.C | ||
# of | % of | |
Affirmative | 103,262,001.88 | 67.400 |
Against | 4,354,979.52 | 2.842 |
Abstain | 6,913,004.08 | 4.513 |
Broker Non-Votes | 38,678,502.70 | 25.246 |
TOTAL | 153,208,488.18 | 100.000 |
PROPOSAL 3B | ||
To modify the fundamental concentration policy of Fidelity Advisor Industrials Fund.C | ||
# of | % of | |
Affirmative | 103,063,141.29 | 67.270 |
Against | 4,478,980.28 | 2.923 |
Abstain | 6,987,863.91 | 4.561 |
Broker Non-Votes | 38,678,502.70 | 25.246 |
TOTAL | 153,208,488.18 | 100.000 |
PROPOSAL 4A | ||
To modify the fundamental concentration policy of Fidelity Advisor Utilities Fund.D | ||
# of | % of | |
Affirmative | 78,803,170.56 | 70.172 |
Against | 3,577,908.42 | 3.186 |
Abstain | 6.541,369.10 | 5.825 |
Broker Non-Votes | 23,378,154.01 | 20.817 |
TOTAL | 112,300,602.09 | 100.000 |
PROPOSAL 5A | ||
To modify the fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments) of Fidelity Advisor Communications Equipment Fund.D | ||
# of | % of | |
Affirmative | 5,159,022.72 | 69.946 |
Against | 285,575.04 | 3.872 |
Abstain | 443,398.62 | 6.011 |
Broker Non-Votes | 1,487,692.54 | 20.170 |
TOTAL | 7,375,688.92 | 100.000 |
PROPOSAL 5B | ||
To modify the fundamental concentration policy of Fidelity Advisor Communications Equipment Fund.D | ||
# of | % of | |
Affirmative | 5,159,987.88 | 69.959 |
Against | 295,440.44 | 4.006 |
Abstain | 432,568.06 | 5.864 |
Broker Non-Votes | 1,487,692.54 | 20.170 |
TOTAL | 7,375,688.92 | 100.000 |
PROPOSAL 6A | ||
To modify the fundamental investment objective of Fidelity Advisor Energy Fund.D | ||
# of | % of | |
Affirmative | 335,212,227.18 | 68.272 |
Against | 23,151,143.88 | 4.716 |
Abstain | 28,129,279.36 | 5.728 |
Broker Non-Votes | 104,499,231.10 | 21.283 |
TOTAL | 490,991,881.52 | 100.000 |
PROPOSAL 6B | ||
To modify the fundamental investment policy of Fidelity Advisor Energy Fund.D | ||
# of | % of | |
Affirmative | 338,904,300.69 | 69.024 |
Against | 21,528,314.89 | 4.385 |
Abstain | 26,060,034.84 | 5.307 |
Broker Non-Votes | 104,499,231.10 | 21.283 |
TOTAL | 490,991,881.52 | 100.000 |
PROPOSAL 6C | ||
To modify the fundamental concentration policy of Fidelity Advisor Energy Fund.D | ||
# of | % of | |
Affirmative | 334,458,778.33 | 68.119 |
Against | 22,220,293.16 | 4.526 |
Abstain | 29,813,578.93 | 6.072 |
Broker Non-Votes | 104,499,231.10 | 21.283 |
TOTAL | 490,991,881.52 | 100.000 |
A Denotes trust-wide proposal and voting results. B Effective on or about January 1, 2007. C The special meeting of shareholders reconvened on September 30, 2006 with respect to this proposal. D The special meeting of shareholders reconvened on September 28, 2006 with respect to this proposal. | ||
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Focus Funds
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2007 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of the management fee and total expenses of each fund; (ii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to each fund's agreements with foreign sub-advisers to clarify that each sub-adviser provides services as an independent contractor.
In determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board also considered that Fidelity voluntarily pays for market data out of its own resources. The Board also considered the agreement reached between the Independent Trustees and Fidelity in December 2006 following an independent review of matters relating to receipt of travel, entertainment, gifts and gratuities in violation of Fidelity policies.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of a fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in July 2006, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fee on Fidelity Advisor Floating Rate High Income Fund; (iii) contractually agreeing to reduce the management fees on Fidelity's California, Massachusetts, New Jersey, and New York AMT Tax-Free Money Market Funds, launching new Institutional Classes and Service Classes of these funds, and contractually agreeing to impose expense limitations on these funds; (iv) eliminating the exchange fee on the Fidelity Select Portfolios and reducing the pricing and bookkeeping fee rates for these funds; (v) reducing the maximum transfer agency fee rates on high income funds and certain equity funds; (vi) proposing amended management contracts that, if approved by shareholders, will add a performance adjustment component to the management fees paid by 18 Fidelity Advisor equity funds; (vii) contractually agreeing to reduce fees for Ultra-Short Central Fund and the money market Central Funds; (viii) waiving the Fidelity Advisor funds' contingent deferred sales charge on certain redemptions made through systematic withdrawal programs; and (ix) amending the management contracts for equity and fixed-income funds whose management contracts incorporate a "group fee" structure by adding four new fee "breakpoints" to the group fee rate schedules.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance for each class, as well as each fund's relative investment performance for each class measured against a third-party-sponsored index that reflects the market sector in which the fund invests over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare any of the funds' performance. The Board also noted that in 2006 FMR implemented changes to the sector fund product line, which included changes to the funds' indices.
For each of Advisor Biotechnology and Advisor Communications Equipment, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2006, the cumulative total returns of Institutional Class (Class I) and Class C of the fund and the cumulative total returns of a third-party-sponsored index ("benchmark"). The returns of Institutional Class (Class I) and Class C show the performance of the highest and lowest performing classes, respectively (based on three-year performance).
For each of Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology and Advisor Utilities, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2006, the cumulative total returns of Institutional Class (Class I) and Class B of the fund and the cumulative total returns of a third-party-sponsored index ("benchmark"). The returns of Institutional Class (Class I) and Class B show the performance of the highest and lowest performing classes, respectively (based on three-year performance).
Advisor Biotechnology
The Board stated that the relative investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year cumulative total return of Institutional Class (Class I) compared favorably to its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Communications Equipment
The Board stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Advisor Consumer Discretionary
The Board stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Electronics
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Energy
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Financial Services
The Board stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Advisor Health Care
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Industrials
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Technology
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Utilities
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how each fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a TMG % of 10% would mean that 90% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee ranked, is also included in the charts and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Biotechnology
Advisor Communications Equipment
Annual Report
Advisor Consumer Discretionary
Advisor Electronics
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Energy
Advisor Financial Services
Annual Report
Advisor Health Care
Advisor Industrials
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Technology
Advisor Utilities
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2006.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the total expenses of each class of each fund, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of each fund compared to competitive fund median expenses. Each class of each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expenses of the classes of each fund vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Biotechnology ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
Annual Report
The Board noted that the total expenses of each of Class A, Class B and Class C of Advisor Communications Equipment ranked below its competitive median for 2006, the total expenses of Institutional Class ranked equal to its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B and Class C of Advisor Consumer Discretionary ranked below its competitive median for 2006, the total expenses of Institutional Class ranked equal to its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B and Class C of Advisor Electronics ranked below its competitive median for 2006, the total expenses of Institutional Class ranked equal to its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each class of Advisor Energy ranked below its competitive median for 2006.
The Board noted that the total expenses of each class of Advisor Financial Services ranked below its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Health Care ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each class of Advisor Industrials ranked below its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Technology ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Utilities ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of each fund were reasonable, although in some cases above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. In connection with the renewal of each fund's management contract, the Board approved amendments to each fund's management contract that added four new fee breakpoints to the group fee rate schedule for assets under FMR's management above $1,386 billion. The Board considered that the group fee rate declines under both the present and amended schedules, but that under the amended schedule, the group fee rate declines faster as assets under FMR's management exceed $1,386 billion. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on several topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) Fidelity's portfolio manager compensation structure, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (iii) Fidelity's fee structures; (iv) the funds' sub-advisory arrangements; and (v) accounts managed by Fidelity other than the Fidelity funds.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service 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 Energy Fund only.
(dagger)(dagger) Custodian for Fidelity Advisor Biotechnology Fund, Fidelity Advisor
Communications Equipment Fund, and Fidelity Advisor Electronics Fund only.
AFOC-UANNPRO-0907
1.789241.103
Fidelity Advisor
Focus Funds®
Institutional Class
Biotechnology
Communications Equipment (formerly Developing Communications)
Consumer Discretionary (formerly Consumer Industries)
Electronics
Energy (formerly Natural Resources)
Financial Services
Health Care
Industrials (formerly Cyclical Industries)
Technology
Utilities (formerly Telecommunications
& Utilities Growth)
Annual Report
July 31, 2007(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Notes to Shareholders | ||
Biotechnology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Communications Equipment | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Consumer Discretionary | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Electronics | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Energy | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Financial Services | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Health Care | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Industrials | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Technology | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Utilities | Performance | |
Management's Discussion | ||
Shareholder Expense Example | ||
Investment Changes | ||
Investments | ||
Financial Statements | ||
Notes to the Financial Statements | ||
Report of Independent Registered Public Accounting Firm | ||
Trustees and Officers | ||
Distributions | ||
Proxy Voting Results | ||
Board Approval of Investment Advisory Contracts and |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://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.
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.
A 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. A 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 a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(Photograph of Edward C. Johnson 3d.)
Dear Shareholder:
Stocks are currently on pace to register their fifth straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies
indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Notes to Shareholders:
Effective October 1, 2006, Fidelity restructured the Advisor Focus Funds product line. The restructuring aligned the funds' investment goals more closely with standard industry classifications and facilitated adoption of more-specific benchmark indexes to evaluate fund performance. As restructured, the funds generally align under seven sectors in the widely recognized Global Industry Classification Standard (GICS), developed by Standard & Poor's® (S&P®) and Morgan Stanley Capital InternationalSM (MSCI®): Consumer Discretionary, Energy, Financials, Health Care, Industrials, Information Technology and Utilities. Changes to the funds ranged from simply adopting a new supplemental benchmark to, in some cases, changing investment policies and fund names.
For Advisor Communications Equipment Fund (formerly Advisor Developing Communications Fund), Advisor Consumer Discretionary Fund (formerly Advisor Consumer Industries Fund), Advisor Energy Fund (formerly Advisor Natural Resources Fund), Advisor Industrials Fund (formerly Advisor Cyclical Industries Fund), and Advisor Utilities Fund (formerly Advisor Telecommunications & Utilities Growth Fund), shareholders approved certain fundamental investment policy changes related to the restructuring at a special meeting of shareholders held in September 2006. All the funds adopted new benchmark indexes from MSCI. Taken together, the name, policy and benchmark changes will make it easier for investors to distinguish funds in the product line and to evaluate Fidelity Management & Research Company's skill in managing the funds.
Changes for each fund are described in detail below.
Advisor Biotechnology Fund
The fund is now benchmarked to the MSCI US Investable Market Biotechnology Index.
Advisor Communications Equipment Fund (formerly Advisor Developing Communications Fund)
Shareholders approved modifying the fund's policies so that it invests primarily in companies engaged in the development, manufacture or sale of communications equipment, rather than communications services companies. The fund is now benchmarked to the MSCI US Investable Market Communications Equipment Index.
Advisor Consumer Discretionary Fund (formerly Advisor Consumer Industries Fund)
Shareholders approved narrowing the fund's policies to focus on companies engaged in the manufacture and distribution of consumer discretionary products and services. Consumer discretionary companies are a subset of the broader consumer industries sector, which is generally made up of consumer discretionary and consumer staples companies. The fund is now benchmarked to the MSCI US Investable Market Consumer Discretionary Index.
Advisor Electronics Fund
The fund is now benchmarked to the MSCI US Investable Market Semiconductors & Semiconductor Equipment Index.
Advisor Energy Fund (formerly Advisor Natural Resources Fund)
Shareholders approved narrowing the fund's policies to focus on energy and to exclude industrial or agricultural materials and unfinished goods. Energy companies are a subset of the broader natural resources sector, which is generally made up of energy and materials companies. The fund is now benchmarked to the MSCI US Investable Market Energy Index.
Advisor Financial Services Fund
The fund is now benchmarked to the MSCI US Investable Market Financials Index.
Advisor Health Care Fund
The fund is now benchmarked to the MSCI US Investable Market Health Care Index.
Advisor Industrials Fund (formerly Advisor Cyclical Industries Fund)
Shareholders approved narrowing the fund's policies to invest primarily in companies engaged in the research, development, manufacture, distribution, supply or sale of industrial products, services or equipment. The industrials and materials industries are considered subsets of the cyclical industries sector. The fund is now benchmarked to the MSCI US Investable Market Industrials Index.
Advisor Technology Fund
The fund is now benchmarked to the MSCI US Investable Market Information Technology Index.
Advisor Utilities Fund (formerly Advisor Telecommunications & Utilities Growth Fund)
Shareholders approved narrowing the fund's policies to focus on utilities and to exclude telecommunications. The fund is now benchmarked to the MSCI US Investable Market Utilities Index, generally emphasizing power and gas utilities and not telephone companies and telecommunications utilities.
Annual Report
Advisor Biotechnology 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, 2007 | Past 1 | Past 5 | Life of |
Institutional Class | 6.66% | 10.87% | -4.52% |
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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares advanced 6.17%, 5.96%, 5.52% and 5.52%, respectively (excluding sales charges), handily beating the 1.00% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Biotechnology Index and also topping the 2.06% return of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months 1. During the same 12-month period, the fund trailed the S&P 500. The fund lagged the Goldman Sachs index during the first two months of the period. A substantial overweighting in biotechnology - together with unrewarding stock selection in that group - accounted for much of the shortfall. An underweighting and lackluster picks in pharmaceuticals were detrimental as well. Offsetting some of the negative impact was our underweighting in the weak-performing health care equipment group. Among individual holdings, biotech stock Celgene detracted from performance, as investors worried - unnecessarily, as it turned out - about a potential slowdown in the sales of Revlimid, the company's recently approved treatment for multiple myeloma, a type of blood cancer. Other detractors included Amylin Pharmaceuticals and Pfizer. Conversely, Gilead Sciences was a strong contributor, as the company reached an agreement with co-developer Bristol-Myers Squibb to market HIV drug Atripla in Canada. Avoiding Medtronic, a maker of cardiac defibrillators, was helpful as well. During the period's final 10 months, the fund beat the MSCI index. Stock selection in the fund's core biotechnology area added the most to performance, with an additional boost provided by effective picks in pharmaceuticals. Significantly underweighting major index constituent Amgen helped, as the stock struggled due to some safety concerns about Aranesp, the company's top-selling drug, which is used to treat kidney-related disease and chemotherapy-induced anemia. Other contributors were New River Pharmaceuticals - a company that was not included in the index and that I sold after it received a buyout offer from another firm - and Alexion Pharmaceuticals. On the other hand, underweighting index component MedImmune detracted from our results, as the company was bought by AstraZeneca during the period.
During the past year, the fund's Institutional Class shares advanced 6.66%, handily beating the 1.00% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Biotechnology Index and also topping the 2.06% return of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund trailed the S&P 500. The fund lagged the Goldman Sachs index during the first two months of the period. A substantial overweighting in biotechnology - together with unrewarding stock selection in that group - accounted for much of the shortfall. An underweighting and lackluster picks in pharmaceuticals were detrimental as well. Offsetting some of the negative impact was our underweighting in the weak-performing health care equipment group. Among individual holdings, biotech stock Celgene detracted from performance, as investors worried - unnecessarily, as it turned out - about a potential slowdown in the sales of Revlimid, the company's recently approved treatment for multiple myeloma, a type of blood cancer. Other detractors included Amylin Pharmaceuticals and Pfizer. Conversely, Gilead Sciences was a strong contributor, as the company reached an agreement with co-developer Bristol-Myers Squibb to market HIV drug Atripla in Canada. Avoiding Medtronic, a maker of cardiac defibrillators, was helpful as well. During the period's final 10 months, the fund beat the MSCI index. Stock selection in the fund's core biotechnology area added the most to performance, with an additional boost provided by effective picks in pharmaceuticals. Significantly underweighting major index constituent Amgen helped, as the stock struggled due to some safety concerns about Aranesp, the company's top-selling drug, which is used to treat kidney-related disease and chemotherapy-induced anemia. Other contributors were New River Pharmaceuticals - a company that was not included in the index and that I sold after it received a buyout offer from another firm - and Alexion Pharmaceuticals. On the other hand, underweighting index component MedImmune detracted from our results, as the company was bought by AstraZeneca during the period.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Health Care Index, which returned 3.65% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Biotechnology Index, which returned -1.53% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 2.06%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 964.00 | $ 6.82 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 963.40 | $ 8.03 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 960.90 | $ 10.45 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 960.90 | $ 10.45 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 965.90 | $ 4.73 |
HypotheticalA | $ 1,000.00 | $ 1,019.98 | $ 4.86 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | .97% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Amgen, Inc. | 20.5 | 13.0 |
Biogen Idec, Inc. | 7.2 | 6.8 |
Gilead Sciences, Inc. | 6.5 | 11.0 |
Celgene Corp. | 6.3 | 4.2 |
Genentech, Inc. | 6.0 | 12.5 |
Cephalon, Inc. | 5.0 | 4.4 |
Alexion Pharmaceuticals, Inc. | 5.0 | 2.8 |
Vertex Pharmaceuticals, Inc. | 3.2 | 3.0 |
Amylin Pharmaceuticals, Inc. | 2.6 | 2.2 |
Elan Corp. PLC sponsored ADR | 2.4 | 1.4 |
64.7 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
 | Biotechnology | 85.6% | |
 | Pharmaceuticals | 9.3% | |
 | Life Sciences | 3.0% | |
 | Health Care Equipment & Supplies | 2.2% | |
 | Health Care | 0.2% | |
 | All Others | (0.3)%(dagger) | |
As of January 31, 2007 | |||
| Biotechnology | 88.5% | |
| Pharmaceuticals | 7.4% | |
| Life Sciences | 2.7% | |
| Health Care Equipment & Supplies | 1.4% | |
| Health Care | 0.1% | |
| All Others | (0.1)%(dagger) | |
(dagger) Short-term investments and net other assets are not included in the pie chart. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 100.3% | |||
Shares | Value | ||
BIOTECHNOLOGY - 85.6% | |||
Biotechnology - 85.6% | |||
3SBio, Inc. sponsored ADR | 11,700 | $ 104,949 | |
Acadia Pharmaceuticals, Inc. (a) | 31,774 | 446,107 | |
Acorda Therapeutics, Inc. (a) | 5,600 | 93,968 | |
Affymax, Inc. | 7,800 | 186,186 | |
Alexion Pharmaceuticals, Inc. (a) | 44,000 | 2,559,040 | |
Alkermes, Inc. (a) | 48,240 | 686,938 | |
Alnylam Pharmaceuticals, Inc. (a) | 10,000 | 241,100 | |
Altus Pharmaceuticals, Inc. (a) | 6,212 | 63,362 | |
Amgen, Inc. (a) | 196,240 | 10,545,935 | |
Amylin Pharmaceuticals, Inc. (a) | 29,108 | 1,353,813 | |
Arena Pharmaceuticals, Inc. (a) | 10,800 | 123,444 | |
ArQule, Inc. (a) | 15,381 | 87,364 | |
Array Biopharma, Inc. (a) | 4,500 | 45,225 | |
Biogen Idec, Inc. (a) | 65,807 | 3,720,728 | |
Celgene Corp. (a) | 53,995 | 3,269,937 | |
Cephalon, Inc. (a) | 34,099 | 2,562,199 | |
Cepheid, Inc. (a) | 9,900 | 146,025 | |
Cougar Biotechnology, Inc. (a) | 10,900 | 258,875 | |
Cougar Biotechnology, Inc. (a)(e) | 2,500 | 59,375 | |
Cubist Pharmaceuticals, Inc. (a) | 21,015 | 484,606 | |
Cytokinetics, Inc. (a) | 7,800 | 39,000 | |
Cytos Biotechnology AG (a) | 559 | 63,926 | |
Dendreon Corp. (a)(d) | 15,600 | 118,716 | |
Dyax Corp. (a) | 12,900 | 50,052 | |
Enzon Pharmaceuticals, Inc. (a) | 6,800 | 48,960 | |
Genentech, Inc. (a) | 41,500 | 3,086,770 | |
Gilead Sciences, Inc. (a) | 89,660 | 3,338,042 | |
GTx, Inc. (a) | 10,700 | 164,459 | |
Halozyme Therapeutics, Inc. (a) | 6,310 | 50,732 | |
Human Genome Sciences, Inc. (a) | 21,930 | 170,177 | |
Indevus Pharmaceuticals, Inc. (a) | 32,757 | 232,247 | |
Infinity Pharmaceuticals, Inc. (a) | 1,899 | 20,319 | |
Isis Pharmaceuticals, Inc. (a) | 16,500 | 171,765 | |
Ligand Pharmaceuticals, Inc. Class B | 10,400 | 56,160 | |
MannKind Corp. (a) | 23,300 | 246,048 | |
Martek Biosciences (a) | 6,300 | 161,406 | |
Medarex, Inc. (a) | 45,185 | 639,820 | |
Momenta Pharmaceuticals, Inc. (a) | 11,308 | 109,914 | |
Myriad Genetics, Inc. (a) | 15,605 | 583,315 | |
Neurochem, Inc. (a) | 1,300 | 8,117 | |
Neurocrine Biosciences, Inc. (a) | 31,940 | 324,830 | |
Novacea, Inc. (a) | 4,500 | 35,730 | |
Omrix Biopharmaceuticals, Inc. (a) | 4,700 | 134,796 | |
ONYX Pharmaceuticals, Inc. (a) | 26,294 | 731,236 | |
OREXIGEN Therapeutics, Inc. | 8,697 | 128,977 | |
OSI Pharmaceuticals, Inc. (a) | 38,700 | 1,247,688 | |
PDL BioPharma, Inc. (a) | 51,500 | 1,209,735 | |
Pharmion Corp. (a) | 6,366 | 155,076 | |
Poniard Pharmaceuticals, Inc. (a) | 8,500 | 49,300 | |
Shares | Value | ||
Regeneron Pharmaceuticals, Inc. (a) | 22,499 | $ 335,010 | |
Rosetta Genomics Ltd. | 745 | 5,096 | |
Sangamo Biosciences, Inc. (a) | 9,650 | 84,052 | |
Savient Pharmaceuticals, Inc. (a) | 10,100 | 119,584 | |
Tanox, Inc. (a) | 5,700 | 111,150 | |
Theravance, Inc. (a) | 14,800 | 396,196 | |
Trubion Pharmaceuticals, Inc. | 4,700 | 79,759 | |
United Therapeutics Corp. (a) | 7,103 | 492,664 | |
Vanda Pharmaceuticals, Inc. (a) | 11,531 | 215,745 | |
Vertex Pharmaceuticals, Inc. (a) | 51,700 | 1,669,910 | |
ViaCell, Inc. (a) | 500 | 2,500 | |
Zymogenetics, Inc. (a) | 16,395 | 189,526 | |
44,117,681 | |||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.2% | |||
Health Care Equipment - 2.2% | |||
Alsius Corp. (a) | 15,600 | 80,808 | |
Clinical Data, Inc. (a) | 5,898 | 135,654 | |
Gen-Probe, Inc. (a) | 4,723 | 297,596 | |
Quidel Corp. (a) | 39,800 | 592,224 | |
TomoTherapy, Inc. | 200 | 5,420 | |
1,111,702 | |||
HEALTH CARE PROVIDERS & SERVICES - 0.2% | |||
Health Care Services - 0.2% | |||
Oracle Healthcare Acquisition Corp. unit (a) | 9,600 | 79,200 | |
LIFE SCIENCES TOOLS & SERVICES - 3.0% | |||
Life Sciences Tools & Services - 3.0% | |||
AMAG Pharmaceuticals, Inc. (a) | 3,915 | 210,196 | |
Applera Corp. - Celera Genomics Group (a) | 24,400 | 293,288 | |
Exelixis, Inc. (a) | 39,500 | 382,755 | |
Medivation, Inc. (a) | 1,359 | 22,301 | |
QIAGEN NV (a)(d) | 31,800 | 546,960 | |
Ventana Medical Systems, Inc. (a) | 1,400 | 116,676 | |
1,572,176 | |||
PHARMACEUTICALS - 9.3% | |||
Pharmaceuticals - 9.3% | |||
Akorn, Inc. (a) | 125,679 | 852,104 | |
Alexza Pharmaceuticals, Inc. (a) | 5,100 | 44,778 | |
Auxilium Pharmaceuticals, Inc. (a) | 44,772 | 782,167 | |
Biodel, Inc. | 20,764 | 350,912 | |
Cardiome Pharma Corp. (a) | 2,600 | 23,302 | |
Catalyst Pharmaceutical Partners, Inc. | 24,894 | 83,644 | |
Cypress Bioscience, Inc. (a) | 2,700 | 31,131 | |
Elan Corp. PLC sponsored ADR (a) | 67,400 | 1,262,402 | |
Jazz Pharmaceuticals, Inc. (a) | 8,900 | 126,291 | |
Sepracor, Inc. (a) | 5,296 | 148,976 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Sirtris Pharmaceuticals, Inc. | 2,300 | $ 28,658 | |
Xenoport, Inc. (a) | 25,000 | 1,067,250 | |
4,801,615 | |||
TOTAL COMMON STOCKS (Cost $50,771,249) | 51,682,374 | ||
Money Market Funds - 1.2% | |||
Fidelity Cash Central Fund, 5.38% (b) | 113,509 | 113,509 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 508,225 | 508,225 | |
TOTAL MONEY MARKET FUNDS (Cost $621,734) | 621,734 | ||
TOTAL INVESTMENT PORTFOLIO - 101.5% (Cost $51,392,983) | 52,304,108 | ||
NET OTHER ASSETS - (1.5)% | (754,903) | ||
NET ASSETS - 100% | $ 51,549,205 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $59,375 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Cougar Biotechnology, Inc. | 5/3/07 | $ 50,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 24,223 |
Fidelity Securities Lending Cash Central Fund | 37,417 |
Total | $ 61,640 |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $493,769) - See accompanying schedule: Unaffiliated issuers (cost $50,771,249) | $ 51,682,374 | |
Fidelity Central Funds (cost $621,734) | 621,734 | |
Total Investments (cost $51,392,983) | $ 52,304,108 | |
Receivable for investments sold | 289,332 | |
Receivable for fund shares sold | 69,014 | |
Distributions receivable from Fidelity Central Funds | 11,183 | |
Prepaid expenses | 105 | |
Other receivables | 28 | |
Total assets | 52,673,770 | |
Liabilities | ||
Payable for investments purchased | $ 307,773 | |
Payable for fund shares redeemed | 196,892 | |
Accrued management fee | 29,200 | |
Distribution fees payable | 29,548 | |
Other affiliated payables | 15,353 | |
Other payables and accrued expenses | 37,574 | |
Collateral on securities loaned, at value | 508,225 | |
Total liabilities | 1,124,565 | |
Net Assets | $ 51,549,205 | |
Net Assets consist of: | ||
Paid in capital | $ 49,691,286 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 946,794 | |
Net unrealized appreciation (depreciation) on investments | 911,125 | |
Net Assets | $ 51,549,205 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 7.23 | |
Maximum offering price per share (100/94.25 of $7.23) | $ 7.67 | |
Class T: | $ 7.11 | |
Maximum offering price per share (100/96.50 of $7.11) | $ 7.37 | |
Class B: | $ 6.88 | |
Class C: | $ 6.88 | |
Institutional Class: | $ 7.37 | |
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
Advisor Biotechnology Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 28,117 | |
Interest | 98 | |
Income from Fidelity Central Funds (including $37,417 from security lending) | 61,640 | |
Total income | 89,855 | |
Expenses | ||
Management fee | $ 326,120 | |
Transfer agent fees | 208,015 | |
Distribution fees | 391,357 | |
Accounting and security lending fees | 25,631 | |
Custodian fees and expenses | 10,853 | |
Independent trustees' compensation | 192 | |
Registration fees | 48,885 | |
Audit | 47,316 | |
Legal | 1,060 | |
Miscellaneous | 18,778 | |
Total expenses before reductions | 1,078,207 | |
Expense reductions | (22,132) | 1,056,075 |
Net investment income (loss) | (966,220) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 8,930,805 | |
Foreign currency transactions | 6 | |
Total net realized gain (loss) | 8,930,811 | |
Change in net unrealized appreciation (depreciation) on investment securities | (4,482,074) | |
Net gain (loss) | 4,448,737 | |
Net increase (decrease) in net assets resulting from operations | $ 3,482,517 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (966,220) | $ (1,015,236) |
Net realized gain (loss) | 8,930,811 | 1,447,883 |
Change in net unrealized appreciation (depreciation) | (4,482,074) | (1,063,236) |
Net increase (decrease) in net assets resulting from operations | 3,482,517 | (630,589) |
Share transactions - net increase (decrease) | (8,274,098) | 1,061,142 |
Redemption fees | 1,128 | 8,381 |
Total increase (decrease) in net assets | (4,790,453) | 438,934 |
Net Assets | ||
Beginning of period | 56,339,658 | 55,900,724 |
End of period | $ 51,549,205 | $ 56,339,658 |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.81 | $ 6.80 | $ 6.00 | $ 5.94 | $ 4.39 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.09) | (.08) H | (.09) | (.05) |
Net realized and unrealized gain (loss) | .51 | .10 | .88 | .15 | 1.60 |
Total from investment operations | .42 | .01 | .80 | .06 | 1.55 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 | $ 5.94 |
Total Return A, B | 6.17% | .15% | 13.33% | 1.01% | 35.31% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.42% | 1.48% | 1.56% | 1.68% | 2.04% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.45% | 1.50% | 1.50% |
Expenses net of all reductions | 1.40% | 1.37% | 1.43% | 1.48% | 1.47% |
Net investment income (loss) | (1.25)% | (1.29)% | (1.36)% H | (1.38)% | (1.11)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,081 | $ 12,539 | $ 11,022 | $ 10,197 | $ 7,718 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.37)%.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.71 | $ 6.72 | $ 5.95 | $ 5.90 | $ 4.37 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.11) | (.10) F | (.10) | (.06) |
Net realized and unrealized gain (loss) | .51 | .10 | .87 | .15 | 1.59 |
Total from investment operations | .40 | (.01) | .77 | .05 | 1.53 |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 | $ 5.90 |
Total Return A, B | 5.96% | (.15)% | 12.94% | .85% | 35.01% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.75% | 1.79% | 1.93% | 2.10% | 2.39% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.70% | 1.75% | 1.75% |
Expenses net of all reductions | 1.65% | 1.62% | 1.68% | 1.73% | 1.72% |
Net investment income (loss) | (1.49)% | (1.54)% | (1.61)% F | (1.63)% | (1.36)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 13,008 | $ 13,808 | $ 14,177 | $ 13,367 | $ 10,281 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.52 | $ 6.56 | $ 5.84 | $ 5.82 | $ 4.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.14) | (.13) F | (.13) | (.09) |
Net realized and unrealized gain (loss) | .50 | .10 | .85 | .15 | 1.58 |
Total from investment operations | .36 | (.04) | .72 | .02 | 1.49 |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 | $ 5.82 |
Total Return A, B | 5.52% | (.61)% | 12.33% | .34% | 34.41% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 2.17% | 2.23% | 2.33% | 2.46% | 2.78% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.12% | 2.18% | 2.22% | 2.22% |
Net investment income (loss) | (1.99)% | (2.04)% | (2.11)% F | (2.12)% | (1.86)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,656 | $ 14,938 | $ 16,921 | $ 16,819 | $ 15,154 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.52 | $ 6.57 | $ 5.84 | $ 5.82 | $ 4.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.14) | (.13) F | (.13) | (.09) |
Net realized and unrealized gain (loss) | .50 | .09 | .86 | .15 | 1.58 |
Total from investment operations | .36 | (.05) | .73 | .02 | 1.49 |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 | $ 5.82 |
Total Return A, B | 5.52% | (.76)% | 12.50% | .34% | 34.41% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 2.16% | 2.17% | 2.24% | 2.31% | 2.58% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.12% | 2.18% | 2.23% | 2.22% |
Net investment income (loss) | (1.99)% | (2.04)% | (2.11)% F | (2.13)% | (1.86)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 11,813 | $ 13,787 | $ 12,538 | $ 13,215 | $ 10,493 |
Portfolio turnover rate E | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
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. Expenses net of fee 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 - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.91 | $ 6.89 | $ 6.06 | $ 5.97 | $ 4.40 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.07) | (.07) | (.06) E | (.06) | (.04) |
Net realized and unrealized gain (loss) | .53 | .09 | .89 | .15 | 1.61 |
Total from investment operations | .46 | .02 | .83 | .09 | 1.57 |
Redemption fees added to paid in capital B | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 | $ 5.97 |
Total Return A | 6.66% | .29% | 13.70% | 1.51% | 35.68% |
Ratios to Average Net Assets C, F | |||||
Expenses before reductions | 1.06% | 1.05% | 1.10% | 1.16% | 1.37% |
Expenses net of fee waivers, if any | 1.06% | 1.05% | 1.10% | 1.16% | 1.25% |
Expenses net of all reductions | 1.06% | 1.03% | 1.09% | 1.14% | 1.22% |
Net investment income (loss) | (.91)% | (.94)% | (1.02)% E | (1.04)% | (.86)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 991 | $ 1,268 | $ 1,243 | $ 1,146 | $ 1,153 |
Portfolio turnover rate D | 120% | 62% | 30% | 50% | 71% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Biotechnology Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, 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 | $ 5,721,262 |
Unrealized depreciation | (6,449,094) |
Net unrealized appreciation (depreciation) | (727,832) |
Undistributed long-term capital gain | 2,585,750 |
Cost for federal income tax purposes | $ 53,031,940 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Biotechnology
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $68,744,959 and $77,774,882, respectively.
6. 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 .26% 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 .56% 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% | $ 34,967 | $ 1,493 |
Class T | .25% | .25% | 71,880 | 218 |
Class B | .75% | .25% | 147,132 | 110,899 |
Class C | .75% | .25% | 137,378 | 26,818 |
$ 391,357 | $ 139,428 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 15,802 |
Class T | 8,599 |
Class B * | 46,535 |
Class C * | 3,551 |
$ 74,487 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 48,640 | .35 |
Class T | 60,175 | .42 |
Class B | 51,121 | .35 |
Class C | 45,105 | .33 |
Institutional Class | 2,974 | .24 |
$ 208,015 |
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.
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 $518 for the period.
7. 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, which amounted to $111 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 2,744 |
Class T | 1.65% | 13,561 |
Class B | 2.15% | 3,592 |
Class C | 2.15% | 708 |
Institutional Class | 1.15% | - |
$ 20,605 |
Biotechnology
9. 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 $434 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 654,030 | 802,915 | $ 4,756,477 | $ 5,733,744 |
Shares redeemed | (687,789) | (581,094) | (5,067,147) | (4,036,446) |
Net increase (decrease) | (33,759) | 221,821 | $ (310,670) | $ 1,697,298 |
Class T | ||||
Shares sold | 413,953 | 587,840 | $ 2,989,158 | $ 4,097,337 |
Shares redeemed | (643,045) | (638,853) | (4,647,999) | (4,417,619) |
Net increase (decrease) | (229,092) | (51,013) | $ (1,658,841) | $ (320,282) |
Class B | ||||
Shares sold | 235,936 | 419,648 | $ 1,623,598 | $ 2,840,429 |
Shares redeemed | (686,826) | (706,101) | (4,815,046) | (4,753,466) |
Net increase (decrease) | (450,890) | (286,453) | $ (3,191,448) | $ (1,913,037) |
Class C | ||||
Shares sold | 294,514 | 744,203 | $ 2,075,073 | $ 5,179,930 |
Shares redeemed | (691,341) | (539,467) | (4,822,276) | (3,621,319) |
Net increase (decrease) | (396,827) | 204,736 | $ (2,747,203) | $ 1,558,611 |
Institutional Class | ||||
Shares sold | 40,455 | 94,904 | $ 308,779 | $ 686,802 |
Shares redeemed | (89,434) | (92,008) | (674,715) | (648,250) |
Net increase (decrease) | (48,979) | 2,896 | $ (365,936) | $ 38,552 |
Annual Report
Advisor Communications Equipment 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, 2007 | Past 1 | Past 5 | Life of |
Institutional Class | 30.58% | 19.38% | -0.54% |
A From December 27, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Communications Equipment 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 performed over the same period.
Annual Report
Advisor Communications Equipment Fund
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 30.18%, 29.90%, 29.18% and 29.18%, respectively (excluding sales charges), trailing the 31.02% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Communications Equipment Index but beating the 25.42% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. Our results were aided by currency fluctuations that benefited the fund's foreign holdings. During the first two months of the period, the fund modestly trailed the Goldman Sachs index. Weak stock selection in the fund's core segment of communications equipment hurt and nearly offset the substantial benefits of having an overweighted exposure to that strong-performing group. Unfavorable picks and an underweighting in systems software also detracted, as did an overweighting in wireless telecommunication services. Positive influences included having no exposure to the weak-performing data processing and outsourced services group, along with rewarding stock selection in Internet software and services and in semiconductors. Among individual holdings, not owning strong-performing networking equipment maker and major index component Cisco Systems during this two-month stretch was detrimental. The stock price of Canada-based Sandvine, a supplier of Internet traffic monitoring equipment and an out-of-index holding, hit a weak patch despite the company's favorable prospects. Meanwhile, the fund's top contributor versus the Goldman Sachs index was Corning, which experienced strong demand for the glass substrates it makes for liquid crystal displays. During the final 10 months of the period, the fund handily beat the MSCI index and narrowed its focus to reflect its new benchmark. Stock selection in communications equipment added more than three percentage points to the fund's results, while my choices in systems software also helped significantly. Conversely, a weak showing in computer hardware, semiconductors and application software - groups not represented in the index - detracted modestly. At the stock level, a sizable underweighting in cellular handset maker Motorola, which sported a double-digit weighting in the index, proved to be timely. A lack of compelling products to follow the company's popular RAZR handset line caused Motorola's stock to post a steep loss. Also boosting the fund's performance were two Canada-based stocks: Research In Motion (RIM), maker of the popular BlackBerry handheld messaging device, and Sandvine, which I mentioned earlier. Among detractors, Cisco Systems had the most negative impact due to our sizable underweighting. Cisco is the largest component of the MSCI index, accounting for more than 41% of that benchmark, on average, during the period. While I liked the company's prospects, there were other opportunities that I thought offered faster growth and more-attractive valuations. That said, Cisco was a strong performer during the period. Wireless communications equipment maker Powerwave Technologies also held back our results.
During the past year, the fund's Institutional Class shares returned 30.58%, trailing the 31.02% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Communications Equipment Index but beating the 25.42% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. Our results were aided by currency fluctuations that benefited the fund's foreign holdings. During the first two months of the period, the fund modestly trailed the Goldman Sachs index. Weak stock selection in the fund's core segment of communications equipment hurt and nearly offset the substantial benefits of having an overweighted exposure to that strong-performing group. Unfavorable picks and an underweighting in systems software also detracted, as did an overweighting in wireless telecommunication services. Positive influences included having no exposure to the weak-performing data processing and outsourced services group, along with rewarding stock selection in Internet software and services and in semiconductors. Among individual holdings, not owning strong-performing networking equipment maker and major index component Cisco Systems, during this two-month stretch was detrimental. The stock price of Canada-based Sandvine, a supplier of Internet traffic monitoring equipment and an out-of-index holding, hit a weak patch despite the company's favorable prospects. Meanwhile, the fund's top contributor versus the Goldman Sachs index was Corning, which experienced strong demand for the glass substrates it makes for liquid crystal displays. During the final 10 months of the period, the fund handily beat the MSCI index and narrowed its focus to reflect its new benchmark. Stock selection in communications equipment added more than three percentage points to the fund's results, while my choices in systems software also helped significantly. Conversely, a weak showing in computer hardware, semiconductors and application software - groups not represented in the index - detracted modestly. At the stock level, a sizable underweighting in cellular handset maker Motorola, which sported a double-digit weighting in the index, proved to be timely. A lack of compelling products to follow the company's popular RAZR handset line caused Motorola's stock to post a steep loss. Also boosting the fund's performance were two Canada-based stocks: Research In Motion (RIM), maker of the popular BlackBerry handheld messaging device, and Sandvine, which I mentioned earlier. Among detractors, Cisco Systems had the most negative impact due to our sizable underweighting. Cisco is the largest component of the MSCI index, accounting for more than 41% of that benchmark, on average, during the period. While I liked the company's prospects, there were other opportunities that I thought offered faster growth and more-attractive valuations. That said, Cisco was a strong performer during the period. Wireless communications equipment maker Powerwave Technologies also held back our results.
Annual Report
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Technology Index, which returned 12.15% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Communications Equipment Index, which returned 11.83% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 25.42%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Portfolio
Advisor Communications Equipment 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,135.20 | $ 7.41 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 1,133.50 | $ 8.73 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 1,130.20 | $ 11.36 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 1,130.20 | $ 11.36 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,135.30 | $ 6.09 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Annual Report
Advisor Communications Equipment Fund
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
QUALCOMM, Inc. | 19.6 | 20.0 |
Research In Motion Ltd. | 10.2 | 6.2 |
Cisco Systems, Inc. | 6.6 | 10.2 |
Juniper Networks, Inc. | 5.8 | 3.5 |
Corning, Inc. | 4.8 | 4.2 |
Comverse Technology, Inc. | 4.7 | 7.7 |
Powerwave Technologies, Inc. | 4.4 | 3.9 |
F5 Networks, Inc. | 4.2 | 3.6 |
Sandvine Corp. (U.K.) | 3.0 | 1.2 |
Motorola, Inc. | 2.9 | 4.5 |
66.2 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Communications Equipment | 79.6% | |
| Software | 6.9% | |
| Semiconductors & Semiconductor Equipment | 6.2% | |
| Computers & Peripherals | 1.6% | |
| Household Durables | 1.5% | |
| All Others * | 4.2% | |
As of January 31, 2007 | |||
| Communications Equipment | 80.5% | |
| Semiconductors & Semiconductor Equipment | 6.3% | |
| Software | 4.0% | |
| Internet Software & Services | 2.4% | |
| Wireless Telecommunication Services | 2.2% | |
| All Others * | 4.6% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Advisor Communications Equipment Fund
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 98.3% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Human Resource & Employment Services - 0.0% | |||
Taleo Corp. Class A (a) | 100 | $ 2,151 | |
COMMUNICATIONS EQUIPMENT - 79.4% | |||
Communications Equipment - 79.4% | |||
3Com Corp. (a) | 7,700 | 30,800 | |
Acme Packet, Inc. | 100 | 1,105 | |
Adtran, Inc. | 3,083 | 80,435 | |
ADVA AG Optical Networking (a) | 7,013 | 70,053 | |
Airvana, Inc. | 3,700 | 26,122 | |
Alcatel-Lucent SA sponsored ADR | 8,803 | 102,115 | |
AudioCodes Ltd. (a) | 20,500 | 113,980 | |
Avanex Corp. (a) | 11,600 | 19,720 | |
Bookham, Inc. (a) | 18,772 | 49,370 | |
Carrier Access Corp. (a) | 3,100 | 14,880 | |
Ceragon Networks Ltd. (a) | 100 | 1,429 | |
Ciena Corp. (a) | 5,607 | 204,824 | |
Cisco Systems, Inc. (a) | 23,800 | 688,058 | |
Comtech Group, Inc. (a) | 7,601 | 108,086 | |
Comverse Technology, Inc. (a) | 25,306 | 487,647 | |
Corning, Inc. | 20,900 | 498,256 | |
F5 Networks, Inc. (a) | 5,100 | 442,119 | |
Finisar Corp. (a) | 2,800 | 10,164 | |
Foundry Networks, Inc. (a) | 6,900 | 121,371 | |
Foxconn International Holdings Ltd. (a) | 2,000 | 5,726 | |
Harris Stratex Networks, Inc. (a) | 11,175 | 190,199 | |
Ixia (a) | 2,963 | 27,734 | |
JDS Uniphase Corp. (a) | 4,600 | 65,918 | |
Juniper Networks, Inc. (a) | 20,150 | 603,694 | |
Motorola, Inc. | 17,500 | 297,325 | |
Opnext, Inc. | 500 | 6,105 | |
Orckit Communications Ltd. (a) | 3,800 | 29,488 | |
Powerwave Technologies, Inc. (a) | 69,500 | 454,530 | |
QUALCOMM, Inc. | 48,900 | 2,036,685 | |
Research In Motion Ltd. (a) | 4,940 | 1,057,160 | |
Riverbed Technology, Inc. | 2,300 | 101,568 | |
Riverstone Networks, Inc. (a) | 30,300 | 0 | |
Sonus Networks, Inc. (a) | 34,704 | 237,375 | |
Symmetricom, Inc. (a) | 8,145 | 60,762 | |
8,244,803 | |||
COMPUTERS & PERIPHERALS - 1.6% | |||
Computer Hardware - 1.2% | |||
Compal Electronics, Inc. | 5,670 | 6,489 | |
Concurrent Computer Corp. (a) | 77,917 | 119,213 | |
NEC Corp. sponsored ADR | 90 | 438 | |
126,140 | |||
Computer Storage & Peripherals - 0.4% | |||
SanDisk Corp. (a) | 610 | 32,714 | |
TOTAL COMPUTERS & PERIPHERALS | 158,854 | ||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.3% | |||
Alternative Carriers - 0.3% | |||
Aruba Networks, Inc. | 100 | $ 2,008 | |
Level 3 Communications, Inc. (a) | 5,900 | 30,857 | |
32,865 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.0% | |||
Electronic Equipment & Instruments - 0.7% | |||
Chi Mei Optoelectronics Corp. | 8,227 | 9,215 | |
HannStar Display Corp. (a) | 58,000 | 16,794 | |
Nippon Electric Glass Co. Ltd. | 3,000 | 46,775 | |
72,784 | |||
Electronic Manufacturing Services - 0.3% | |||
Molex, Inc. | 500 | 14,170 | |
Trimble Navigation Ltd. (a) | 600 | 19,818 | |
33,988 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 106,772 | ||
HOUSEHOLD DURABLES - 1.5% | |||
Consumer Electronics - 1.5% | |||
Tele Atlas NV (a) | 5,400 | 154,136 | |
INTERNET SOFTWARE & SERVICES - 1.4% | |||
Internet Software & Services - 1.4% | |||
Openwave Systems, Inc. | 18,107 | 95,243 | |
RADVision Ltd. (a) | 3,050 | 52,125 | |
147,368 | |||
MEDIA - 0.0% | |||
Publishing - 0.0% | |||
Gemstar-TV Guide International, Inc. (a) | 104 | 597 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.2% | |||
Semiconductor Equipment - 0.4% | |||
EMCORE Corp. (a) | 5,800 | 44,892 | |
Semiconductors - 5.8% | |||
Actel Corp. (a) | 451 | 5,322 | |
Altera Corp. | 2,500 | 58,000 | |
AMIS Holdings, Inc. (a) | 5,900 | 60,829 | |
Applied Micro Circuits Corp. (a) | 11,032 | 32,213 | |
Broadcom Corp. Class A (a) | 1,300 | 42,653 | |
Conexant Systems, Inc. (a) | 12,800 | 16,768 | |
Cree, Inc. (a) | 1,100 | 28,182 | |
CSR PLC (a) | 2,000 | 29,618 | |
Exar Corp. (a) | 143 | 2,021 | |
Hittite Microwave Corp. (a) | 600 | 24,132 | |
Intersil Corp. Class A | 2,000 | 58,500 | |
Marvell Technology Group Ltd. (a) | 1,200 | 21,600 | |
Microsemi Corp. (a) | 449 | 10,466 | |
Mindspeed Technologies, Inc. (a) | 12,509 | 22,766 | |
MIPS Technologies, Inc. (a) | 1,398 | 12,372 | |
Pericom Semiconductor Corp. (a) | 1,700 | 18,156 | |
Pixelplus Co. Ltd. sponsored ADR (a) | 3,600 | 4,464 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
PLX Technology, Inc. (a) | 1,400 | $ 15,456 | |
PMC-Sierra, Inc. (a) | 3,100 | 23,622 | |
Silicon Motion Technology Corp. sponsored ADR (a) | 1,800 | 32,940 | |
Silicon Storage Technology, Inc. (a) | 1,200 | 4,344 | |
SiRF Technology Holdings, Inc. (a) | 200 | 4,688 | |
Soitec SA (a) | 2,100 | 37,298 | |
Transmeta Corp. (a) | 5,800 | 3,538 | |
Vimicro International Corp. sponsored ADR (a) | 600 | 3,126 | |
Xilinx, Inc. | 1,000 | 25,000 | |
598,074 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 642,966 | ||
SOFTWARE - 6.9% | |||
Application Software - 3.4% | |||
NAVTEQ Corp. (a) | 2,100 | 113,673 | |
Smith Micro Software, Inc. (a) | 6,700 | 91,455 | |
Ulticom, Inc. (a) | 17,898 | 145,869 | |
350,997 | |||
Home Entertainment Software - 0.5% | |||
Ubisoft Entertainment SA (a) | 800 | 52,490 | |
Systems Software - 3.0% | |||
Allot Communications Ltd. | 300 | 2,103 | |
Sandvine Corp. (U.K.) (a) | 57,300 | 314,278 | |
316,381 | |||
TOTAL SOFTWARE | 719,868 | ||
TOTAL COMMON STOCKS (Cost $9,863,354) | 10,210,380 | ||
Convertible Bonds - 0.2% | ||||
Principal Amount | Value | |||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 20,000 | $ 20,792 | ||
Money Market Funds - 2.5% | |||
Shares | |||
Fidelity Cash Central Fund, 5.38% (b) | 265,659 | 265,659 | |
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $10,149,013) | 10,496,831 | ||
NET OTHER ASSETS - (1.0)% | (106,875) | ||
NET ASSETS - 100% | $ 10,389,956 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 8,471 |
Other |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 79.2% |
Canada | 13.2% |
Israel | 1.9% |
France | 1.9% |
Netherlands | 1.5% |
Others (individually less than 1%) | 2.3% |
100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2008 approximately $221,739 of losses recognized during the period November 1, 2006 to July 31, 2007. |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Advisor Communications Equipment Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $9,883,354) | $ 10,231,172 | |
Fidelity Central Funds (cost $265,659) | 265,659 | |
Total Investments (cost $10,149,013) | $ 10,496,831 | |
Receivable for fund shares sold | 13,048 | |
Dividends receivable | 489 | |
Interest receivable | 12 | |
Distributions receivable from Fidelity Central Funds | 623 | |
Prepaid expenses | 21 | |
Receivable from investment adviser for expense reductions | 2,668 | |
Other receivables | 46 | |
Total assets | 10,513,738 | |
Liabilities | ||
Payable for investments purchased | $ 36,795 | |
Payable for fund shares redeemed | 37,467 | |
Accrued management fee | 5,069 | |
Distribution fees payable | 5,554 | |
Other affiliated payables | 2,929 | |
Other payables and accrued expenses | 35,968 | |
Total liabilities | 123,782 | |
Net Assets | $ 10,389,956 | |
Net Assets consist of: | ||
Paid in capital | $ 10,231,581 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (189,443) | |
Net unrealized appreciation (depreciation) on investments | 347,818 | |
Net Assets | $ 10,389,956 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 9.49 | |
Maximum offering price per share (100/94.25 of $9.49) | $ 10.07 | |
Class T: | $ 9.34 | |
Maximum offering price per share (100/96.50 of $9.34) | $ 9.68 | |
Class B: | $ 9.03 | |
Class C: | $ 9.03 | |
Institutional Class: | $ 9.65 | |
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
Fund Name
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 33,717 | |
Interest | 178 | |
Income from Fidelity Central Funds | 8,471 | |
Total income | 42,366 | |
Expenses | ||
Management fee | $ 60,205 | |
Transfer agent fees | 40,385 | |
Distribution fees | 66,062 | |
Accounting fees and expenses | 4,278 | |
Custodian fees and expenses | 4,525 | |
Independent trustees' compensation | 37 | |
Registration fees | 52,170 | |
Audit | 47,685 | |
Legal | 341 | |
Miscellaneous | 5,666 | |
Total expenses before reductions | 281,354 | |
Expense reductions | (92,420) | 188,934 |
Net investment income (loss) | (146,568) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 337,496 | |
Foreign currency transactions | (131) | |
Total net realized gain (loss) | 337,365 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 2,613,992 | |
Assets and liabilities in foreign currencies | 5 | |
Total change in net unrealized appreciation (depreciation) | 2,613,997 | |
Net gain (loss) | 2,951,362 | |
Net increase (decrease) in net assets resulting from operations | $ 2,804,794 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (146,568) | $ (181,630) |
Net realized gain (loss) | 337,365 | 2,011,059 |
Change in net unrealized appreciation (depreciation) | 2,613,997 | (2,915,095) |
Net increase (decrease) in net assets resulting from operations | 2,804,794 | (1,085,666) |
Share transactions - net increase (decrease) | (3,045,289) | 1,243,705 |
Redemption fees | 192 | 3,257 |
Total increase (decrease) in net assets | (240,303) | 161,296 |
Net Assets | ||
Beginning of period | 10,630,259 | 10,468,963 |
End of period | $ 10,389,956 | $ 10,630,259 |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.29 | $ 7.70 | $ 6.53 | $ 5.57 | $ 3.96 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.09) | (.07) | (.09) | (.04) |
Net realized and unrealized gain (loss) | 2.29 | (.32) | 1.24 | 1.01 | 1.65 |
Total from investment operations | 2.20 | (.41) | 1.17 | .92 | 1.61 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 | $ 5.57 |
Total Return A, B | 30.18% | (5.32)% | 17.92% | 17.24% | 40.66% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.24% | 2.13% | 2.32% | 2.38% | 6.13% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.45% | 1.50% | 1.50% |
Expenses net of all reductions | 1.40% | 1.32% | 1.28% | 1.35% | 1.36% |
Net investment income (loss) | (1.00)% | (1.05)% | (.92)% | (1.18)% | (.82)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 2,825 | $ 3,145 | $ 2,406 | $ 3,480 | $ 970 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.19 | $ 7.61 | $ 6.48 | $ 5.54 | $ 3.95 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) | (.11) | (.08) | (.10) | (.05) |
Net realized and unrealized gain (loss) | 2.26 | (.31) | 1.21 | 1.00 | 1.64 |
Total from investment operations | 2.15 | (.42) | 1.13 | .90 | 1.59 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 | $ 5.54 |
Total Return A, B | 29.90% | (5.52)% | 17.44% | 16.97% | 40.25% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.57% | 2.51% | 2.78% | 3.06% | 6.82% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.71% | 1.75% | 1.75% |
Expenses net of all reductions | 1.64% | 1.57% | 1.54% | 1.60% | 1.61% |
Net investment income (loss) | (1.25)% | (1.30)% | (1.18)% | (1.43)% | (1.07)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 3,271 | $ 2,932 | $ 3,034 | $ 3,250 | $ 1,723 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 | $ 3.92 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.14) | (.12) | (.13) | (.07) |
Net realized and unrealized gain (loss) | 2.18 | (.31) | 1.20 | .98 | 1.62 |
Total from investment operations | 2.04 | (.45) | 1.08 | .85 | 1.55 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Total Return A, B | 29.18% | (6.05)% | 16.98% | 16.27% | 39.54% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 3.00% | 2.94% | 3.14% | 3.48% | 6.88% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.20% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.07% | 2.04% | 2.11% | 2.11% |
Net investment income (loss) | (1.75)% | (1.80)% | (1.68)% | (1.93)% | (1.56)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 2,225 | $ 2,406 | $ 2,864 | $ 2,998 | $ 1,846 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 | $ 3.92 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.14) | (.15) | (.12) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 2.18 | (.30) | 1.20 | .99 | 1.62 |
Total from investment operations | 2.04 | (.45) | 1.08 | .85 | 1.55 |
Redemption fees added to paid in capital C | - G | - G | - G | .04 | - G |
Net asset value, end of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Total Return A, B | 29.18% | (6.05)% | 16.98% | 16.27% | 39.54% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.98% | 2.86% | 3.07% | 3.19% | 6.81% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.07% | 2.02% | 2.10% | 2.11% |
Net investment income (loss) | (1.75)% | (1.81)% | (1.66)% | (1.93)% | (1.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 1,745 | $ 1,768 | $ 1,846 | $ 3,180 | $ 1,009 |
Portfolio turnover rate E | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Communications Equipment
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.39 | $ 7.79 | $ 6.60 | $ 5.61 | $ 3.98 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.07) | (.07) | (.05) | (.07) | (.03) |
Net realized and unrealized gain (loss) | 2.33 | (.33) | 1.24 | 1.02 | 1.66 |
Total from investment operations | 2.26 | (.40) | 1.19 | .95 | 1.63 |
Redemption fees added to paid in capital B | - F | - F | - F | .04 | - F |
Net asset value, end of period | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 | $ 5.61 |
Total Return A | 30.58% | (5.13)% | 18.03% | 17.65% | 40.95% |
Ratios to Average Net Assets C, E | |||||
Expenses before reductions | 1.87% | 1.70% | 1.85% | 1.55% | 5.34% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.18% | 1.25% | 1.25% |
Expenses net of all reductions | 1.15% | 1.07% | 1.01% | 1.11% | 1.11% |
Net investment income (loss) | (.75)% | (.80)% | (.65)% | (.93)% | (.57)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 324 | $ 379 | $ 319 | $ 607 | $ 154 |
Portfolio turnover rate D | 58% | 174% | 250% | 306% | 167% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Communications Equipment Fund (the Fund) (formerly Fidelity Advisor Developing Communications Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,597,418 |
Unrealized depreciation | (1,362,508) |
Net unrealized appreciation (depreciation) | 234,910 |
Undistributed long-term capital gain | 145,205 |
Cost for federal income tax purposes | $ 10,261,921 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Communications Equipment
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities , other than short-term securities, aggregated $6,151,484 and $9,415,403, respectively.
6. 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 .26% 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 .56% 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, except for the Institutional Class. 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% | $ 7,364 | $ 123 |
Class T | .25% | .25% | 15,680 | 26 |
Class B | .75% | .25% | 23,744 | 17,826 |
Class C | .75% | .25% | 19,274 | 4,539 |
$ 66,062 | $ 22,514 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 2,348 |
Class T | 1,596 |
Class B* | 3,860 |
Class C* | 388 |
$ 8,192 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 10,449 | .35 |
Class T | 14,069 | .45 |
Class B | 8,476 | .36 |
Class C | 6,628 | .34 |
Institutional Class | 763 | .23 |
$ 40,385 |
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.
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 $355 for the period.
7. 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, which amounted to $21 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 24,759 |
Class T | 1.65% | 28,846 |
Class B | 2.15% | 20,000 |
Class C | 2.15% | 15,929 |
Institutional Class | 1.15% | 2,420 |
$ 91,954 |
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 $243 for the period.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
Communications Equipment
9. Other - continued
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 81,005 | 258,256 | $ 690,457 | $ 2,231,744 |
Shares redeemed | (214,792) | (139,347) | (1,810,328) | (1,139,179) |
Net increase (decrease) | (133,787) | 118,909 | $ (1,119,871) | $ 1,092,565 |
Class T | ||||
Shares sold | 82,403 | 114,159 | $ 704,729 | $ 950,677 |
Shares redeemed | (139,753) | (104,980) | (1,173,589) | (831,470) |
Net increase (decrease) | (57,350) | 9,179 | $ (468,860) | $ 119,207 |
Class B | ||||
Shares sold | 24,084 | 69,205 | $ 199,321 | $ 569,934 |
Shares redeemed | (121,877) | (109,978) | (1,002,926) | (860,340) |
Net increase (decrease) | (97,793) | (40,773) | $ (803,605) | $ (290,406) |
Class C | ||||
Shares sold | 60,107 | 307,489 | $ 487,807 | $ 2,475,377 |
Shares redeemed | (119,863) | (302,626) | (990,194) | (2,257,686) |
Net increase (decrease) | (59,756) | 4,863 | $ (502,387) | $ 217,691 |
Institutional Class | ||||
Shares sold | 1,716 | 30,494 | $ 15,290 | $ 275,027 |
Shares redeemed | (19,380) | (20,224) | (165,856) | (170,379) |
Net increase (decrease) | (17,664) | 10,270 | $ (150,566) | $ 104,648 |
Annual Report
Advisor Consumer Discretionary 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, 2007 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 12.04% | 8.79% | 6.34% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Discretionary Fund - Institutional Class on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Comments from John Harris, who became Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund on April 11, 2007
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the 12 months ending July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 11.67%, 11.43%, 10.82% and 10.88%, respectively (excluding sales charges), while the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Discretionary Index returned 18.09% and a blended index specific to this fund advanced 16.19%. This blended index is a combination of the Goldman Sachs® Consumer Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. The new supplemental benchmark and the fund's simultaneous name change reflected a narrowing of the fund's focus, from both consumer discretionary and consumer staples stocks to consumer discretionary issues only. The portfolio also trailed the S&P 500 over the 12-month stretch. For the first two months of the period, fund performance was in line with that of the Goldman Sachs index. As the fund sold consumer staples stocks in advance of the October 1 benchmark change, consumer discretionary stocks in several areas of retailing helped results. Federated Department Stores, the nation's largest department store chain, and women's retailer Coldwater Creek were key contributors. On the negative side, some consumer staples holdings - particularly pharmacy chains CVS and Walgreen - hurt results before being sold out of the fund. The fund also missed strong performance by some travel industry stocks. A modest allocation to cash detracted as well. The fund underperformed the MSCI index during the final 10 months of the period, dragged down by the very stocks that had helped performance at the beginning of the period: apparel retailers, such as Coldwater Creek and Gymboree, and department stores, particularly Federated. Our holdings in footwear maker Skechers fell because expenses rose as the firm ramped up production to meet strong demand. Taking a longer view, I felt the company still had a good product line with strong potential. On the positive side, the fund's holdings in another footwear maker, Deckers Outdoor, performed well after the firm expanded the market for UGGS, which had been a women's-only, winter-only product. Electronics chain RadioShack's share price appreciated as a new management team cut costs, while timely ownership of department store chain Saks also contributed. I sold both RadioShack and Saks before period end, however, as I felt they had largely run their course. Some other stocks mentioned in this discussion also were sold from the fund.
For the 12 months ending July 31, 2007, the fund's Institutional Class shares were up 12.04%, while the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Discretionary Index returned 18.09% and a blended index specific to this fund advanced 16.19%. This blended index is a combination of the Goldman Sachs® Consumer Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. The new supplemental benchmark and the fund's simultaneous name change reflected a narrowing of the fund's focus, from both consumer discretionary and consumer staples stocks to consumer discretionary issues only. The portfolio also trailed the S&P 500 over the 12-month stretch. For the first two months of the period, fund performance was in line with that of the Goldman Sachs index. As the fund sold consumer staples stocks in advance of the October 1 benchmark change, consumer discretionary stocks in several areas of retailing helped results. Federated Department Stores, the nation's largest department store chain, and women's retailer Coldwater Creek were key contributors. On the negative side, some consumer staples holdings - particularly pharmacy chains CVS and Walgreen - hurt results before being sold out of the fund. The fund also missed strong performance by some travel industry stocks. A modest allocation to cash detracted as well. The fund underperformed the MSCI index during the final 10 months of the period, dragged down by the very stocks that had helped performance at the beginning of the period: apparel retailers, such as Coldwater Creek and Gymboree, and department stores, particularly Federated. Our holdings in footwear maker Skechers fell because expenses rose as the firm ramped up production to meet strong demand. Taking a longer view, I felt the company still had a good product line with strong potential. On the positive side, the fund's holdings in another footwear maker, Deckers Outdoor, performed well after the firm expanded the market for UGGS, which had been a women's-only, winter-only product. Electronics chain RadioShack's share price appreciated as a new management team cut costs, while timely ownership of department store chain Saks also contributed. I sold both RadioShack and Saks before period end, however, as I felt they had largely run their course. Some other stocks mentioned in this discussion also were sold from the fund.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Consumer Industries Index, which returned 6.79% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Consumer Discretionary Index, which returned 8.80% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 16.19%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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 Discretionary 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 955.50 | $ 6.79 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 954.30 | $ 8.00 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 951.60 | $ 10.40 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 951.70 | $ 10.40 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 956.90 | $ 5.58 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Annual Report
Advisor Consumer Discretionary Fund
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Home Depot, Inc. | 6.3 | 1.4 |
Time Warner, Inc. | 6.1 | 5.9 |
Target Corp. | 5.5 | 3.3 |
McDonald's Corp. | 5.0 | 3.0 |
Comcast Corp. Class A | 4.5 | 6.0 |
Staples, Inc. | 3.2 | 2.2 |
News Corp. Class A | 3.2 | 6.3 |
McGraw-Hill Companies, Inc. | 2.5 | 2.8 |
Coach, Inc. | 2.4 | 2.2 |
Las Vegas Sands Corp. | 2.1 | 0.8 |
40.8 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Media | 27.2% | |
| Specialty Retail | 20.8% | |
| Hotels, Restaurants & Leisure | 16.0% | |
| Multiline Retail | 12.5% | |
| Textiles, Apparel & Luxury Goods | 6.4% | |
| All Others* | 17.1% | |
As of January 31, 2007 | |||
| Media | 25.9% | |
| Multiline Retail | 19.0% | |
| Specialty Retail | 19.0% | |
| Hotels, Restaurants & Leisure | 13.6% | |
| Textiles, Apparel & Luxury Goods | 10.5% | |
| All Others* | 12.0% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Advisor Consumer Discretionary Fund
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
AUTO COMPONENTS - 1.7% | |||
Auto Parts & Equipment - 1.7% | |||
Johnson Controls, Inc. | 8,400 | $ 950,460 | |
AUTOMOBILES - 2.7% | |||
Automobile Manufacturers - 1.8% | |||
General Motors Corp. (d) | 18,100 | 586,440 | |
Renault SA | 1,300 | 190,444 | |
Toyota Motor Corp. sponsored ADR | 1,900 | 229,197 | |
1,006,081 | |||
Motorcycle Manufacturers - 0.9% | |||
Harley-Davidson, Inc. | 8,100 | 464,292 | |
TOTAL AUTOMOBILES | 1,470,373 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Hardware - 0.0% | |||
Hewlett-Packard Co. | 100 | 4,603 | |
DIVERSIFIED CONSUMER SERVICES - 0.9% | |||
Specialized Consumer Services - 0.9% | |||
Sotheby's Class A (ltd. vtg.) | 11,600 | 495,900 | |
FOOD & STAPLES RETAILING - 1.8% | |||
Food Retail - 0.6% | |||
Susser Holdings Corp. | 19,683 | 291,505 | |
Hypermarkets & Super Centers - 1.2% | |||
Costco Wholesale Corp. | 11,300 | 675,740 | |
TOTAL FOOD & STAPLES RETAILING | 967,245 | ||
HOTELS, RESTAURANTS & LEISURE - 16.0% | |||
Casinos & Gaming - 6.7% | |||
Aristocrat Leisure Ltd. | 11,176 | 129,998 | |
Bally Technologies, Inc. (a) | 8,452 | 207,919 | |
Boyd Gaming Corp. | 4,300 | 189,630 | |
International Game Technology | 26,600 | 939,512 | |
Las Vegas Sands Corp. (a)(d) | 12,900 | 1,125,525 | |
Penn National Gaming, Inc. (a) | 11,300 | 649,750 | |
Wynn Resorts Ltd. | 4,500 | 434,520 | |
3,676,854 | |||
Hotels, Resorts & Cruise Lines - 4.3% | |||
Accor SA | 5,800 | 502,376 | |
Carnival Corp. unit | 9,300 | 412,083 | |
Hilton Hotels Corp. | 19,500 | 862,095 | |
Home Inns & Hotels Management, Inc. ADR (d) | 4,400 | 133,672 | |
Starwood Hotels & Resorts Worldwide, Inc. | 6,800 | 428,128 | |
2,338,354 | |||
Restaurants - 5.0% | |||
McDonald's Corp. | 57,800 | 2,766,886 | |
TOTAL HOTELS, RESTAURANTS & LEISURE | 8,782,094 | ||
Shares | Value | ||
HOUSEHOLD DURABLES - 2.4% | |||
Homebuilding - 1.6% | |||
Centex Corp. (d) | 10,100 | $ 376,831 | |
D.R. Horton, Inc. | 7,700 | 125,664 | |
Toll Brothers, Inc. (a)(d) | 16,100 | 353,073 | |
855,568 | |||
Household Appliances - 0.8% | |||
The Stanley Works | 2,500 | 138,325 | |
Whirlpool Corp. | 3,100 | 316,541 | |
454,866 | |||
TOTAL HOUSEHOLD DURABLES | 1,310,434 | ||
INTERNET & CATALOG RETAIL - 3.6% | |||
Catalog Retail - 1.3% | |||
Liberty Media Corp. New - Interactive Series A (a) | 34,700 | 726,965 | |
Internet Retail - 2.3% | |||
Amazon.com, Inc. (a) | 9,900 | 777,546 | |
Blue Nile, Inc. (a)(d) | 5,100 | 385,611 | |
Orbitz Worldwide, Inc. | 6,600 | 79,728 | |
1,242,885 | |||
TOTAL INTERNET & CATALOG RETAIL | 1,969,850 | ||
INTERNET SOFTWARE & SERVICES - 2.4% | |||
Internet Software & Services - 2.4% | |||
Google, Inc. Class A (sub. vtg.) (a) | 2,200 | 1,122,000 | |
LoopNet, Inc. | 10,200 | 210,936 | |
1,332,936 | |||
LEISURE EQUIPMENT & PRODUCTS - 0.4% | |||
Photographic Products - 0.4% | |||
Eastman Kodak Co. | 8,900 | 224,725 | |
MEDIA - 27.2% | |||
Advertising - 2.1% | |||
National CineMedia, Inc. | 14,800 | 368,520 | |
Omnicom Group, Inc. | 14,900 | 772,863 | |
1,141,383 | |||
Broadcasting & Cable TV - 7.2% | |||
Citadel Broadcasting Corp. | 79 | 397 | |
Clear Channel Communications, Inc. | 18,600 | 686,340 | |
Comcast Corp. Class A (a)(d) | 93,650 | 2,460,186 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 21,500 | 542,875 | |
Time Warner Cable, Inc. | 7,500 | 286,650 | |
3,976,448 | |||
Movies & Entertainment - 12.9% | |||
Cinemark Holdings, Inc. | 8,600 | 140,610 | |
Live Nation, Inc. (a) | 7,314 | 145,256 | |
News Corp.: | |||
Class A | 82,484 | 1,742,062 | |
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Movies & Entertainment - continued | |||
News Corp.: - continued | |||
Class B | 6,100 | $ 138,226 | |
Regal Entertainment Group Class A (d) | 35,800 | 765,762 | |
The Walt Disney Co. | 19,500 | 643,500 | |
Time Warner, Inc. | 174,500 | 3,360,870 | |
Viacom, Inc. Class B (non-vtg.) (a) | 4,900 | 187,670 | |
7,123,956 | |||
Publishing - 5.0% | |||
Getty Images, Inc. (a) | 8,000 | 359,440 | |
McGraw-Hill Companies, Inc. | 23,000 | 1,391,500 | |
R.H. Donnelley Corp. (a) | 16,000 | 1,000,480 | |
2,751,420 | |||
TOTAL MEDIA | 14,993,207 | ||
MULTILINE RETAIL - 12.5% | |||
Department Stores - 5.8% | |||
JCPenney Co., Inc. | 15,000 | 1,020,600 | |
Macy's, Inc. (d) | 17,400 | 627,618 | |
Nordstrom, Inc. (d) | 13,500 | 642,330 | |
Sears Holdings Corp. (a) | 6,600 | 902,814 | |
3,193,362 | |||
General Merchandise Stores - 6.7% | |||
Family Dollar Stores, Inc. | 22,500 | 666,450 | |
Lojas Americanas SA (PN) | 15,000 | 1,343 | |
Target Corp. | 49,900 | 3,022,443 | |
3,690,236 | |||
TOTAL MULTILINE RETAIL | 6,883,598 | ||
PERSONAL PRODUCTS - 0.9% | |||
Personal Products - 0.9% | |||
Bare Escentuals, Inc. | 16,900 | 476,749 | |
SPECIALTY RETAIL - 20.8% | |||
Apparel Retail - 4.3% | |||
Abercrombie & Fitch Co. Class A | 7,900 | 552,210 | |
Casual Male Retail Group, Inc. (a)(d) | 27,900 | 285,138 | |
Lululemon Athletica, Inc. | 2,200 | 70,708 | |
Payless ShoeSource, Inc. (a) | 16,000 | 425,920 | |
TJX Companies, Inc. | 32,348 | 897,657 | |
Urban Outfitters, Inc. (a) | 5,600 | 112,336 | |
2,343,969 | |||
Automotive Retail - 0.3% | |||
Penske Auto Group, Inc. | 8,600 | 167,528 | |
Computer & Electronics Retail - 1.0% | |||
Best Buy Co., Inc. | 13,006 | 579,938 | |
Home Improvement Retail - 8.4% | |||
Home Depot, Inc. | 92,833 | 3,450,601 | |
Shares | Value | ||
Lowe's Companies, Inc. | 30,300 | $ 848,703 | |
Sherwin-Williams Co. | 4,700 | 327,543 | |
4,626,847 | |||
Homefurnishing Retail - 0.5% | |||
Williams-Sonoma, Inc. (d) | 9,800 | 301,742 | |
Specialty Stores - 6.3% | |||
OfficeMax, Inc. | 2,300 | 75,624 | |
PETsMART, Inc. | 31,600 | 1,021,628 | |
Staples, Inc. | 76,938 | 1,771,113 | |
Tiffany & Co., Inc. (d) | 12,100 | 583,825 | |
3,452,190 | |||
TOTAL SPECIALTY RETAIL | 11,472,214 | ||
TEXTILES, APPAREL & LUXURY GOODS - 6.4% | |||
Apparel, Accessories & Luxury Goods - 3.6% | |||
Burberry Group PLC | 21,600 | 280,821 | |
Coach, Inc. (a) | 29,700 | 1,350,162 | |
G-III Apparel Group Ltd. (a) | 15,600 | 251,628 | |
Polo Ralph Lauren Corp. Class A | 1,500 | 134,025 | |
2,016,636 | |||
Footwear - 2.8% | |||
Deckers Outdoor Corp. (a)(d) | 5,548 | 571,999 | |
Iconix Brand Group, Inc. (a) | 23,100 | 456,918 | |
Skechers U.S.A., Inc. Class A (sub. vtg.) (a) | 23,831 | 495,446 | |
1,524,363 | |||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 3,540,999 | ||
TOTAL COMMON STOCKS (Cost $52,268,076) | 54,875,387 | ||
Money Market Funds - 17.1% | |||
Fidelity Cash Central Fund, 5.38% (b) | 532,755 | 532,755 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 8,872,300 | 8,872,300 | |
TOTAL MONEY MARKET FUNDS (Cost $9,405,055) | 9,405,055 | ||
TOTAL INVESTMENT PORTFOLIO - 116.8% (Cost $61,673,131) | 64,280,442 | ||
NET OTHER ASSETS - (16.8)% | (9,267,662) | ||
NET ASSETS - 100% | $ 55,012,780 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 45,660 |
Fidelity Securities Lending Cash Central Fund | 21,857 |
Total | $ 67,517 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Discretionary Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,501,227) - See accompanying schedule: Unaffiliated issuers (cost $52,268,076) | $ 54,875,387 | |
Fidelity Central Funds (cost $9,405,055) | 9,405,055 | |
Total Investments (cost $61,673,131) | $ 64,280,442 | |
Receivable for investments sold | 336,300 | |
Receivable for fund shares sold | 86,725 | |
Dividends receivable | 12,762 | |
Distributions receivable from Fidelity Central Funds | 4,515 | |
Prepaid expenses | 101 | |
Receivable from investment adviser for expense reductions | 1,353 | |
Other receivables | 311 | |
Total assets | 64,722,509 | |
Liabilities | ||
Payable for investments purchased | $ 493,717 | |
Payable for fund shares redeemed | 232,011 | |
Accrued management fee | 27,523 | |
Distribution fees payable | 28,250 | |
Other affiliated payables | 16,969 | |
Other payables and accrued expenses | 38,959 | |
Collateral on securities loaned, at value | 8,872,300 | |
Total liabilities | 9,709,729 | |
Net Assets | $ 55,012,780 | |
Net Assets consist of: | ||
Paid in capital | $ 47,542,179 | |
Accumulated net investment loss | (12) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 4,863,248 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 2,607,365 | |
Net Assets | $ 55,012,780 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 15.89 | |
Maximum offering price per share (100/94.25 of $15.89) | $ 16.86 | |
Class T: | $ 15.47 | |
Maximum offering price per share (100/96.50 of $15.47) | $ 16.03 | |
Class B: | $ 14.56 | |
Class C: | $ 14.59 | |
Institutional Class: | $ 16.41 | |
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
Advisor Consumer Discretionary Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 575,030 | |
Special dividends | 258,300 | |
Interest | 143 | |
Income from Fidelity Central Funds | 67,517 | |
Total income | 900,990 | |
Expenses | ||
Management fee | $ 335,937 | |
Transfer agent fees | 197,977 | |
Distribution fees | 349,171 | |
Accounting and security lending fees | 24,539 | |
Custodian fees and expenses | 14,306 | |
Independent trustees' compensation | 195 | |
Registration fees | 61,596 | |
Audit | 46,844 | |
Legal | 1,064 | |
Miscellaneous | 20,962 | |
Total expenses before reductions | 1,052,591 | |
Expense reductions | (24,891) | 1,027,700 |
Net investment income (loss) | (126,710) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 8,082,299 | |
Foreign currency transactions | 1,367 | |
Total net realized gain (loss) | 8,083,666 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,699,359) | |
Assets and liabilities in foreign currencies | (49) | |
Total change in net unrealized appreciation (depreciation) | (1,699,408) | |
Net gain (loss) | 6,384,258 | |
Net increase (decrease) in net assets resulting from operations | $ 6,257,548 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (126,710) | $ (348,612) |
Net realized gain (loss) | 8,083,666 | 6,032,685 |
Change in net unrealized appreciation (depreciation) | (1,699,408) | (6,266,158) |
Net increase (decrease) in net assets resulting from operations | 6,257,548 | (582,085) |
Distributions to shareholders from net investment income | (93,265) | - |
Distributions to shareholders from net realized gain | (7,904,219) | (441,481) |
Total distributions | (7,997,484) | (441,481) |
Share transactions - net increase (decrease) | 3,157,156 | (8,793,822) |
Redemption fees | 895 | 4,458 |
Total increase (decrease) in net assets | 1,418,115 | (9,812,930) |
Net Assets | ||
Beginning of period | 53,594,665 | 63,407,595 |
End of period (including accumulated net investment loss of $12 and accumulated net investment loss of $20, respectively) | $ 55,012,780 | $ 53,594,665 |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.39 | $ 16.62 | $ 14.51 | $ 13.71 | $ 12.71 |
Income from Investment Operations | |||||
Net investment income (loss) C | .02H | (.04) | (.07) | (.07) | (.04) |
Net realized and unrealized gain (loss) | 1.83 | (.07) | 2.71 | .87 | 1.04 |
Total from investment operations | 1.85 | (.11) | 2.64 | .80 | 1.00 |
Distributions from net investment income | (.05) | - | - | - | - |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Total distributions | (2.35) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 | $ 13.71 |
Total Return A, B | 11.67% | (.69)% | 18.85% | 5.84% | 7.87% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.42% | 1.42% | 1.47% | 1.55% | 1.70% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.44% | 1.50% | 1.53% |
Expenses net of all reductions | 1.39% | 1.39% | 1.42% | 1.45% | 1.48% |
Net investment income (loss) | .11%H | (.23)% | (.45)% | (.50)% | (.33)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 19,708 | $ 16,935 | $ 17,887 | $ 11,856 | $ 9,101 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.03 | $ 16.29 | $ 14.27 | $ 13.51 | $ 12.57 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.02)H | (.07) | (.11) | (.11) | (.07) |
Net realized and unrealized gain (loss) | 1.79 | (.07) | 2.66 | .87 | 1.01 |
Total from investment operations | 1.77 | (.14) | 2.55 | .76 | .94 |
Distributions from net investment income | (.03) | - | - | - | - |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Total distributions | (2.33) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 | $ 13.51 |
Total Return A, B | 11.43% | (.89)% | 18.52% | 5.63% | 7.48% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.69% | 1.69% | 1.75% | 1.81% | 1.87% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.69% | 1.75% | 1.78% |
Expenses net of all reductions | 1.61% | 1.62% | 1.67% | 1.70% | 1.73% |
Net investment income (loss) | (.10)%H | (.46)% | (.70)% | (.74)% | (.58)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 14,787 | $ 14,267 | $ 16,782 | $ 15,555 | $ 13,693 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.26 | $ 15.60 | $ 13.75 | $ 13.08 | $ 12.22 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.10)H | (.15) | (.17) | (.18) | (.13) |
Net realized and unrealized gain (loss) | 1.70 | (.07) | 2.55 | .85 | .99 |
Total from investment operations | 1.60 | (.22) | 2.38 | .67 | .86 |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 | $ 13.08 |
Total Return A, B | 10.82% | (1.45)% | 17.97% | 5.12% | 7.04% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.20% | 2.19% | 2.24% | 2.29% | 2.37% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.19% | 2.25% | 2.25% |
Expenses net of all reductions | 2.15% | 2.14% | 2.16% | 2.20% | 2.19% |
Net investment income (loss) | (.64)%H | (.98)% | (1.20)% | (1.25)% | (1.05)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 11,081 | $ 14,088 | $ 18,862 | $ 17,302 | $ 15,944 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.28 | $ 15.62 | $ 13.77 | $ 13.10 | $ 12.24 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.10)H | (.15) | (.17) | (.18) | (.13) |
Net realized and unrealized gain (loss) | 1.71 | (.07) | 2.55 | .85 | .99 |
Total from investment operations | 1.61 | (.22) | 2.38 | .67 | .86 |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 | $ 13.10 |
Total Return A, B | 10.88% | (1.45)% | 17.94% | 5.11% | 7.03% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.16% | 2.12% | 2.17% | 2.24% | 2.33% |
Expenses net of fee waivers, if any | 2.15% | 2.12% | 2.17% | 2.24% | 2.25% |
Expenses net of all reductions | 2.15% | 2.12% | 2.14% | 2.19% | 2.19% |
Net investment income (loss) | (.64)%H | (.95)% | (1.18)% | (1.24)% | (1.05)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,051 | $ 7,160 | $ 8,505 | $ 6,992 | $ 6,759 |
Portfolio turnover rate E | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.82 | $ 17.01 | $ 14.81 | $ 13.95 | $ 12.91 |
Income from Investment Operations | |||||
Net investment income (loss) B | .06G | - | (.03) | (.04) | (.01) |
Net realized and unrealized gain (loss) | 1.89 | (.07) | 2.76 | .90 | 1.05 |
Total from investment operations | 1.95 | (.07) | 2.73 | .86 | 1.04 |
Distributions from net investment income | (.06) | - | - | - | - |
Distributions from net realized gain | (2.30) | (.12) | (.53) | - | - |
Total distributions | (2.36) | (.12) | (.53) | - | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | - F |
Net asset value, end of period | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 | $ 13.95 |
Total Return A | 12.04% | (.44)% | 19.08% | 6.16% | 8.06% |
Ratios to Average Net Assets C, E | |||||
Expenses before reductions | 1.15% | 1.18% | 1.26% | 1.34% | 1.49% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.20% | 1.25% | 1.25% |
Expenses net of all reductions | 1.14% | 1.14% | 1.17% | 1.20% | 1.19% |
Net investment income (loss) | .36%G | .02% | (.21)% | (.25)% | (.05)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 1,385 | $ 1,144 | $ 1,371 | $ 907 | $ 766 |
Portfolio turnover rate D | 164% | 81% | 66% | 152% | 88% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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.
G Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.07)%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Consumer Discretionary Fund (the Fund) (formerly Fidelity Advisor Consumer Industries Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, deferred trustees compensation, net operating losses 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 | $ 5,236,199 |
Unrealized depreciation | (2,682,562) |
Net unrealized appreciation (depreciation) | 2,553,637 |
Undistributed ordinary income | 2,263,115 |
Undistributed long-term capital gain | 2,180,446 |
Cost for federal income tax purposes | $ 61,726,805 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 1,304,072 | $ - |
Long-term Capital Gains | 6,693,412 | 441,481 |
Total | $ 7,997,484 | $ 441,481 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Consumer Discretionary
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $95,928,114 and $98,746,414, respectively.
6. 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 .26% 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 .56% 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% | $ 50,936 | $ 1,685 |
Class T | .25% | .25% | 77,866 | 232 |
Class B | .75% | .25% | 136,510 | 102,694 |
Class C | .75% | .25% | 83,859 | 15,406 |
$ 349,171 | $ 120,017 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 18,487 |
Class T | 4,898 |
Class B* | 30,788 |
Class C* | 321 |
$ 54,494 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 66,087 | .33 |
Class T | 52,937 | .34 |
Class B | 46,987 | .34 |
Class C | 26,162 | .31 |
Institutional Class | 5,804 | .32 |
$ 197,977 |
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.
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 $417 for the period.
7. 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, which amounted to $110 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $21,857.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 3,876 |
Class T | 1.65% | 5,682 |
Class B | 2.15% | 5,982 |
Class C | 2.15% | 582 |
$ 16,122 |
Consumer Discretionary
9. 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 $2,314 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class T | $ 5,377 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 58,649 | $ - |
Class T | 28,339 | - |
Class C | 505 | - |
Institutional Class | 5,772 | - |
Total | $ 93,265 | $ - |
From net realized gain | ||
Class A | $ 2,496,425 | $ 129,938 |
Class T | 2,054,841 | 112,178 |
Class B | 2,079,901 | 130,928 |
Class C | 1,100,868 | 59,730 |
Institutional Class | 172,184 | 8,707 |
Total | $ 7,904,219 | $ 441,481 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 540,609 | 426,479 | $ 8,973,622 | $ 7,019,654 |
Reinvestment of distributions | 141,640 | 7,092 | 2,265,680 | 116,631 |
Shares redeemed | (475,746) | (476,405) | (7,950,826) | (7,879,209) |
Net increase (decrease) | 206,503 | (42,834) | $ 3,288,476 | $ (742,924) |
Class T | ||||
Shares sold | 188,336 | 183,824 | $ 3,060,088 | $ 2,956,227 |
Reinvestment of distributions | 122,934 | 6,480 | 1,916,483 | 104,320 |
Shares redeemed | (245,736) | (330,058) | (4,018,366) | (5,310,774) |
Net increase (decrease) | 65,534 | (139,754) | $ 958,205 | $ (2,250,227) |
Class B | ||||
Shares sold | 83,325 | 124,427 | $ 1,279,468 | $ 1,901,339 |
Reinvestment of distributions | 122,770 | 7,467 | 1,810,224 | 114,882 |
Shares redeemed | (368,667) | (417,847) | (5,659,191) | (6,443,082) |
Net increase (decrease) | (162,572) | (285,953) | $ (2,569,499) | $ (4,426,861) |
Class C | ||||
Shares sold | 183,143 | 103,187 | $ 2,817,553 | $ 1,601,293 |
Reinvestment of distributions | 59,948 | 3,123 | 885,827 | 48,106 |
Shares redeemed | (159,811) | (182,363) | (2,453,389) | (2,814,524) |
Net increase (decrease) | 83,280 | (76,053) | $ 1,249,991 | $ (1,165,125) |
Institutional Class | ||||
Shares sold | 116,522 | 14,460 | $ 1,988,792 | $ 246,044 |
Reinvestment of distributions | 8,916 | 433 | 146,867 | 7,305 |
Shares redeemed | (109,046) | (27,416) | (1,905,676) | (462,034) |
Net increase (decrease) | 16,392 | (12,523) | $ 229,983 | $ (208,685) |
Consumer Discretionary
Advisor Electronics 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, 2007 | Past 1 | Past 5 | Life of |
Institutional Class | 23.83% | 10.68% | -1.09% |
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 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Christopher Lee and Paul Jackson, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 23.44%, 23.18%, 22.54% and 22.57%, respectively (excluding sales charges), trailing both the 25.06% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Semiconductors & Semiconductor Equipment Index and the 26.21% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. Over the same 12-month period, the fund beat the S&P 500. The fund considerably lagged the Goldman Sachs index during the first two months of the period, when unfavorable stock selection in the fund's core segment of semiconductors was the primary negative factor. Having no exposure to the strong-performing communications equipment and systems software groups also hurt, as did an overweighting in the technology distributors segment. Among individual holdings, an out-of-index position in United Kingdom-based CSR, a maker of semiconductors used in wireless networking, was a major detractor, as it was weighed down by higher-than-expected inventories. Having no stake in networking equipment manufacturer Cisco Systems, a key index component that did well, also dampened performance. On the plus side, our picks in electronic manufacturing services aided performance, as did not having exposure to two underperforming groups: data processing/outsourced services and Internet software/services. Performance particularly benefited from our position in Broadcom, a chip maker for cellular handsets and digital televisions. The stock rebounded after getting pounded earlier in the year, as the company made progress toward settling its stock options backdating issues with regulators and industry fundamentals improved. During the last 10 months of the period, the fund topped the MSCI index. Stock picking in technology distributors had by far the most positive impact, along with an underweighting and timely picks in the semiconductor group. Distributors Arrow Electronics and Avnet - out-of-index holdings - each added about two percentage points to the fund's relative results, riding a cyclical recovery in the semiconductor food chain. Underweighting Advanced Micro Devices, a maker of personal computer (PC) microprocessors, proved timely, as the company lost market share to larger rival Intel. Conversely, unrewarding stock selection in the diversified communications and professional services area - - specifically Arrowhead Research, a nanotechnology company - was the main drag on performance versus the MSCI index. The fund's results were further undermined by Vimicro International, a non-index maker of chips for PCs, camera sensors and the like. Competition hurt the company's pricing power. Underweighting strong-performing index component MEMC Electronic Materials detracted as well, along with the fund's modest cash position. Some stocks mentioned in this report were sold by period end.
During the past year, the fund's Institutional Class shares returned 23.83%, trailing both the 25.06% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Semiconductors & Semiconductor Equipment Index and the 26.21% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. Over the same 12-month period, the fund beat the S&P 500. The fund considerably lagged the Goldman Sachs index during the first two months of the period, when unfavorable stock selection in the fund's core segment of semiconductors was the primary negative factor. Having no exposure to the strong-performing communications equipment and systems software groups also hurt, as did an overweighting in the technology distributors segment. Among individual holdings, an out-of-index position in United Kingdom-based CSR, a maker of semiconductors used in wireless networking, was a major detractor, as it was weighed down by higher-than-expected inventories. Having no stake in networking equipment manufacturer Cisco Systems, a key index component that did well, also dampened performance. On the plus side, our picks in electronic manufacturing services aided performance, as did not having exposure to two underperforming groups: data processing/outsourced services and Internet software/services. Performance particularly benefited from our position in Broadcom, a chip maker for cellular handsets and digital televisions. The stock rebounded after getting pounded earlier in the year, as the company made progress toward settling its stock options backdating issues with regulators and industry fundamentals improved. During the last 10 months of the period, the fund topped the MSCI index. Stock picking in technology distributors had by far the most positive impact, along with an underweighting and timely picks in the semiconductor group. Distributors Arrow Electronics and Avnet - out-of-index holdings - each added about two percentage points to the fund's relative results, riding a cyclical recovery in the semiconductor food chain. Underweighting Advanced Micro Devices, a maker of personal computer (PC) microprocessors, proved timely, as the company lost market share to larger rival Intel. Conversely, unrewarding stock selection in the diversified communications and professional services area - specifically Arrowhead Research, a nanotechnology company - was the main drag on performance versus the MSCI index. The fund's results were further undermined by Vimicro International, a non-index maker of chips for PCs, camera sensors and the like. Competition hurt the company's pricing power. Underweighting strong-performing index component MEMC Electronic Materials detracted as well, along with the fund's modest cash position. Some stocks mentioned in this report were sold by period end.
Annual Report
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Technology Index, which returned 12.15% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Semiconductors & Semiconductor Equipment Index, which returned 12.54% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 26.21%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Electronics
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,085.80 | $ 7.24 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | |||
Actual | $ 1,000.00 | $ 1,084.50 | $ 8.53 |
HypotheticalA | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | |||
Actual | $ 1,000.00 | $ 1,083.40 | $ 11.11 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | |||
Actual | $ 1,000.00 | $ 1,082.20 | $ 11.10 |
HypotheticalA | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,087.70 | $ 5.95 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Intel Corp. | 18.8 | 7.2 |
Broadcom Corp. Class A | 5.9 | 3.1 |
Maxim Integrated Products, Inc. | 5.5 | 5.0 |
Applied Materials, Inc. | 5.0 | 5.8 |
Marvell Technology Group Ltd. | 4.8 | 4.8 |
Texas Instruments, Inc. | 4.2 | 3.5 |
Arrowhead Research Corp. | 3.6 | 0.0 |
Analog Devices, Inc. | 3.5 | 3.2 |
National Semiconductor Corp. | 3.0 | 4.5 |
Advanced Micro Devices, Inc. | 2.8 | 0.0 |
57.1 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 85.2% | |
| Commercial Services & Supplies | 4.6% | |
| Electronic Equipment & Instruments | 3.6% | |
| Communications Equipment | 2.0% | |
| Chemicals | 1.3% | |
| All Others* | 3.3% | |
As of January 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 78.8% | |
 | Electronic | 15.0% | |
| All Others* | 6.2% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 100.0% | |||
Shares | Value | ||
CAPITAL MARKETS - 0.6% | |||
Asset Management & Custody Banks - 0.3% | |||
Harris & Harris Group, Inc. (a) | 10,052 | $ 100,419 | |
Diversified Capital Markets - 0.1% | |||
Indochina Capital Vietnam Holdings Ltd. | 3,200 | 29,360 | |
Investment Banking & Brokerage - 0.2% | |||
REXCAPITAL Financial Holdings Ltd. (a) | 375,000 | 56,321 | |
TOTAL CAPITAL MARKETS | 186,100 | ||
CHEMICALS - 1.3% | |||
Specialty Chemicals - 1.3% | |||
Nanophase Technologies Corp. (a) | 28,000 | 183,120 | |
Nitto Denko Corp. | 900 | 47,219 | |
Tokuyama Corp. | 3,000 | 43,571 | |
Wacker Chemie AG | 400 | 98,795 | |
372,705 | |||
COMMERCIAL SERVICES & SUPPLIES - 4.6% | |||
Diversified Commercial & Professional Services - 4.6% | |||
Arrowhead Research Corp. (a) | 22,900 | 103,279 | |
Arrowhead Research Corp. (a)(c) | 259,516 | 1,053,375 | |
Arrowhead Research Corp. warrants 5/21/17 (a)(c) | 64,879 | 179,616 | |
1,336,270 | |||
COMMUNICATIONS EQUIPMENT - 2.0% | |||
Communications Equipment - 2.0% | |||
AAC Acoustic Technology Holdings, Inc. (a) | 34,000 | 40,264 | |
Alcatel-Lucent SA sponsored ADR | 9,300 | 107,880 | |
China Techfaith Wireless Communication Technology Ltd. sponsored ADR (a) | 10,603 | 51,000 | |
Foxconn International Holdings Ltd. (a) | 68,000 | 194,689 | |
Nokia Corp. sponsored ADR | 3,600 | 103,104 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 2,300 | 86,043 | |
582,980 | |||
COMPUTERS & PERIPHERALS - 0.7% | |||
Computer Storage & Peripherals - 0.7% | |||
SanDisk Corp. (a) | 3,400 | 182,342 | |
STEC, Inc. (a) | 4,400 | 32,340 | |
214,682 | |||
ELECTRICAL EQUIPMENT - 1.0% | |||
Electrical Components & Equipment - 1.0% | |||
Evergreen Solar, Inc. (a) | 16,900 | 140,777 | |
Neo-Neon Holdings Ltd. | 26,000 | 53,122 | |
Q-Cells AG (a) | 500 | 44,266 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 1,300 | 52,429 | |
290,594 | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.6% | |||
Electronic Equipment & Instruments - 0.8% | |||
LG.Philips LCD Co. Ltd. sponsored ADR (a) | 4,000 | $ 92,440 | |
Motech Industries, Inc. | 4,000 | 49,986 | |
Murata Manufacturing Co. Ltd. | 400 | 29,885 | |
Nidec Corp. | 700 | 46,337 | |
218,648 | |||
Electronic Manufacturing Services - 1.7% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 43,000 | 356,488 | |
Jabil Circuit, Inc. | 6,900 | 155,457 | |
511,945 | |||
Technology Distributors - 1.1% | |||
Arrow Electronics, Inc. (a) | 5,900 | 225,498 | |
Wolfson Microelectronics PLC (a) | 14,500 | 82,180 | |
307,678 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 1,038,271 | ||
MEDIA - 0.2% | |||
Broadcasting & Cable TV - 0.2% | |||
JumpTV, Inc. | 18,000 | 63,279 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 85.2% | |||
Semiconductor Equipment - 13.1% | |||
Applied Materials, Inc. | 65,800 | 1,450,232 | |
ASML Holding NV (NY Shares) (a) | 8,500 | 251,260 | |
Eagle Test Systems, Inc. (a) | 10,200 | 152,898 | |
Entegris, Inc. (a) | 2,500 | 26,950 | |
FormFactor, Inc. (a) | 5,550 | 213,065 | |
Greatek Electronics, Inc. | 21,000 | 35,652 | |
KLA-Tencor Corp. | 4,290 | 243,629 | |
MEMC Electronic Materials, Inc. (a) | 11,500 | 705,180 | |
PDF Solutions, Inc. (a) | 1,700 | 18,853 | |
Tessera Technologies, Inc. (a) | 5,100 | 209,763 | |
Topco Scientific Co. Ltd. | 12,000 | 34,015 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 8,500 | 399,500 | |
Verigy Ltd. | 3,700 | 90,502 | |
3,831,499 | |||
Semiconductors - 72.1% | |||
Advanced Analog Technology, Inc. | 5,000 | 49,224 | |
Advanced Analogic Technologies, Inc. (a) | 7,800 | 69,264 | |
Advanced Micro Devices, Inc. (a) | 60,300 | 816,462 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR (a) | 22,200 | 145,632 | |
Altera Corp. | 29,700 | 689,040 | |
Analog Devices, Inc. | 28,650 | 1,015,643 | |
ARM Holdings PLC sponsored ADR | 16,500 | 146,850 | |
Atheros Communications, Inc. (a) | 5,000 | 139,400 | |
Atmel Corp. (a) | 50,600 | 272,734 | |
Broadcom Corp. Class A (a) | 52,700 | 1,729,087 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Cavium Networks, Inc. | 1,700 | $ 40,375 | |
Diodes, Inc. (a) | 7,500 | 199,275 | |
Epistar Corp. | 8,000 | 41,452 | |
Fairchild Semiconductor International, Inc. (a) | 13,600 | 248,200 | |
Global Mixed-Mode Tech, Inc. | 11,500 | 125,309 | |
Himax Technologies, Inc. sponsored ADR (a) | 12,600 | 64,386 | |
Hittite Microwave Corp. (a) | 5,000 | 201,100 | |
Ikanos Communications, Inc. (a) | 6,100 | 43,920 | |
Infineon Technologies AG sponsored ADR (a) | 13,500 | 220,995 | |
Intel Corp. | 234,090 | 5,529,208 | |
Intersil Corp. Class A | 12,200 | 356,850 | |
Lattice Semiconductor Corp. (a) | 16,900 | 79,937 | |
Linear Technology Corp. | 1,900 | 67,735 | |
LSI Corp. (a) | 50,700 | 365,040 | |
Marvell Technology Group Ltd. (a) | 78,900 | 1,420,200 | |
Maxim Integrated Products, Inc. | 51,000 | 1,616,700 | |
Microchip Technology, Inc. | 900 | 32,679 | |
Micron Technology, Inc. (a) | 15,300 | 181,611 | |
Mindspeed Technologies, Inc. (a) | 16,400 | 29,848 | |
National Semiconductor Corp. | 33,920 | 881,581 | |
NVIDIA Corp. (a) | 8,100 | 370,656 | |
ON Semiconductor Corp. (a) | 35,100 | 414,882 | |
ProMOS Technologies, Inc. (a) | 172,000 | 66,841 | |
Richtek Technology Corp. | 10,350 | 148,425 | |
Samsung Electronics Co. Ltd. | 150 | 99,025 | |
Semtech Corp. (a) | 10,200 | 165,750 | |
Silicon Laboratories, Inc. (a) | 9,000 | 313,470 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 7,545 | 72,734 | |
SiRF Technology Holdings, Inc. (a) | 7,700 | 180,488 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 25,223 | 256,013 | |
Texas Instruments, Inc. | 35,100 | 1,235,169 | |
Volterra Semiconductor Corp. (a) | 25,000 | 287,250 | |
Xilinx, Inc. | 29,700 | 742,500 | |
21,172,940 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 25,004,439 | ||
Shares | Value | ||
SOFTWARE - 0.8% | |||
Home Entertainment Software - 0.8% | |||
Nintendo Co. Ltd. | 500 | $ 245,000 | |
TOTAL COMMON STOCKS (Cost $30,682,265) | 29,334,320 | ||
Money Market Funds - 0.4% | |||
Fidelity Cash Central Fund, 5.38% (b) | 128,513 | 128,513 | |
TOTAL INVESTMENT PORTFOLIO - 100.4% (Cost $30,810,778) | 29,462,833 | ||
NET OTHER ASSETS - (0.4)% | (118,875) | ||
NET ASSETS - 100% | $ 29,343,958 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) 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 $1,232,991 or 4.2% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Arrowhead Research Corp. | 5/18/07 | $ 1,265,060 |
Arrowhead Research Corp. warrants 5/21/17 | 5/18/07 | $ 234,942 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 50,342 |
Fidelity Securities Lending Cash Central Fund | 11,432 |
Total | $ 61,774 |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 82.1% |
Bermuda | 4.8% |
Taiwan | 4.7% |
Japan | 1.5% |
Cayman Islands | 1.4% |
Germany | 1.2% |
Others (individually less than 1%) | 4.3% |
100.0% |
Income Tax Information |
At July 31, 2007, the fund had a capital loss carryforward of approximately $7,319,181 of which $4,774,109, $2,265,871 and $279,201 will expire on July 31, 2011, 2012 and 2013, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $30,682,265) | $ 29,334,320 | |
Fidelity Central Funds (cost $128,513) | 128,513 | |
Total Investments (cost $30,810,778) | $ 29,462,833 | |
Receivable for investments sold | 139,730 | |
Receivable for fund shares sold | 12,696 | |
Dividends receivable | 12,509 | |
Distributions receivable from Fidelity Central Funds | 753 | |
Prepaid expenses | 59 | |
Receivable from investment adviser for expense reductions | 1,707 | |
Other receivables | 821 | |
Total assets | 29,631,108 | |
Liabilities | ||
Payable to custodian bank | $ 41,500 | |
Payable for investments purchased | 116,720 | |
Payable for fund shares redeemed | 52,835 | |
Accrued management fee | 14,379 | |
Distribution fees payable | 16,564 | |
Other affiliated payables | 8,691 | |
Other payables and accrued expenses | 36,461 | |
Total liabilities | 287,150 | |
Net Assets | $ 29,343,958 | |
Net Assets consist of: | ||
Paid in capital | $ 38,300,340 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (7,608,443) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (1,347,939) | |
Net Assets | $ 29,343,958 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 9.11 | |
Maximum offering price per share (100/94.25 of $9.11) | $ 9.67 | |
Class T: | $ 8.98 | |
Maximum offering price per share (100/96.50 of $8.98) | $ 9.31 | |
Class B: | $ 8.70 | |
Class C: | $ 8.69 | |
Institutional Class: | $ 9.30 | |
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
Advisor Electronics Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 255,984 | |
Interest | 1,668 | |
Income from Fidelity Central Funds | 61,774 | |
Total income | 319,426 | |
Expenses | ||
Management fee | $ 173,257 | |
Transfer agent fees | 107,153 | |
Distribution fees | 195,950 | |
Accounting and security lending fees | 13,516 | |
Custodian fees and expenses | 17,432 | |
Independent trustees' compensation | 102 | |
Registration fees | 48,905 | |
Audit | 47,967 | |
Legal | 669 | |
Miscellaneous | 10,871 | |
Total expenses before reductions | 615,822 | |
Expense reductions | (69,851) | 545,971 |
Net investment income (loss) | (226,545) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 4,563,969 | |
Foreign currency transactions | (1,742) | |
Total net realized gain (loss) | 4,562,227 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 2,119,333 | |
Assets and liabilities in foreign currencies | (68) | |
Total change in net unrealized appreciation (depreciation) | 2,119,265 | |
Net gain (loss) | 6,681,492 | |
Net increase (decrease) in net assets resulting from operations | $ 6,454,947 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (226,545) | $ (355,473) |
Net realized gain (loss) | 4,562,227 | 3,613,218 |
Change in net unrealized appreciation (depreciation) | 2,119,265 | (6,280,048) |
Net increase (decrease) in net assets resulting from operations | 6,454,947 | (3,022,303) |
Share transactions - net increase (decrease) | (7,957,827) | (10,537,180) |
Redemption fees | 878 | 3,363 |
Total increase (decrease) in net assets | (1,502,002) | (13,556,120) |
Net Assets | ||
Beginning of period | 30,845,960 | 44,402,080 |
End of period | $ 29,343,958 | $ 30,845,960 |
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.38 | $ 8.04 | $ 6.58 | $ 6.59 | $ 5.57 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.03) | (.04) | (.07) | (.09) | (.06) |
Net realized and unrealized gain (loss) | 1.76 | (.62) | 1.53 | .08 | 1.07 |
Total from investment operations | 1.73 | (.66) | 1.46 | (.01) | 1.01 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 | $ 6.59 |
Total Return A, B | 23.44% | (8.21)% | 22.19% | (.15)% | 18.31% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.60% | 1.50% | 1.59% | 1.55% | 1.89% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.45% | 1.50% | 1.50% |
Expenses net of all reductions | 1.38% | 1.36% | 1.38% | 1.48% | 1.46% |
Net investment income (loss) | (.35)% | (.52)% | (.96)% | (1.15)% | (1.09)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 7,551 | $ 7,916 | $ 11,397 | $ 8,374 | $ 8,116 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.29 | $ 7.96 | $ 6.53 | $ 6.56 | $ 5.55 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.05) | (.06) | (.08) | (.11) | (.07) |
Net realized and unrealized gain (loss) | 1.74 | (.61) | 1.51 | .08 | 1.07 |
Total from investment operations | 1.69 | (.67) | 1.43 | (.03) | 1.00 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 | $ 6.56 |
Total Return A, B | 23.18% | (8.42)% | 21.90% | (.46)% | 18.20% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.89% | 1.82% | 1.89% | 1.83% | 2.14% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.69% | 1.75% | 1.75% |
Expenses net of all reductions | 1.64% | 1.61% | 1.61% | 1.72% | 1.71% |
Net investment income (loss) | (.60)% | (.77)% | (1.20)% | (1.39)% | (1.33)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,103 | $ 9,048 | $ 12,085 | $ 15,445 | $ 14,362 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.10 | $ 7.78 | $ 6.42 | $ 6.48 | $ 5.52 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.10) | (.12) | (.14) | (.10) |
Net realized and unrealized gain (loss) | 1.69 | (.58) | 1.48 | .08 | 1.06 |
Total from investment operations | 1.60 | (.68) | 1.36 | (.06) | .96 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 | $ 6.48 |
Total Return A, B | 22.54% | (8.74)% | 21.18% | (.93)% | 17.39% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.36% | 2.29% | 2.41% | 2.41% | 2.76% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.21% | 2.25% | 2.25% |
Expenses net of all reductions | 2.13% | 2.11% | 2.13% | 2.23% | 2.21% |
Net investment income (loss) | (1.10)% | (1.27)% | (1.72)% | (1.90)% | (1.83)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 4,572 | $ 6,123 | $ 8,963 | $ 8,498 | $ 11,335 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.09 | $ 7.77 | $ 6.41 | $ 6.47 | $ 5.51 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.10) | (.11) | (.14) | (.10) |
Net realized and unrealized gain (loss) | 1.69 | (.58) | 1.47 | .08 | 1.06 |
Total from investment operations | 1.60 | (.68) | 1.36 | (.06) | .96 |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 | $ 6.47 |
Total Return A, B | 22.57% | (8.75)% | 21.22% | (.93)% | 17.42% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 2.34% | 2.26% | 2.31% | 2.24% | 2.52% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.18% | 2.24% | 2.25% |
Expenses net of all reductions | 2.13% | 2.11% | 2.11% | 2.21% | 2.21% |
Net investment income (loss) | (1.10)% | (1.27)% | (1.69)% | (1.88)% | (1.83)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,389 | $ 7,009 | $ 11,058 | $ 12,322 | $ 13,061 |
Portfolio turnover rate E | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Electronics
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 7.51 | $ 8.15 | $ 6.65 | $ 6.64 | $ 5.60 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.01) | (.02) | (.05) | (.06) | (.04) |
Net realized and unrealized gain (loss) | 1.80 | (.62) | 1.55 | .07 | 1.07 |
Total from investment operations | 1.79 | (.64) | 1.50 | .01 | 1.03 |
Redemption fees added to paid in capital B | - F | - F | - F | - F | .01 |
Net asset value, end of period | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 | $ 6.64 |
Total Return A | 23.83% | (7.85)% | 22.56% | .15% | 18.57% |
Ratios to Average Net Assets C, E | |||||
Expenses before reductions | 1.26% | 1.11% | 1.16% | 1.12% | 1.46% |
Expenses net of fee waivers, if any | 1.15% | 1.11% | 1.16% | 1.12% | 1.25% |
Expenses net of all reductions | 1.13% | 1.07% | 1.08% | 1.09% | 1.21% |
Net investment income (loss) | (.10)% | (.23)% | (.67)% | (.76)% | (.84)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 730 | $ 750 | $ 899 | $ 687 | $ 625 |
Portfolio turnover rate D | 97% | 95% | 128% | 84% | 66% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Electronics Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM) an affiliate of, FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 foreign currency transactions, passive foreign investment companies (PFIC), net operating losses, 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 | $ 1,577,796 |
Unrealized depreciation | (3,215,000) |
Net unrealized appreciation (depreciation) | (1,637,204) |
Capital loss carryforward | (7,319,181) |
Cost for federal income tax purposes | $ 31,100,037 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Electronics
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $29,088,126 and $36,888,144, respectively.
6. 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 .26% 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 .56% 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% | $ 20,055 | $ 302 |
Class T | .25% | .25% | 43,948 | 162 |
Class B | .75% | .25% | 53,350 | 40,094 |
Class C | .75% | .25% | 78,597 | 9,924 |
$ 195,950 | $ 50,482 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 1,222 |
Class T | 2,154 |
Class B* | 20,244 |
Class C* | 711 |
$ 24,331 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 27,063 | .34 |
Class T | 33,021 | .38 |
Class B | 18,328 | .34 |
Class C | 26,602 | .34 |
Institutional Class | 2,139 | .25 |
$ 107,153 |
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.
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 $858 for the period.
7. 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, which amounted to $58 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $11,432.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class A | 1.40% | $ 16,383 |
Class T | 1.65% | 21,401 |
Class B | 2.15% | 11,365 |
Class C | 2.15% | 14,831 |
Institutional Class | 1.15% | 944 |
$ 64,924 |
Electronics
9. 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 $4,272 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 172,908 | 435,594 | $ 1,452,847 | $ 3,620,302 |
Shares redeemed | (416,578) | (781,896) | (3,518,739) | (6,327,084) |
Net increase (decrease) | (243,670) | (346,302) | $ (2,065,892) | $ (2,706,782) |
Class T | ||||
Shares sold | 96,013 | 251,455 | $ 811,586 | $ 2,041,805 |
Shares redeemed | (434,383) | (529,920) | (3,616,000) | (4,209,309) |
Net increase (decrease) | (338,370) | (278,465) | $ (2,804,414) | $ (2,167,504) |
Class B | ||||
Shares sold | 33,257 | 89,856 | $ 271,410 | $ 712,048 |
Shares redeemed | (370,189) | (378,696) | (3,005,497) | (2,960,769) |
Net increase (decrease) | (336,932) | (288,840) | $ (2,734,087) | $ (2,248,721) |
Class C | ||||
Shares sold | 354,933 | 184,474 | $ 2,907,179 | $ 1,462,697 |
Shares redeemed | (378,058) | (618,382) | (3,063,507) | (4,840,037) |
Net increase (decrease) | (23,125) | (433,908) | $ (156,328) | $ (3,377,340) |
Institutional Class | ||||
Shares sold | 23,807 | 66,399 | $ 203,253 | $ 577,320 |
Shares redeemed | (45,136) | (76,867) | (400,359) | (614,153) |
Net increase (decrease) | (21,329) | (10,468) | $ (197,106) | $ (36,833) |
Annual Report
Advisor Energy 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, 2007 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 22.47% | 27.81% | 13.78% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Energy Fund - Institutional Class on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the 12 months that ended July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 22.08%, 21.84%, 21.18% and 21.22%, respectively (excluding sales charges), versus a gain of 21.20% for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Energy Index and a 20.14% advance for a blended index specific to this fund. The blended index is a combination of the Goldman Sachs® Natural Resources Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's remaining 10 months1. During the same 12-month period, the fund also beat the S&P 500. The fund slightly underperformed the Goldman Sachs benchmark during the first two months of the period, largely due to underweighted positions in the strong-performing integrated oil companies, including Exxon Mobil and Chevron. Overweighting several companies with sizable natural gas exposure - including Ultra Petroleum in the exploration and production (E&P) arena, and Smith International, National Oilwell Varco and Halliburton in energy services - also hurt when natural gas prices declined. A position in refiner Valero Energy also detracted. On the flip side, several out-of-index stocks provided gains, including Oregon Steel Mills and fertilizer manufacturer Mosaic. Among index components, overweighting Canadian aluminum producer Novelis boosted performance, as did underweighting or not owning the more commodity-price-sensitive integrated oil companies, such as ConocoPhillips, Hess and Marathon Oil. We sold several of these stocks. During the final 10 months of the period, the fund outperformed the MSCI index largely due to solid stock selection and overweighted positions in the oil and gas drilling and oil and gas equipment/services segments. Top performers in these areas included oil-rig manufacturer National Oilwell Varco and offshore oil and gas driller Noble Corp. A non-index position in Danish wind turbine manufacturer Vestas Wind Systems also helped, as did an overweighted position in natural gas producer Range Resources. On the other hand, the fund was hurt by underweighting strong-performing, large integrated oil companies such as Chevron. Positions in several oil and gas E&P companies, including Ultra Petroleum and Plains Exploration & Production, lagged due to their exposure to natural gas prices, which remained relatively flat overall. Oil-field services provider Baker Hughes also detracted from returns.
For the 12 months that ended July 31, 2007, the fund's Institutional Class shares returned 22.47%, outperforming the 21.20% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Energy Index and the 20.14% advance of a blended index specific to this fund. The blended index is a combination of the Goldman Sachs® Natural Resources Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's remaining 10 months1. During the same 12-month period, the fund also beat the S&P 500. The fund slightly underperformed the Goldman Sachs benchmark during the first two months of the period, largely due to underweighted positions in the strong-performing integrated oil companies, including Exxon Mobil and Chevron. Overweighting several companies with sizable natural gas exposure - including Ultra Petroleum in the exploration and production (E&P) arena, and Smith International, National Oilwell Varco and Halliburton in energy services - also hurt when natural gas prices declined. A position in refiner Valero Energy also detracted. On the flip side, several out-of-index stocks provided gains, including Oregon Steel Mills and fertilizer manufacturer Mosaic. Among index components, overweighting Canadian aluminum producer Novelis boosted performance, as did underweighting or not owning the more commodity-price-sensitive integrated oil companies, such as ConocoPhillips, Hess and Marathon Oil. We sold several of these stocks. During the final 10 months of the period, the fund outperformed the MSCI index largely due to solid stock selection and overweighted positions in the oil and gas drilling and oil and gas equipment/services segments. Top performers in these areas included oil-rig manufacturer National Oilwell Varco and offshore oil and gas driller Noble Corp. A non-index position in Danish wind turbine manufacturer Vestas Wind Systems also helped, as did an overweighted position in natural gas producer Range Resources. On the other hand, the fund was hurt by underweighting strong-performing, large integrated oil companies such as Chevron. Positions in several oil and gas E&P companies, including Ultra Petroleum and Plains Exploration & Production, lagged due to their exposure to natural gas prices, which remained relatively flat overall. Oil-field services provider Baker Hughes also detracted from returns.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Natural Resources Index, which returned -8.26% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Energy Index, which returned 30.96% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 20.14%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,220.10 | $ 6.33 |
HypotheticalA | $ 1,000.00 | $ 1,019.09 | $ 5.76 |
Class T | |||
Actual | $ 1,000.00 | $ 1,219.00 | $ 7.48 |
HypotheticalA | $ 1,000.00 | $ 1,018.05 | $ 6.81 |
Class B | |||
Actual | $ 1,000.00 | $ 1,215.50 | $ 10.49 |
HypotheticalA | $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Class C | |||
Actual | $ 1,000.00 | $ 1,215.80 | $ 10.27 |
HypotheticalA | $ 1,000.00 | $ 1,015.52 | $ 9.35 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,222.10 | $ 4.68 |
HypotheticalA | $ 1,000.00 | $ 1,020.58 | $ 4.26 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.15% |
Class T | 1.36% |
Class B | 1.91% |
Class C | 1.87% |
Institutional Class | .85% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Exxon Mobil Corp. | 15.1 | 7.7 |
Schlumberger Ltd. (NY Shares) | 7.4 | 5.7 |
Valero Energy Corp. | 6.9 | 7.6 |
ConocoPhillips | 5.6 | 6.9 |
National Oilwell Varco, Inc. | 5.6 | 3.3 |
Range Resources Corp. | 3.8 | 3.8 |
Chevron Corp. | 3.3 | 7.6 |
Ultra Petroleum Corp. | 3.2 | 3.6 |
Cabot Oil & Gas Corp. | 2.6 | 2.2 |
Transocean, Inc. | 2.4 | 1.5 |
55.9 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Oil, Gas & Consumable Fuels | 63.4% | |
| Energy Equipment & Services | 32.2% | |
| Electrical Equipment | 1.5% | |
| Construction & Engineering | 1.0% | |
| Industrial Conglomerates | 0.4% | |
| All Others* | 1.5% | |
As of January 31, 2007 | |||
| Oil, Gas & Consumable Fuels | 60.0% | |
| Energy Equipment & Services | 35.4% | |
| Electrical Equipment | 1.5% | |
| Machinery | 1.3% | |
| Construction & Engineering | 0.9% | |
| All Others* | 0.9% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Environmental & Facility Services - 0.0% | |||
Fuel Tech, Inc. (a)(d) | 16,062 | $ 449,254 | |
CONSTRUCTION & ENGINEERING - 1.0% | |||
Construction & Engineering - 1.0% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 20,400 | 828,240 | |
Fluor Corp. | 16,200 | 1,871,262 | |
Jacobs Engineering Group, Inc. (a) | 103,400 | 6,372,542 | |
9,072,044 | |||
ELECTRICAL EQUIPMENT - 1.5% | |||
Electrical Components & Equipment - 0.1% | |||
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 15,700 | 633,181 | |
Heavy Electrical Equipment - 1.4% | |||
Suzlon Energy Ltd. | 73,040 | 2,309,965 | |
Vestas Wind Systems AS (a) | 164,200 | 11,112,039 | |
13,422,004 | |||
TOTAL ELECTRICAL EQUIPMENT | 14,055,185 | ||
ENERGY EQUIPMENT & SERVICES - 32.2% | |||
Oil & Gas Drilling - 10.1% | |||
Diamond Offshore Drilling, Inc. | 197,200 | 20,347,096 | |
GlobalSantaFe Corp. | 211,500 | 15,166,665 | |
Noble Corp. | 216,700 | 22,203,082 | |
Pride International, Inc. (a) | 370,000 | 12,968,500 | |
Transocean, Inc. (a) | 206,800 | 22,220,660 | |
92,906,003 | |||
Oil & Gas Equipment & Services - 22.1% | |||
Baker Hughes, Inc. | 229,150 | 18,114,308 | |
Cameron International Corp. (a) | 40,700 | 3,174,600 | |
FMC Technologies, Inc. (a) | 29,100 | 2,663,232 | |
Grant Prideco, Inc. (a) | 41,100 | 2,305,710 | |
Halliburton Co. | 178,700 | 6,436,774 | |
Hanover Compressor Co. (a) | 95,000 | 2,263,850 | |
National Oilwell Varco, Inc. (a) | 425,032 | 51,050,594 | |
Oceaneering International, Inc. (a) | 93,200 | 5,234,112 | |
Schlumberger Ltd. (NY Shares) | 715,500 | 67,772,160 | |
Smith International, Inc. | 331,927 | 20,383,637 | |
Superior Energy Services, Inc. (a) | 188,100 | 7,584,192 | |
Universal Compression Holdings, Inc. (a) | 31,400 | 2,293,456 | |
W-H Energy Services, Inc. (a) | 74,400 | 4,767,552 | |
Weatherford International Ltd. (a) | 158,000 | 8,742,140 | |
202,786,317 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 295,692,320 | ||
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
Questar Corp. | 19,400 | 998,906 | |
Shares | Value | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.3% | |||
Independent Power Producers & Energy Traders - 0.3% | |||
AES Corp. (a) | 41,400 | $ 813,510 | |
Constellation Energy Group, Inc. | 10,400 | 871,520 | |
NRG Energy, Inc. (a) | 21,900 | 844,245 | |
2,529,275 | |||
INDUSTRIAL CONGLOMERATES - 0.4% | |||
Industrial Conglomerates - 0.4% | |||
McDermott International, Inc. (a) | 38,900 | 3,226,366 | |
MULTI-UTILITIES - 0.3% | |||
Multi-Utilities - 0.3% | |||
Sempra Energy | 52,200 | 2,751,984 | |
OIL, GAS & CONSUMABLE FUELS - 63.4% | |||
Coal & Consumable Fuels - 2.7% | |||
Arch Coal, Inc. (d) | 163,385 | 4,883,578 | |
CONSOL Energy, Inc. | 248,259 | 10,339,987 | |
Foundation Coal Holdings, Inc. | 25,200 | 878,220 | |
International Coal Group, Inc. (a) | 15,000 | 60,900 | |
Natural Resource Partners LP | 4,700 | 175,310 | |
Peabody Energy Corp. | 209,700 | 8,861,922 | |
25,199,917 | |||
Integrated Oil & Gas - 29.6% | |||
Chevron Corp. (d) | 355,256 | 30,289,127 | |
ConocoPhillips | 636,838 | 51,481,984 | |
Exxon Mobil Corp. | 1,634,598 | 139,153,327 | |
Hess Corp. | 175,700 | 10,752,840 | |
Marathon Oil Corp. | 232,600 | 12,839,520 | |
Occidental Petroleum Corp. | 257,100 | 14,582,712 | |
Petroleo Brasileiro SA Petrobras sponsored ADR | 110,800 | 7,190,920 | |
Suncor Energy, Inc. | 60,100 | 5,434,185 | |
271,724,615 | |||
Oil & Gas Exploration & Production - 20.4% | |||
Aurora Oil & Gas Corp. (a) | 310,900 | 609,364 | |
Cabot Oil & Gas Corp. | 699,000 | 23,905,800 | |
Canadian Natural Resources Ltd. | 34,400 | 2,360,949 | |
Chesapeake Energy Corp. (d) | 524,700 | 17,860,788 | |
EOG Resources, Inc. | 261,300 | 18,317,130 | |
Goodrich Petroleum Corp. (a) | 10,300 | 309,927 | |
Mariner Energy, Inc. (a) | 34,210 | 722,857 | |
Newfield Exploration Co. (a) | 40,600 | 1,950,830 | |
Noble Energy, Inc. | 89,500 | 5,472,030 | |
Petrohawk Energy Corp. (a) | 316,500 | 4,744,335 | |
Plains Exploration & Production Co. (a) | 268,800 | 11,614,848 | |
Quicksilver Resources, Inc. (a) | 258,450 | 10,885,914 | |
Range Resources Corp. | 930,227 | 34,548,631 | |
Talisman Energy, Inc. | 154,800 | 2,831,300 | |
Ultra Petroleum Corp. (a) | 526,700 | 29,121,243 | |
W&T Offshore, Inc. | 88,000 | 2,060,960 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Western Oil Sands, Inc. Class A (a) | 79,000 | $ 2,763,926 | |
XTO Energy, Inc. | 325,800 | 17,765,874 | |
187,846,706 | |||
Oil & Gas Refining & Marketing - 8.8% | |||
Petroplus Holdings AG | 11,817 | 1,140,884 | |
Sunoco, Inc. | 162,200 | 10,821,984 | |
Tesoro Corp. | 101,800 | 5,069,640 | |
Valero Energy Corp. | 946,048 | 63,394,676 | |
80,427,184 | |||
Oil & Gas Storage & Transport - 1.9% | |||
Williams Companies, Inc. | 539,977 | 17,414,258 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 582,612,680 | ||
TOTAL COMMON STOCKS (Cost $628,731,257) | 911,388,014 | ||
Money Market Funds - 5.8% | |||
Fidelity Cash Central Fund, 5.38% (b) | 11,325,628 | 11,325,628 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 42,209,550 | 42,209,550 | |
TOTAL MONEY MARKET FUNDS (Cost $53,535,178) | 53,535,178 | ||
TOTAL INVESTMENT PORTFOLIO - 105.0% (Cost $682,266,435) | 964,923,192 | ||
NET OTHER ASSETS - (5.0)% | (45,906,810) | ||
NET ASSETS - 100% | $ 919,016,382 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 301,787 |
Fidelity Securities Lending Cash Central Fund | 87,241 |
Total | $ 389,028 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 81.0% |
Netherlands Antilles | 7.4% |
Canada | 4.6% |
Cayman Islands | 4.2% |
Denmark | 1.2% |
Others (individually less than 1%) | 1.6% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $41,090,448) - See accompanying schedule: Unaffiliated issuers (cost $628,731,257) | $ 911,388,014 | |
Fidelity Central Funds (cost $53,535,178) | 53,535,178 | |
Total Investments (cost $682,266,435) | $ 964,923,192 | |
Receivable for fund shares sold | 1,380,234 | |
Dividends receivable | 268,751 | |
Distributions receivable from Fidelity Central Funds | 42,212 | |
Prepaid expenses | 4,204 | |
Other receivables | 3,203 | |
Total assets | 966,621,796 | |
Liabilities | ||
Payable for investments purchased | $ 2,637,403 | |
Payable for fund shares redeemed | 1,575,628 | |
Accrued management fee | 441,836 | |
Distribution fees payable | 439,725 | |
Other affiliated payables | 221,106 | |
Other payables and accrued expenses | 80,166 | |
Collateral on securities loaned, at value | 42,209,550 | |
Total liabilities | 47,605,414 | |
Net Assets | $ 919,016,382 | |
Net Assets consist of: | ||
Paid in capital | $ 600,852,967 | |
Accumulated net investment loss | (26,290) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 35,570,540 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 282,619,165 | |
Net Assets | $ 919,016,382 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 48.28 | |
Maximum offering price per share (100/94.25 of $48.28) | $ 51.23 | |
Class T: | $ 49.26 | |
Maximum offering price per share (100/96.50 of $49.26) | $ 51.05 | |
Class B: | $ 46.64 | |
Class C: | $ 46.88 | |
Institutional Class: | $ 49.68 | |
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
Advisor Energy Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 7,824,692 | |
Special dividends | 899,600 | |
Interest | 6,852 | |
Income from Fidelity Central Funds | 389,028 | |
Total income | 9,120,172 | |
Expenses | ||
Management fee | $ 4,513,856 | |
Transfer agent fees | 2,206,663 | |
Distribution fees | 4,553,057 | |
Accounting and security lending fees | 288,058 | |
Custodian fees and expenses | 34,540 | |
Independent trustees' compensation | 2,696 | |
Registration fees | 129,614 | |
Audit | 52,841 | |
Legal | 16,673 | |
Interest | 1,122 | |
Miscellaneous | 162,571 | |
Total expenses before reductions | 11,961,691 | |
Expense reductions | (37,970) | 11,923,721 |
Net investment income (loss) | (2,803,549) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 67,310,609 | |
Foreign currency transactions | (12,598) | |
Total net realized gain (loss) | 67,298,011 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $37,594) | 88,823,208 | |
Assets and liabilities in foreign currencies | (1,106) | |
Total change in net unrealized appreciation (depreciation) | 88,822,102 | |
Net gain (loss) | 156,120,113 | |
Net increase (decrease) in net assets resulting from operations | $ 153,316,564 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (2,803,549) | $ (2,855,811) |
Net realized gain (loss) | 67,298,011 | 151,070,040 |
Change in net unrealized appreciation (depreciation) | 88,822,102 | 36,149,130 |
Net increase (decrease) in net assets resulting from operations | 153,316,564 | 184,363,359 |
Distributions to shareholders from net realized gain | (117,273,909) | (96,405,578) |
Share transactions - net increase (decrease) | 40,324,071 | 199,114,450 |
Redemption fees | 36,406 | 111,350 |
Total increase (decrease) in net assets | 76,403,132 | 287,183,581 |
Net Assets | ||
Beginning of period | 842,613,250 | 555,429,669 |
End of period (including accumulated net investment loss of $26,290 and undistributed net investment income of $6,675, respectively) | $ 919,016,382 | $ 842,613,250 |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 46.39 | $ 40.93 | $ 29.12 | $ 21.65 | $ 20.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.02) F | (.04) | .06 | .07 | .13 |
Net realized and unrealized gain (loss) | 8.42 | 12.30 | 12.21 | 7.50 | 1.30 |
Total from investment operations | 8.40 | 12.26 | 12.27 | 7.57 | 1.43 |
Distributions from net investment income | - | - | (.06) | (.10) | (.11) |
Distributions from net realized gain | (6.51) | (6.81) | (.41) | - | - |
Total distributions | (6.51) | (6.81) | (.47) | (.10) | (.11) |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 | $ 21.65 |
Total Return A, B | 22.08% | 32.90% | 42.69% | 35.08% | 7.07% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.19% | 1.21% | 1.25% | 1.30% | 1.36% |
Expenses net of fee waivers, if any | 1.19% | 1.21% | 1.25% | 1.30% | 1.36% |
Expenses net of all reductions | 1.19% | 1.17% | 1.19% | 1.29% | 1.32% |
Net investment income (loss) | (.05)% F | (.09)% | .19% | .28% | .63% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 268,108 | $ 204,391 | $ 90,342 | $ 44,315 | $ 21,798 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.17)%.
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. Expenses net of fee 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 T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 47.18 | $ 41.46 | $ 29.52 | $ 21.97 | $ 20.61 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.11) F | (.13) | - | .03 | .10 |
Net realized and unrealized gain (loss) | 8.61 | 12.49 | 12.37 | 7.60 | 1.32 |
Total from investment operations | 8.50 | 12.36 | 12.37 | 7.63 | 1.42 |
Distributions from net investment income | - | - | (.03) | (.08) | (.06) |
Distributions from net realized gain | (6.42) | (6.65) | (.41) | - | - |
Total distributions | (6.42) | (6.65) | (.44) | (.08) | (.06) |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 | $ 21.97 |
Total Return A, B | 21.84% | 32.60% | 42.41% | 34.82% | 6.91% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.40% | 1.42% | 1.44% | 1.48% | 1.50% |
Expenses net of fee waivers, if any | 1.40% | 1.42% | 1.44% | 1.48% | 1.50% |
Expenses net of all reductions | 1.39% | 1.38% | 1.39% | 1.47% | 1.47% |
Net investment income (loss) | (.26)% F | (.29)% | (.01)% | .10% | .48% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 382,222 | $ 362,272 | $ 280,820 | $ 201,187 | $ 155,249 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.37)%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 45.10 | $ 39.89 | $ 28.54 | $ 21.28 | $ 20.02 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.34) F | (.35) | (.18) | (.11) | (.01) |
Net realized and unrealized gain (loss) | 8.17 | 11.98 | 11.93 | 7.37 | 1.27 |
Total from investment operations | 7.83 | 11.63 | 11.75 | 7.26 | 1.26 |
Distributions from net realized gain | (6.29) | (6.43) | (.41) | - | - |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 | $ 21.28 |
Total Return A, B | 21.18% | 31.86% | 41.66% | 34.12% | 6.29% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.96% | 1.96% | 1.98% | 2.02% | 2.06% |
Expenses net of fee waivers, if any | 1.96% | 1.96% | 1.98% | 2.02% | 2.06% |
Expenses net of all reductions | 1.95% | 1.92% | 1.93% | 2.01% | 2.02% |
Net investment income (loss) | (.82)% F | (.84)% | (.55)% | (.44)% | (.07)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 116,487 | $ 130,973 | $ 102,003 | $ 68,347 | $ 50,833 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.93)%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 45.33 | $ 40.10 | $ 28.68 | $ 21.38 | $ 20.10 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.32) F | (.34) | (.17) | (.10) | - |
Net realized and unrealized gain (loss) | 8.20 | 12.06 | 11.99 | 7.40 | 1.28 |
Total from investment operations | 7.88 | 11.72 | 11.82 | 7.30 | 1.28 |
Distributions from net realized gain | (6.33) | (6.50) | (.41) | - | - |
Redemption fees added to paid in capital C | - H | .01 | .01 | - H | - H |
Net asset value, end of period | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 | $ 21.38 |
Total Return A, B | 21.22% | 31.96% | 41.70% | 34.14% | 6.37% |
Ratios to Average Net Assets D, G | |||||
Expenses before reductions | 1.91% | 1.92% | 1.94% | 1.99% | 2.01% |
Expenses net of fee waivers, if any | 1.91% | 1.92% | 1.94% | 1.99% | 2.01% |
Expenses net of all reductions | 1.91% | 1.88% | 1.89% | 1.97% | 1.97% |
Net investment income (loss) | (.77)% F | (.79)% | (.51)% | (.41)% | (.02)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 135,072 | $ 125,424 | $ 72,832 | $ 37,206 | $ 22,044 |
Portfolio turnover rate E | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.88)%.
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. Expenses net of fee 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.
Energy
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 47.48 | $ 41.76 | $ 29.64 | $ 22.03 | $ 20.67 |
Income from Investment Operations | |||||
Net investment income (loss) B | .11 E | .12 | .19 | .18 | .22 |
Net realized and unrealized gain (loss) | 8.67 | 12.56 | 12.44 | 7.62 | 1.32 |
Total from investment operations | 8.78 | 12.68 | 12.63 | 7.80 | 1.54 |
Distributions from net investment income | - | - | (.11) | (.19) | (.18) |
Distributions from net realized gain | (6.58) | (6.97) | (.41) | - | - |
Total distributions | (6.58) | (6.97) | (.52) | (.19) | (.18) |
Redemption fees added to paid in capital B | - G | .01 | .01 | - G | - G |
Net asset value, end of period | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 | $ 22.03 |
Total Return A | 22.47% | 33.35% | 43.21% | 35.60% | 7.51% |
Ratios to Average Net Assets C, F | |||||
Expenses before reductions | .88% | .87% | .89% | .90% | .95% |
Expenses net of fee waivers, if any | .88% | .87% | .89% | .90% | .95% |
Expenses net of all reductions | .88% | .83% | .84% | .89% | .91% |
Net investment income (loss) | .25% E | .26% | .54% | .68% | 1.04% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 17,127 | $ 19,553 | $ 9,433 | $ 4,206 | $ 2,652 |
Portfolio turnover rate D | 80% | 139% | 125% | 40% | 41% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Energy Fund (the Fund) (formerly Fidelity Advisor Natural Resources Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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), partnerships deferred trustee compensation 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 | $ 287,689,452 |
Unrealized depreciation | (6,824,768) |
Net unrealized appreciation (depreciation) | 280,864,684 |
Undistributed ordinary income | 1,135,610 |
Undistributed long-term capital gain | 32,949,871 |
Cost for federal income tax purposes | $ 684,058,508 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 36,468,176 | $ 27,866,863 |
Long-term Capital Gains | 80,805,733 | 68,538,715 |
Total | $ 117,273,909 | $ 96,405,578 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Energy
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $647,297,130 and $729,051,628, respectively.
6. 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 .26% 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 .56% 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% | $ 539,831 | $ 27,767 |
Class T | .25% | .25% | 1,710,702 | 28,022 |
Class B | .75% | .25% | 1,141,656 | 861,467 |
Class C | .75% | .25% | 1,160,868 | 278,851 |
$ 4,553,057 | $ 1,196,107 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 209,383 |
Class T | 54,676 |
Class B* | 201,377 |
Class C* | 43,272 |
$ 508,708 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 640,928 | .30 |
Class T | 861,682 | .25 |
Class B | 357,753 | .31 |
Class C | 309,201 | .27 |
Institutional Class | 37,099 | .24 |
$ 2,206,663 |
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.
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 $887 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 7,517,000 | 5.37% | $ 1,122 |
7. 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, which amounted to $1,448 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $87,241.
Energy
9. 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 $22,560 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $1,326. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | |
Class C | $ 206 |
Institutional Class | 4 |
$ 210 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has reimbursed the Fund for related audit and legal expenses and, beginning in June 2007, remediated affected shareholders.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net realized gain | ||
Class A | $ 30,378,115 | $ 17,953,640 |
Class T | 48,658,927 | 46,191,250 |
Class B | 18,097,588 | 17,304,417 |
Class C | 17,464,821 | 12,815,774 |
Institutional Class | 2,674,458 | 2,140,497 |
Total | $ 117,273,909 | $ 96,405,578 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 2,409,415 | 2,831,331 | $ 103,800,389 | $ 124,673,619 |
Reinvestment of distributions | 718,262 | 400,806 | 27,810,279 | 16,449,083 |
Shares redeemed | (1,980,718) | (1,033,179) | (81,122,220) | (44,849,856) |
Net increase (decrease) | 1,146,959 | 2,198,958 | $ 50,488,448 | $ 96,272,846 |
Class T | ||||
Shares sold | 1,250,444 | 1,987,040 | $ 54,473,563 | $ 88,233,274 |
Reinvestment of distributions | 1,161,034 | 1,036,774 | 45,909,961 | 43,334,106 |
Shares redeemed | (2,330,754) | (2,118,138) | (98,273,495) | (92,809,287) |
Net increase (decrease) | 80,724 | 905,676 | $ 2,110,029 | $ 38,758,093 |
Class B | ||||
Shares sold | 451,905 | 1,013,249 | $ 18,746,589 | $ 43,295,228 |
Reinvestment of distributions | 414,158 | 367,313 | 15,588,355 | 14,743,317 |
Shares redeemed | (1,272,145) | (1,034,052) | (50,696,372) | (43,654,702) |
Net increase (decrease) | (406,082) | 346,510 | $ (16,361,428) | $ 14,383,843 |
Class C | ||||
Shares sold | 863,338 | 1,465,945 | $ 36,256,164 | $ 63,632,906 |
Reinvestment of distributions | 385,215 | 261,691 | 14,569,142 | 10,551,203 |
Shares redeemed | (1,134,191) | (777,152) | (44,464,337) | (32,787,487) |
Net increase (decrease) | 114,362 | 950,484 | $ 6,360,969 | $ 41,396,622 |
Institutional Class | ||||
Shares sold | 150,039 | 261,912 | $ 6,836,544 | $ 11,683,224 |
Reinvestment of distributions | 39,397 | 24,127 | 1,561,516 | 1,012,348 |
Shares redeemed | (256,502) | (100,080) | (10,672,007) | (4,392,526) |
Net increase (decrease) | (67,066) | 185,959 | $ (2,273,947) | $ 8,303,046 |
Energy
Advisor Financial Services 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, 2007 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 4.88% | 10.75% | 8.41% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Financial Services Fund - Institutional Class on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Financial Services Fund
Management's Discussion of Fund Performance
Comments from Brian Younger and Richard Manuel, Co-Portfolio Managers of Fidelity® Advisor Financial Services Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the year, the fund's Class A, Class T, Class B and Class C shares returned 4.54%, 4.25%, 3.71% and 3.75%, respectively (excluding sales charges). These returns beat the 2.58% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Financials Index and the 3.04% return of a blended index specific to the fund. This blended index is a combination of the Goldman Sachs® Financial Services Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. For the 12-month period, the fund trailed the S&P 500. The fund got off to a good start in the first two months of the period, modestly outperforming the Goldman Sachs index. Strong security selection and an overweighting in reinsurers boosted performance, as the industry benefited from a mild hurricane season that tempered loss claims. Standout contributors included reinsurers Endurance Specialty Holdings and Platinum Underwriters Holdings. An underweighting in the lagging regional banks group and strong stock selection among property and casualty insurers further aided returns relative to the index. Among the biggest detractors were investment banking and brokerage stocks, notably Goldman Sachs and Lehman Brothers, the latter of which was sold from the fund. We had underweightings in both names during a time when strong capital markets activity boosted their returns. Some disappointments among diversified banks hurt as well. During the last 10 months of the period, the fund declined modestly, but beat the MSCI index even as the subprime mortgage crisis and credit-quality concerns pressured the sector. The fund picked up ground mainly from positive stock selection but also from industry positioning. Reinsurers, regional banks, property/casualty insurers and asset managers/custody banks all added to returns. Contributors included Endurance Specialty and Platinum Underwriters, as well as custody banks Investors Financial Services and State Street. The latter two stocks benefited after State Street bought Investors Financial at a premium price, which helped State Street broaden its offerings. Conversely, a modest overweighting in retail and residential real estate investment trusts (REITs), along with subpar returns from our holdings there, hampered performance. Weak stock picking among investment banking and brokerage companies, including a sizable overweighting and untimely ownership of Goldman Sachs, also hurt. Other detractors included mortgage insurer Radian and mortgage originator Countrywide Financial, both of which suffered from rising default rates in the subprime mortgage market. The fund also lost ground from its stake in Equity Residential, an apartment-related REIT that struggled and was no longer held at period end.
For the year, the fund's Institutional Class shares were up 4.88%. This return beat the 2.58% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Financials Index and the 3.04% return of a blended index specific to the fund. This blended index is a combination of the Goldman Sachs® Financial Services Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. For the 12-month period, the fund trailed the S&P 500. The fund got off to a good start in the first two months of the period, modestly outperforming the Goldman Sachs index. Strong security selection and an overweighting in reinsurers boosted performance, as the industry benefited from a mild hurricane season that tempered loss claims. Standout contributors included reinsurers Endurance Specialty Holdings and Platinum Underwriters Holdings. An underweighting in the lagging regional banks group and strong stock selection among property and casualty insurers further aided returns relative to the index. Among the biggest detractors were investment banking and brokerage stocks, notably Goldman Sachs and Lehman Brothers, the latter of which was sold from the fund. We had underweightings in both names during a time when strong capital markets activity boosted their returns. Some disappointments among diversified banks hurt as well. During the last 10 months of the period, the fund declined modestly, but beat the MSCI index even as the subprime mortgage crisis and credit-quality concerns pressured the sector. The fund picked up ground mainly from positive stock selection but also from industry positioning. Reinsurers, regional banks, property/casualty insurers and asset managers/custody banks all added to returns. Contributors included Endurance Specialty and Platinum Underwriters, as well as custody banks Investors Financial Services and State Street. The latter two stocks benefited after State Street bought Investors Financial at a premium price, which helped State Street broaden its offerings. Conversely, a modest overweighting in retail and residential real estate investment trusts (REITs), along with subpar returns from our holdings there, hampered performance. Weak stock picking among investment banking and brokerage companies, including a sizable overweighting and untimely ownership of Goldman Sachs, also hurt. Other detractors included mortgage insurer Radian and mortgage originator Countrywide Financial, both of which suffered from rising default rates in the subprime mortgage market. The fund also lost ground from its stake in Equity Residential, an apartment-related REIT that struggled and was no longer held at period end.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance to the Goldman Sachs Financial Services Index, which returned 5.63% during that period. On October 1, 2006, the fund began comparing its performance to a different index, the MSCI US Investable Market Financials Index, which returned -2.45% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 3.04%.
Annual Report
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Financial Services
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 922.70 | $ 5.67 |
HypotheticalA | $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | |||
Actual | $ 1,000.00 | $ 921.20 | $ 6.76 |
HypotheticalA | $ 1,000.00 | $ 1,017.75 | $ 7.10 |
Class B | |||
Actual | $ 1,000.00 | $ 919.10 | $ 9.18 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | |||
Actual | $ 1,000.00 | $ 919.30 | $ 9.04 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.49 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 924.10 | $ 4.10 |
HypotheticalA | $ 1,000.00 | $ 1,020.53 | $ 4.31 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.19% |
Class T | 1.42% |
Class B | 1.93% |
Class C | 1.90% |
Institutional Class | .86% |
Annual Report
Advisor Financial Services Fund
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
American International Group, Inc. | 6.0 | 8.8 |
Bank of America Corp. | 5.3 | 4.9 |
JPMorgan Chase & Co. | 5.2 | 5.1 |
Wells Fargo & Co. | 5.2 | 4.2 |
Citigroup, Inc. | 5.1 | 2.6 |
ACE Ltd. | 3.6 | 2.8 |
Fannie Mae | 3.3 | 2.2 |
Platinum Underwriters Holdings Ltd. | 3.1 | 2.3 |
MetLife, Inc. | 2.5 | 2.3 |
American Express Co. | 2.5 | 2.1 |
41.8 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Insurance | 31.6% | |
| Diversified | 18.4% | |
| Capital Markets | 16.3% | |
| Commercial Banks | 13.4% | |
| Thrifts & | 8.9% | |
| All Others* | 11.4% | |
As of January 31, 2007 | |||
| Insurance | 31.8% | |
| Commercial Banks | 18.0% | |
| Capital Markets | 17.4% | |
| Diversified | 13.7% | |
| Real Estate | 7.7% | |
| All Others* | 11.4% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
CAPITAL MARKETS - 16.3% | |||
Asset Management & Custody Banks - 9.0% | |||
Bank New York Mellon Corp. | 101,200 | $ 4,306,060 | |
BlackRock Kelso Capital Corp. (d) | 27,000 | 355,320 | |
EFG International | 51,360 | 2,423,730 | |
Fortress Investment Group LLC (d) | 47,100 | 893,487 | |
Franklin Resources, Inc. | 40,600 | 5,171,222 | |
Janus Capital Group, Inc. | 87,000 | 2,615,220 | |
Julius Baer Holding AG (Bearer) | 20,078 | 1,422,087 | |
KKR Private Equity Investors, LP | 23,000 | 469,200 | |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 37,100 | 756,840 | |
State Street Corp. | 117,982 | 7,908,333 | |
T. Rowe Price Group, Inc. | 46,300 | 2,413,619 | |
The Blackstone Group LP | 47,000 | 1,128,470 | |
29,863,588 | |||
Diversified Capital Markets - 0.7% | |||
UBS AG (NY Shares) | 38,000 | 2,092,660 | |
Investment Banking & Brokerage - 6.6% | |||
Bear Stearns Companies, Inc. | 26,500 | 3,212,330 | |
Charles Schwab Corp. | 172,200 | 3,466,386 | |
Goldman Sachs Group, Inc. | 11,300 | 2,128,242 | |
Lazard Ltd. Class A | 22,500 | 833,175 | |
Merrill Lynch & Co., Inc. | 88,900 | 6,596,380 | |
Morgan Stanley | 86,900 | 5,550,303 | |
21,786,816 | |||
TOTAL CAPITAL MARKETS | 53,743,064 | ||
COMMERCIAL BANKS - 13.4% | |||
Diversified Banks - 8.8% | |||
ICICI Bank Ltd. sponsored ADR | 22,500 | 997,200 | |
Mizrahi Tefahot Bank Ltd. | 28,800 | 203,026 | |
U.S. Bancorp, Delaware | 128,800 | 3,857,560 | |
Wachovia Corp. | 148,098 | 6,991,707 | |
Wells Fargo & Co. | 507,200 | 17,128,144 | |
29,177,637 | |||
Regional Banks - 4.6% | |||
Cathay General Bancorp | 62,121 | 1,901,524 | |
Center Financial Corp., California | 57,600 | 855,936 | |
Colonial Bancgroup, Inc. | 39,300 | 857,133 | |
Commerce Bancorp, Inc. | 37,100 | 1,240,995 | |
Nara Bancorp, Inc. | 36,359 | 536,659 | |
PNC Financial Services Group, Inc. | 88,100 | 5,871,865 | |
SVB Financial Group (a) | 49,978 | 2,632,841 | |
Wintrust Financial Corp. | 2,800 | 110,348 | |
Zions Bancorp | 15,500 | 1,155,525 | |
15,162,826 | |||
TOTAL COMMERCIAL BANKS | 44,340,463 | ||
Shares | Value | ||
CONSUMER FINANCE - 3.9% | |||
Consumer Finance - 3.9% | |||
American Express Co. | 141,500 | $ 8,283,410 | |
Capital One Financial Corp. (d) | 37,230 | 2,634,395 | |
Discover Financial Services (a) | 40,700 | 938,135 | |
Dollar Financial Corp. (a) | 46,862 | 1,174,362 | |
13,030,302 | |||
DIVERSIFIED FINANCIAL SERVICES - 18.4% | |||
Multi-Sector Holdings - 0.1% | |||
Compass Diversified Trust | 19,800 | 306,702 | |
Other Diversifed Financial Services - 15.6% | |||
Bank of America Corp. | 366,072 | 17,359,134 | |
Citigroup, Inc. | 365,469 | 17,019,891 | |
JPMorgan Chase & Co. | 390,794 | 17,198,844 | |
51,577,869 | |||
Specialized Finance - 2.7% | |||
CME Group, Inc. | 8,725 | 4,820,563 | |
Deutsche Boerse AG | 14,800 | 1,730,903 | |
MarketAxess Holdings, Inc. (a) | 133,200 | 2,212,452 | |
8,763,918 | |||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 60,648,489 | ||
HOUSEHOLD DURABLES - 0.0% | |||
Homebuilding - 0.0% | |||
D.R. Horton, Inc. | 200 | 3,264 | |
INSURANCE - 31.6% | |||
Insurance Brokers - 0.9% | |||
National Financial Partners Corp. (d) | 48,200 | 2,234,552 | |
Willis Group Holdings Ltd. | 20,740 | 841,837 | |
3,076,389 | |||
Life & Health Insurance - 6.3% | |||
AFLAC, Inc. | 76,700 | 3,997,604 | |
MetLife, Inc. | 137,800 | 8,298,316 | |
Principal Financial Group, Inc. | 49,500 | 2,791,305 | |
Prudential Financial, Inc. | 63,100 | 5,592,553 | |
20,679,778 | |||
Multi-Line Insurance - 7.8% | |||
American International Group, Inc. | 308,460 | 19,796,961 | |
Assurant, Inc. | 25,100 | 1,273,072 | |
Hartford Financial Services Group, Inc. | 51,500 | 4,731,305 | |
25,801,338 | |||
Property & Casualty Insurance - 8.6% | |||
ACE Ltd. | 208,400 | 12,028,848 | |
Argonaut Group, Inc. | 56,600 | 1,558,198 | |
Aspen Insurance Holdings Ltd. | 121,900 | 2,980,455 | |
Axis Capital Holdings Ltd. | 81,900 | 3,018,015 | |
MBIA, Inc. | 49,700 | 2,788,170 | |
The Travelers Companies, Inc. | 73,700 | 3,742,486 | |
Common Stocks - continued | |||
Shares | Value | ||
INSURANCE - CONTINUED | |||
Property & Casualty Insurance - continued | |||
United America Indemnity Ltd. | 24,600 | $ 528,408 | |
XL Capital Ltd. Class A | 22,800 | 1,775,208 | |
28,419,788 | |||
Reinsurance - 8.0% | |||
Endurance Specialty Holdings Ltd. | 191,370 | 7,157,238 | |
Everest Re Group Ltd. | 23,500 | 2,308,875 | |
Greenlight Capital Re, Ltd. | 600 | 12,600 | |
IPC Holdings Ltd. | 74,966 | 1,859,906 | |
Max Capital Group Ltd. | 118,862 | 3,103,487 | |
Montpelier Re Holdings Ltd. | 37,300 | 591,205 | |
PartnerRe Ltd. | 14,500 | 1,029,935 | |
Platinum Underwriters Holdings Ltd. | 313,700 | 10,414,840 | |
26,478,086 | |||
TOTAL INSURANCE | 104,455,379 | ||
REAL ESTATE INVESTMENT TRUSTS - 4.5% | |||
Mortgage REITs - 0.3% | |||
Annaly Capital Management, Inc. | 63,600 | 919,020 | |
Residential REITs - 1.1% | |||
Equity Lifestyle Properties, Inc. | 43,000 | 1,950,480 | |
UDR, Inc. | 69,600 | 1,607,064 | |
3,557,544 | |||
Retail REITs - 3.1% | |||
CBL & Associates Properties, Inc. | 24,292 | 774,672 | |
Developers Diversified Realty Corp. | 80,400 | 3,859,200 | |
General Growth Properties, Inc. | 80,100 | 3,843,198 | |
Simon Property Group, Inc. | 21,500 | 1,860,395 | |
10,337,465 | |||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 14,814,029 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.1% | |||
Real Estate Management & Development - 1.1% | |||
Mitsubishi Estate Co. Ltd. | 147,000 | 3,739,662 | |
THRIFTS & MORTGAGE FINANCE - 8.9% | |||
Thrifts & Mortgage Finance - 8.9% | |||
BankUnited Financial Corp. Class A (d) | 83,800 | 1,411,192 | |
Countrywide Financial Corp. | 158,236 | 4,457,508 | |
Shares | Value | ||
Fannie Mae | 183,735 | $ 10,994,702 | |
Freddie Mac | 124,900 | 7,153,023 | |
Hudson City Bancorp, Inc. | 158,875 | 1,941,453 | |
MGIC Investment Corp. | 9,100 | 351,806 | |
Radian Group, Inc. | 41,900 | 1,412,449 | |
Washington Mutual, Inc. | 45,900 | 1,722,627 | |
29,444,760 | |||
TOTAL COMMON STOCKS (Cost $261,133,698) | 324,219,412 | ||
Money Market Funds - 1.3% | |||
Fidelity Cash Central Fund, 5.38% (b) | 46,709 | 46,709 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 4,359,050 | 4,359,050 | |
TOTAL MONEY MARKET FUNDS (Cost $4,405,759) | 4,405,759 | ||
TOTAL INVESTMENT PORTFOLIO - 99.4% (Cost $265,539,457) | 328,625,171 |
NET OTHER ASSETS - 0.6% | 2,053,549 | ||
NET ASSETS - 100% | $ 330,678,720 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $756,840 or 0.2% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 89,959 |
Fidelity Securities Lending Cash Central Fund | 55,029 |
Total | $ 144,988 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 81.8% |
Bermuda | 10.3% |
Cayman Islands | 3.8% |
Switzerland | 1.8% |
Japan | 1.1% |
Others (individually less than 1%) | 1.2% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $4,174,120) - See accompanying schedule: Unaffiliated issuers (cost $261,133,698) | $ 324,219,412 | |
Fidelity Central Funds (cost $4,405,759) | 4,405,759 | |
Total Investments (cost $265,539,457) | $ 328,625,171 | |
Receivable for investments sold | 21,852,974 | |
Receivable for fund shares sold | 434,683 | |
Dividends receivable | 365,403 | |
Distributions receivable from Fidelity Central Funds | 6,019 | |
Prepaid expenses | 1,960 | |
Other receivables | 118 | |
Total assets | 351,286,328 | |
Liabilities | ||
Payable for investments purchased | $ 14,633,849 | |
Payable for fund shares redeemed | 1,122,679 | |
Accrued management fee | 167,188 | |
Distribution fees payable | 177,601 | |
Other affiliated payables | 101,864 | |
Other payables and accrued expenses | 45,377 | |
Collateral on securities loaned, at value | 4,359,050 | |
Total liabilities | 20,607,608 | |
Net Assets | $ 330,678,720 | |
Net Assets consist of: | ||
Paid in capital | $ 245,239,320 | |
Undistributed net investment income | 1,282,613 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 21,074,598 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 63,082,189 | |
Net Assets | $ 330,678,720 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 21.02 | |
Maximum offering price per share (100/94.25 of $21.02) | $ 22.30 | |
Class T: | $ 20.94 | |
Maximum offering price per share (100/96.50 of $20.94) | $ 21.70 | |
Class B: | $ 20.44 | |
Class C: | $ 20.40 | |
Institutional Class: | $ 21.32 | |
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
Advisor Financial Services Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 8,566,078 | |
Interest | 31 | |
Income from Fidelity Central Funds | 144,988 | |
Total income | 8,711,097 | |
Expenses | ||
Management fee | $ 2,198,530 | |
Transfer agent fees | 1,179,816 | |
Distribution fees | 2,451,390 | |
Accounting and security lending fees | 159,668 | |
Custodian fees and expenses | 26,340 | |
Independent trustees' compensation | 1,297 | |
Registration fees | 73,263 | |
Audit | 54,439 | |
Legal | 6,439 | |
Miscellaneous | 77,045 | |
Total expenses before reductions | 6,228,227 | |
Expense reductions | (21,657) | 6,206,570 |
Net investment income (loss) | 2,504,527 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $42,189) | 49,122,620 | |
Foreign currency transactions | 52,264 | |
Total net realized gain (loss) | 49,174,884 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (30,971,580) | |
Assets and liabilities in foreign currencies | (3,153) | |
Total change in net unrealized appreciation (depreciation) | (30,974,733) | |
Net gain (loss) | 18,200,151 | |
Net increase (decrease) in net assets resulting from operations | $ 20,704,678 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 2,504,527 | $ 1,896,820 |
Net realized gain (loss) | 49,174,884 | 35,867,755 |
Change in net unrealized appreciation (depreciation) | (30,974,733) | 1,112,137 |
Net increase (decrease) in net assets resulting from operations | 20,704,678 | 38,876,712 |
Distributions to shareholders from net investment income | (1,993,507) | (1,881,748) |
Distributions to shareholders from net realized gain | (54,831,267) | (29,223,665) |
Total distributions | (56,824,774) | (31,105,413) |
Share transactions - net increase (decrease) | (19,915,758) | (47,322,942) |
Redemption fees | 2,369 | 8,919 |
Total increase (decrease) in net assets | (56,033,485) | (39,542,724) |
Net Assets | ||
Beginning of period | 386,712,205 | 426,254,929 |
End of period (including undistributed net investment income of $1,282,613 and undistributed net investment income of $1,145,387, respectively) | $ 330,678,720 | $ 386,712,205 |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.34 | $ 23.01 | $ 22.17 | $ 19.98 | $ 17.83 |
Income from Investment Operations | |||||
Net investment income (loss) C | .23 | .20 | .19 | .14 | .16 |
Net realized and unrealized gain (loss) | .92 | 2.02 | 2.48 | 2.20 | 2.07 |
Total from investment operations | 1.15 | 2.22 | 2.67 | 2.34 | 2.23 |
Distributions from net investment income | (.22) | (.26) | (.07) | (.15) | (.08) |
Distributions from net realized gain | (3.25) | (1.63) | (1.76) | - | - |
Total distributions | (3.47) H | (1.89) | (1.83) | (.15) | (.08) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 | $ 19.98 |
Total Return A,B | 4.54% | 10.32% | 12.60% | 11.76% | 12.57% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.23% | 1.25% | 1.26% | 1.27% | 1.31% |
Expenses net of fee waivers, if any | 1.23% | 1.25% | 1.26% | 1.27% | 1.31% |
Expenses net of all reductions | 1.22% | 1.23% | 1.23% | 1.25% | 1.27% |
Net investment income (loss) | 1.01% | .87% | .88% | .63% | .89% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 106,722 | $ 85,356 | $ 68,012 | $ 58,222 | $ 57,255 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.47 per share is comprised of distributions from net investment income of $.223 and distributions from net realized gain of $3.250 per share.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.26 | $ 22.87 | $ 22.07 | $ 19.90 | $ 17.77 |
Income from Investment Operations | |||||
Net investment income (loss) C | .18 | .15 | .14 | .09 | .12 |
Net realized and unrealized gain (loss) | .91 | 2.02 | 2.47 | 2.19 | 2.07 |
Total from investment operations | 1.09 | 2.17 | 2.61 | 2.28 | 2.19 |
Distributions from net investment income | (.16) | (.15) | (.05) | (.11) | (.06) |
Distributions from net realized gain | (3.25) | (1.63) | (1.76) | - | - |
Total distributions | (3.41) H | (1.78) | (1.81) | (.11) | (.06) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 | $ 19.90 |
Total Return A,B | 4.25% | 10.11% | 12.37% | 11.49% | 12.37% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.46% | 1.47% | 1.48% | 1.50% | 1.53% |
Expenses net of fee waivers, if any | 1.46% | 1.47% | 1.48% | 1.50% | 1.53% |
Expenses net of all reductions | 1.46% | 1.46% | 1.46% | 1.48% | 1.49% |
Net investment income (loss) | .77% | .65% | .66% | .41% | .67% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 95,426 | $ 113,344 | $ 128,388 | $ 144,887 | $ 157,238 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.41 per share is comprised of distributions from net investment income of $.156 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.75 | $ 22.33 | $ 21.65 | $ 19.53 | $ 17.50 |
Income from Investment Operations | |||||
Net investment income (loss) C | .06 | .03 | .03 | (.02) | .03 |
Net realized and unrealized gain (loss) | .89 | 1.97 | 2.41 | 2.16 | 2.03 |
Total from investment operations | .95 | 2.00 | 2.44 | 2.14 | 2.06 |
Distributions from net investment income | (.02) | (.01) | - | (.02) | (.03) |
Distributions from net realized gain | (3.25) | (1.57) | (1.76) | - | - |
Total distributions | (3.26) H | (1.58) | (1.76) | (.02) | (.03) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 | $ 19.53 |
Total Return A,B | 3.71% | 9.52% | 11.78% | 10.96% | 11.80% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.98% | 1.99% | 2.00% | 2.02% | 2.03% |
Expenses net of fee waivers, if any | 1.98% | 1.99% | 2.00% | 2.02% | 2.03% |
Expenses net of all reductions | 1.98% | 1.98% | 1.98% | 2.00% | 1.99% |
Net investment income (loss) | .25% | .13% | .14% | (.11)% | .17% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 64,837 | $ 113,652 | $ 145,046 | $ 179,873 | $ 193,373 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.26 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $3.247 per share.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.74 | $ 22.34 | $ 21.65 | $ 19.53 | $ 17.49 |
Income from Investment Operations | |||||
Net investment income (loss) C | .06 | .04 | .04 | (.01) | .04 |
Net realized and unrealized gain (loss) | .90 | 1.98 | 2.42 | 2.15 | 2.03 |
Total from investment operations | .96 | 2.02 | 2.46 | 2.14 | 2.07 |
Distributions from net investment income | (.05) | (.02) | (.01) | (.02) | (.03) |
Distributions from net realized gain | (3.25) | (1.60) | (1.76) | - | - |
Total distributions | (3.30) H | (1.62) | (1.77) | (.02) | (.03) |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 | $ 19.53 |
Total Return A,B | 3.75% | 9.58% | 11.88% | 10.96% | 11.86% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.94% | 1.94% | 1.95% | 1.97% | 1.99% |
Expenses net of fee waivers, if any | 1.94% | 1.94% | 1.95% | 1.97% | 1.99% |
Expenses net of all reductions | 1.94% | 1.93% | 1.92% | 1.95% | 1.95% |
Net investment income (loss) | .29% | .18% | .19% | (.06)% | .22% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 55,219 | $ 62,469 | $ 72,181 | $ 86,199 | $ 97,434 |
Portfolio turnover rate E | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
H Total distributions of $3.30 per share is comprised of distributions from net investment income of $.049 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.63 | $ 23.29 | $ 22.37 | $ 20.17 | $ 17.95 |
Income from Investment Operations | |||||
Net investment income (loss) B | .31 | .29 | .29 | .23 | .24 |
Net realized and unrealized gain (loss) | .93 | 2.05 | 2.50 | 2.21 | 2.09 |
Total from investment operations | 1.24 | 2.34 | 2.79 | 2.44 | 2.33 |
Distributions from net investment income | (.30) | (.37) | (.11) | (.24) | (.11) |
Distributions from net realized gain | (3.25) | (1.63) | (1.76) | - | - |
Total distributions | (3.55) G | (2.00) | (1.87) | (.24) | (.11) |
Redemption fees added to paid in capital B | - F | - F | - F | - F | - F |
Net asset value, end of period | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 | $ 20.17 |
Total Return A | 4.88% | 10.78% | 13.06% | 12.18% | 13.07% |
Ratios to Average Net Assets C,E | |||||
Expenses before reductions | .89% | .86% | .86% | .88% | .88% |
Expenses net of fee waivers, if any | .89% | .86% | .86% | .88% | .88% |
Expenses net of all reductions | .88% | .85% | .84% | .85% | .84% |
Net investment income (loss) | 1.34% | 1.26% | 1.28% | 1.03% | 1.32% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 8,474 | $ 11,892 | $ 12,629 | $ 13,008 | $ 14,539 |
Portfolio turnover rate D | 53% | 33% | 61% | 74% | 60% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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.
G Total distributions of $3.55 per share is comprised of distributions from net investment income of $.298 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claimed a portion of the payment made to redeeming shareholders as a distribution 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, certain foreign taxes, partnerships, 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 | $ 71,434,069 | |
Unrealized depreciation | (9,334,444) | |
Net unrealized appreciation (depreciation) | 62,099,625 | |
Undistributed ordinary income | 1,925,236 | |
Undistributed long-term capital gain | 17,960,028 | |
Cost for federal income tax purposes | $ 266,525,546 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 3,815,559 | $ 4,156,447 |
Long-term Capital Gains | 53,009,215 | 26,948,966 |
Total | $ 56,824,774 | $ 31,105,413 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Financial Services
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $202,427,940 and $280,526,573, respectively.
6. 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 .26% 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 .56% 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% | $ 259,586 | $ 7,782 |
Class T | .25% | .25% | 566,902 | 4,582 |
Class B | .75% | .25% | 976,364 | 736,511 |
Class C | .75% | .25% | 648,538 | 29,243 |
$ 2,451,390 | $ 778,118 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 26,241 |
Class T | 9,670 |
Class B* | 116,047 |
Class C* | 3,652 |
$ 155,610 |
* 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 | $ 325,105 | .31 |
Class T | 337,616 | .30 |
Class B | 311,050 | .32 |
Class C | 179,832 | .28 |
Institutional Class | 26,213 | .22 |
$ 1,179,816 |
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.
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 $1,508 for the period.
7. 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, which amounted to $749 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $55,029.
Financial Services
9. 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 $11,784 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 1,943 | |
Class B | 443 | |
$ 2,386 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to each of the Funds is not anticipated to have a material impact on such Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 867,686 | $ 793,007 |
Class T | 765,107 | 784,601 |
Class B | 69,445 | 62,350 |
Class C | 139,125 | 47,101 |
Institutional Class | 152,144 | 194,689 |
Total | $ 1,993,507 | $ 1,881,748 |
From net realized gain | ||
Class A | $ 12,753,057 | $ 4,952,004 |
Class T | 15,966,933 | 8,720,889 |
Class B | 15,271,397 | 9,718,109 |
Class C | 9,173,101 | 4,968,829 |
Institutional Class | 1,666,779 | 863,834 |
Total | $ 54,831,267 | $ 29,223,665 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 2,132,186 | 1,351,439 | $ 48,786,912 | $ 31,220,975 |
Reinvestment of distributions | 548,319 | 234,688 | 12,292,012 | 5,118,429 |
Shares redeemed | (1,259,845) | (885,268) | (28,919,491) | (20,266,228) |
Net increase (decrease) | 1,420,660 | 700,859 | $ 32,159,433 | $ 16,073,176 |
Class T | ||||
Shares sold | 372,346 | 426,844 | $ 8,558,636 | $ 9,717,059 |
Reinvestment of distributions | 703,948 | 409,216 | 15,750,996 | 8,897,438 |
Shares redeemed | (1,393,386) | (1,576,453) | (31,851,718) | (35,989,546) |
Net increase (decrease) | (317,092) | (740,393) | $ (7,542,086) | $ (17,375,049) |
Class B | ||||
Shares sold | 242,400 | 302,265 | $ 5,428,899 | $ 6,677,115 |
Reinvestment of distributions | 609,690 | 394,522 | 13,365,246 | 8,409,188 |
Shares redeemed | (2,676,523) | (2,197,220) | (59,803,637) | (49,213,763) |
Net increase (decrease) | (1,824,433) | (1,500,433) | $ (41,009,492) | $ (34,127,460) |
Class C | ||||
Shares sold | 284,897 | 241,582 | $ 6,372,368 | $ 5,385,733 |
Reinvestment of distributions | 345,073 | 190,165 | 7,545,497 | 4,051,037 |
Shares redeemed | (670,985) | (915,599) | (14,937,683) | (20,422,653) |
Net increase (decrease) | (41,015) | (483,852) | $ (1,019,818) | $ (10,985,883) |
Institutional Class | ||||
Shares sold | 75,332 | 67,105 | $ 1,755,195 | $ 1,572,188 |
Reinvestment of distributions | 56,949 | 34,641 | 1,292,278 | 762,982 |
Shares redeemed | (238,050) | (140,689) | (5,551,268) | (3,242,896) |
Net increase (decrease) | (105,769) | (38,943) | $ (2,503,795) | $ (907,726) |
Financial Services
Advisor Health Care 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, 2007 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 8.90% | 9.80% | 8.35% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Health Care Fund - Institutional Class on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Matthew Sabel, who became Portfolio Manager of Fidelity® Advisor Health Care Fund on May 1, 2007
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the year ending July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 8.54%, 8.25%, 7.66% and 7.75%, respectively (excluding sales charges), compared with a gain of 8.15% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Health Care Index, and an advance of 7.72% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund lagged the S&P 500. For the first two months of the period, the fund trailed the Goldman Sachs index due to unfavorable security selection and an overweighting in health care services, as well as less-than-successful stock selection in health care facilities. Conversely, positive stock selection and an underweighting in health care equipment helped relative returns. Detractors during the two-month time frame included disease management company Healthways, biotechnology firm Celgene and underweighted positions in pharmaceutical giant Pfizer and managed health care company Cigna. Contributions came from three health care equipment stocks: medical device makers Boston Scientific and Medtronic - where we benefited from underweighted exposures - and a strong-performing out-of-benchmark position in Stereotaxis, which manufactures cardiac-care equipment. For the last 10 months of the period, the fund outperformed its new MSCI benchmark. Favorable security selection and an underweighting in pharmaceutical stocks were the main factors behind this outperformance. A small out-of-benchmark stake in fertilizers/agricultural chemicals and an overweighting in health care technology also helped. Conversely, the fund was hurt by disappointing stock selection in health care facilities and managed health care, as well as by modest out-of-index exposure to personal products companies. Top contributions to performance during the 10-month period came from a significant underweighting in Pfizer, as well as investments in health care information technology firm Cerner, diagnostic-test manufacturers Inverness Medical Innovations and Biosite - which Inverness acquired during the period - and biotech firm Celgene. Among the detractors were Healthways, pharmaceutical supplier Inyx, assisted living company Brookdale Senior Living and an underweighted position in pharmaceutical firm Schering-Plough. Some of the stocks mentioned here were not held at period end.
For the year ending July 31, 2007, the fund's Institutional Class shares returned 8.90%, compared with a gain of 8.15% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Health Care Index, and an advance of 7.72% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Health Care Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund lagged the S&P 500. For the first two months of the period, the fund trailed the Goldman Sachs index due to unfavorable security selection and an overweighting in health care services, as well as less-than-successful stock selection in health care facilities. Conversely, positive stock selection and an underweighting in health care equipment helped relative returns. Detractors during the two-month time frame included disease management company Healthways, biotechnology firm Celgene and underweighted positions in pharmaceutical giant Pfizer and managed health care company Cigna. Contributions came from three health care equipment stocks: medical device makers Boston Scientific and Medtronic - where we benefited from underweighted exposures - and a strong-performing out-of-benchmark position in Stereotaxis, which manufactures cardiac-care equipment. For the last 10 months of the period, the fund outperformed its new MSCI benchmark. Favorable security selection and an underweighting in pharmaceutical stocks were the main factors behind this outperformance. A small out-of-benchmark stake in fertilizers/agricultural chemicals and an overweighting in health care technology also helped. Conversely, the fund was hurt by disappointing stock selection in health care facilities and managed health care, as well as by modest out-of-index exposure to personal products companies. Top contributions to performance during the 10-month period came from a significant underweighting in Pfizer, as well as investments in health care information technology firm Cerner, diagnostic-test manufacturers Inverness Medical Innovations and Biosite - which Inverness acquired during the period - and biotech firm Celgene. Among the detractors were Healthways, pharmaceutical supplier Inyx, assisted living company Brookdale Senior Living and an underweighted position in pharmaceutical firm Schering-Plough. Some of the stocks mentioned here were not held at period end.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Health Care Index, which returned 3.65% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Health Care Index, which returned 3.92% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 7.72%.
Annual Report
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Health Care
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 997.80 | $ 5.75 |
HypotheticalA | $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | |||
Actual | $ 1,000.00 | $ 996.40 | $ 6.98 |
HypotheticalA | $ 1,000.00 | $ 1,017.80 | $ 7.05 |
Class B | |||
Actual | $ 1,000.00 | $ 993.50 | $ 9.34 |
HypotheticalA | $ 1,000.00 | $ 1,015.42 | $ 9.44 |
Class C | |||
Actual | $ 1,000.00 | $ 993.90 | $ 9.39 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.49 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 999.20 | $ 4.21 |
HypotheticalA | $ 1,000.00 | $ 1,020.58 | $ 4.26 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.16% |
Class T | 1.41% |
Class B | 1.89% |
Class C | 1.90% |
Institutional Class | .85% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Merck & Co., Inc. | 7.6 | 5.8 |
Johnson & Johnson | 7.3 | 10.9 |
UnitedHealth Group, Inc. | 4.2 | 3.1 |
Schering-Plough Corp. | 3.6 | 0.0 |
Bristol-Myers Squibb Co. | 3.2 | 0.0 |
Becton, Dickinson & Co. | 3.1 | 2.4 |
Allergan, Inc. | 2.7 | 4.2 |
Thermo Fisher Scientific, Inc. | 2.3 | 0.0 |
C.R. Bard, Inc. | 2.2 | 3.8 |
McKesson Corp. | 1.9 | 1.2 |
38.1 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Pharmaceuticals | 33.6% | |
| Health Care Providers & Services | 19.7% | |
| Health Care Equipment & Supplies | 15.5% | |
| Biotechnology | 11.3% | |
| Life Sciences Tools & Services | 9.8% | |
| All Others* | 10.1% | |
As of January 31, 2007 | |||
| Pharmaceuticals | 30.3% | |
| Health Care Providers & Services | 23.7% | |
| Health Care Equipment & Supplies | 18.9% | |
| Biotechnology | 11.7% | |
| Health Care Technology | 5.0% | |
| All Others* | 10.4% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
BIOTECHNOLOGY - 11.3% | |||
Biotechnology - 11.3% | |||
3SBio, Inc. sponsored ADR | 182,700 | $ 1,638,819 | |
Alexion Pharmaceuticals, Inc. (a) | 12,100 | 703,736 | |
Alnylam Pharmaceuticals, Inc. (a) | 138,400 | 3,336,824 | |
Altus Pharmaceuticals, Inc. (a) | 50,100 | 511,020 | |
Amgen, Inc. (a) | 191,700 | 10,301,958 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 56,500 | 2,627,815 | |
Arena Pharmaceuticals, Inc. (a) | 36,600 | 418,338 | |
Biogen Idec, Inc. (a) | 89,227 | 5,044,895 | |
Celgene Corp. (a) | 166,207 | 10,065,496 | |
Cephalon, Inc. (a) | 36,800 | 2,765,152 | |
Cleveland Biolabs, Inc. (d) | 11,900 | 113,526 | |
CSL Ltd. | 50,400 | 3,820,257 | |
CytRx Corp. (a) | 163,200 | 494,496 | |
deCODE genetics, Inc. (a)(d) | 171,562 | 607,329 | |
Genentech, Inc. (a) | 30,286 | 2,252,673 | |
Genmab AS (a) | 5,600 | 349,109 | |
Genomic Health, Inc. (a) | 7,000 | 139,300 | |
Gilead Sciences, Inc. (a) | 325,800 | 12,129,534 | |
Grifols SA | 23,723 | 503,151 | |
GTx, Inc. (a) | 162,417 | 2,496,349 | |
Human Genome Sciences, Inc. (a) | 57,800 | 448,528 | |
Indevus Pharmaceuticals, Inc. (a) | 51,965 | 368,432 | |
Isis Pharmaceuticals, Inc. (a)(d) | 127,800 | 1,330,398 | |
MannKind Corp. (a) | 14,200 | 149,952 | |
Medarex, Inc. (a)(d) | 105,900 | 1,499,544 | |
Memory Pharmaceuticals Corp. (a) | 716,999 | 1,441,168 | |
Molecular Insight Pharmaceuticals, Inc. (d) | 80,400 | 651,240 | |
Omrix Biopharmaceuticals, Inc. (a) | 25,655 | 735,785 | |
ONYX Pharmaceuticals, Inc. (a) | 13,700 | 380,997 | |
OREXIGEN Therapeutics, Inc. | 15,100 | 223,933 | |
OSI Pharmaceuticals, Inc. (a) | 58,605 | 1,889,425 | |
PDL BioPharma, Inc. (a) | 53,400 | 1,254,366 | |
Regeneron Pharmaceuticals, Inc. (a) | 4,200 | 62,538 | |
Theravance, Inc. (a) | 45,200 | 1,210,004 | |
Titan Pharmaceuticals, Inc. (a) | 85,800 | 199,914 | |
Transition Therapeutics, Inc. (a) | 28,788 | 375,942 | |
Vertex Pharmaceuticals, Inc. (a) | 59,100 | 1,908,930 | |
Zymogenetics, Inc. (a) | 23,700 | 273,972 | |
74,724,845 | |||
CAPITAL MARKETS - 0.2% | |||
Asset Management & Custody Banks - 0.2% | |||
Fortress Investment Group LLC (d) | 75,300 | 1,428,441 | |
CHEMICALS - 3.4% | |||
Diversified Chemicals - 2.1% | |||
Bayer AG | 80,900 | 5,725,315 | |
Bayer AG sponsored ADR | 118,100 | 8,357,937 | |
14,083,252 | |||
Shares | Value | ||
Fertilizers & Agricultural Chemicals - 1.1% | |||
Agrium, Inc. | 58,500 | $ 2,459,665 | |
Monsanto Co. | 70,100 | 4,517,945 | |
6,977,610 | |||
Specialty Chemicals - 0.2% | |||
Ecolab, Inc. | 16,600 | 699,026 | |
Novozymes AS Series B | 4,000 | 476,659 | |
1,175,685 | |||
TOTAL CHEMICALS | 22,236,547 | ||
CONTAINERS & PACKAGING - 0.2% | |||
Metal & Glass Containers - 0.2% | |||
Ess Dee Aluminium Ltd. | 121,609 | 1,604,912 | |
DIVERSIFIED CONSUMER SERVICES - 0.1% | |||
Specialized Consumer Services - 0.1% | |||
Service Corp. International | 57,400 | 695,688 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Agilent Technologies, Inc. (a) | 18,900 | 721,035 | |
Mettler-Toledo International, Inc. (a) | 3,500 | 333,060 | |
1,054,095 | |||
FOOD & STAPLES RETAILING - 0.6% | |||
Drug Retail - 0.6% | |||
CVS Caremark Corp. | 106,600 | 3,751,254 | |
FOOD PRODUCTS - 1.7% | |||
Agricultural Products - 0.7% | |||
Bunge Ltd. | 22,500 | 2,038,725 | |
Nutreco Holding NV | 31,100 | 2,329,924 | |
4,368,649 | |||
Packaged Foods & Meats - 1.0% | |||
BioMar Holding AS | 12,500 | 686,163 | |
Cermaq ASA | 161,600 | 3,008,098 | |
Leroy Seafood Group ASA | 18,400 | 438,787 | |
Marine Harvest ASA (a) | 2,184,000 | 2,761,474 | |
6,894,522 | |||
TOTAL FOOD PRODUCTS | 11,263,171 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 15.4% | |||
Health Care Equipment - 12.3% | |||
American Medical Systems Holdings, Inc. (a)(d) | 89,100 | 1,628,748 | |
ArthroCare Corp. (a) | 70,800 | 3,583,896 | |
Aspect Medical Systems, Inc. (a) | 237,900 | 3,237,819 | |
Baxter International, Inc. | 131,030 | 6,892,178 | |
Becton, Dickinson & Co. | 268,700 | 20,517,932 | |
BioLase Technology, Inc. (a)(d) | 53,000 | 373,650 | |
C.R. Bard, Inc. | 183,479 | 14,397,597 | |
Cytyc Corp. (a) | 40,500 | 1,705,050 | |
Electro-Optical Sciences, Inc. (a) | 177,923 | 1,161,837 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES - CONTINUED | |||
Health Care Equipment - continued | |||
Electro-Optical Sciences, Inc. warrants 11/2/11 (a)(f) | 60,018 | $ 202,068 | |
Gen-Probe, Inc. (a) | 129,600 | 8,166,096 | |
Golden Meditech Co. Ltd. (a) | 288,000 | 145,714 | |
Gyrus Group PLC (a) | 37,800 | 331,528 | |
Hologic, Inc. (a) | 17,600 | 911,680 | |
I-Flow Corp. (a)(d) | 145,523 | 2,577,212 | |
Integra LifeSciences Holdings Corp. (a) | 7,100 | 352,515 | |
Intuitive Surgical, Inc. (a)(d) | 5,388 | 1,145,543 | |
IRIS International, Inc. (a) | 28,800 | 458,208 | |
Kyphon, Inc. (a) | 37,700 | 2,473,874 | |
Mentor Corp. | 27,500 | 1,082,125 | |
Minrad International, Inc. (a) | 61,300 | 291,175 | |
NeuroMetrix, Inc. (a) | 64,400 | 540,960 | |
Northstar Neuroscience, Inc. | 171,400 | 1,756,850 | |
Orthofix International NV (a) | 7,700 | 331,562 | |
Phonak Holding AG | 9,351 | 907,471 | |
Quidel Corp. (a) | 19,900 | 296,112 | |
Respironics, Inc. (a) | 74,800 | 3,422,100 | |
Sirona Dental Systems, Inc. (a) | 29,435 | 1,040,822 | |
The Spectranetics Corp. (a) | 64,309 | 836,660 | |
ThermoGenesis Corp. (a) | 123,934 | 293,724 | |
Varian Medical Systems, Inc. (a) | 8,900 | 363,120 | |
William Demant Holding AS (a) | 3,800 | 380,849 | |
81,806,675 | |||
Health Care Supplies - 3.1% | |||
Cooper Companies, Inc. | 19,043 | 954,626 | |
DJO, Inc. (a) | 43,241 | 2,053,083 | |
Immucor, Inc. (a) | 25,500 | 794,580 | |
Inverness Medical Innovations, Inc. (a) | 243,787 | 11,801,729 | |
Lifecore Biomedical, Inc. (a) | 3,900 | 59,631 | |
Microtek Medical Holdings, Inc. (a) | 291,753 | 1,426,672 | |
Omega Pharma SA | 14,854 | 1,287,009 | |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 260,000 | 645,704 | |
West Pharmaceutical Services, Inc. | 33,200 | 1,536,496 | |
20,559,530 | |||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 102,366,205 | ||
HEALTH CARE PROVIDERS & SERVICES - 19.7% | |||
Health Care Distributors & Services - 2.9% | |||
Chindex International, Inc. (a) | 3,600 | 77,832 | |
Henry Schein, Inc. (a) | 29,400 | 1,597,596 | |
McKesson Corp. | 215,600 | 12,453,056 | |
Profarma Distribuidora de Produtos Farmaceuticos SA | 253,000 | 4,800,313 | |
18,928,797 | |||
Shares | Value | ||
Health Care Facilities - 4.5% | |||
Acibadem Saglik Hizmetleri AS | 325,923 | $ 2,283,973 | |
Apollo Hospitals Enterprise Ltd. | 98,866 | 1,191,238 | |
Bangkok Dusit Medical Service PCL (For. Reg.) | 633,900 | 853,453 | |
Brookdale Senior Living, Inc. (d) | 283,950 | 11,360,840 | |
Bumrungrad Hospital PCL (For. Reg.) | 1,807,100 | 2,553,307 | |
Community Health Systems, Inc. (a) | 40,200 | 1,563,780 | |
Emeritus Corp. (a) | 137,890 | 3,378,305 | |
Five Star Quality Care, Inc. (a)(d) | 99,800 | 738,520 | |
HealthSouth Corp. (a)(d) | 30,000 | 474,000 | |
LifePoint Hospitals, Inc. (a) | 500 | 14,775 | |
Raffles Medical Group Ltd. | 38,000 | 39,354 | |
Southern Cross Healthcare Group | 32,600 | 357,608 | |
Sun Healthcare Group, Inc. (a) | 280,000 | 3,785,600 | |
VCA Antech, Inc. (a) | 30,520 | 1,200,657 | |
29,795,410 | |||
Health Care Services - 5.3% | |||
Diagnosticos da America SA | 273,300 | 6,576,490 | |
Emergency Medical Services Corp. | 100 | 3,901 | |
Express Scripts, Inc. (a) | 145,300 | 7,283,889 | |
HAPC, Inc. unit (a) | 215,800 | 1,361,698 | |
Health Grades, Inc. (a) | 338,105 | 2,106,394 | |
Healthways, Inc. (a)(d) | 27,233 | 1,190,082 | |
HMS Holdings Corp. (a) | 68,200 | 1,297,846 | |
LHC Group, Inc. (a) | 157,265 | 3,808,958 | |
Lincare Holdings, Inc. (a) | 46,100 | 1,645,309 | |
Nighthawk Radiology Holdings, Inc. (a) | 194,800 | 4,018,724 | |
Omnicare, Inc. | 168,729 | 5,595,054 | |
Rural/Metro Corp. (a) | 13,331 | 59,990 | |
34,948,335 | |||
Managed Health Care - 7.0% | |||
Health Net, Inc. (a) | 42,500 | 2,105,450 | |
Healthspring, Inc. (a) | 19,300 | 330,030 | |
Humana, Inc. (a) | 124,400 | 7,972,796 | |
UnitedHealth Group, Inc. | 579,509 | 28,065,621 | |
WellPoint, Inc. (a) | 108,800 | 8,173,056 | |
46,646,953 | |||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 130,319,495 | ||
HEALTH CARE TECHNOLOGY - 1.6% | |||
Health Care Technology - 1.6% | |||
Allscripts Healthcare Solutions, Inc. (a)(d) | 146,647 | 3,336,219 | |
Cerner Corp. (a) | 82,400 | 4,356,488 | |
Eclipsys Corp. (a) | 98,967 | 2,150,553 | |
Vital Images, Inc. (a) | 35,900 | 699,691 | |
10,542,951 | |||
HOTELS, RESTAURANTS & LEISURE - 0.1% | |||
Leisure Facilities - 0.1% | |||
Life Time Fitness, Inc. (a)(d) | 19,000 | 976,980 | |
Common Stocks - continued | |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
WebMD Health Corp. Class A (a) | 42,289 | $ 1,936,413 | |
LIFE SCIENCES TOOLS & SERVICES - 9.8% | |||
Life Sciences Tools & Services - 9.8% | |||
AMAG Pharmaceuticals, Inc. (a) | 83,701 | 4,493,907 | |
Applera Corp. - Applied Biosystems Group | 113,600 | 3,546,592 | |
Bruker BioSciences Corp. (a) | 422,223 | 3,306,006 | |
Covance, Inc. (a) | 23,700 | 1,672,509 | |
Exelixis, Inc. (a) | 342,797 | 3,321,703 | |
Illumina, Inc. (a) | 47,272 | 2,154,185 | |
Luminex Corp. (a)(d) | 75,400 | 900,276 | |
Medivation, Inc. (a) | 17,600 | 288,816 | |
Millipore Corp. (a)(d) | 115,470 | 9,077,097 | |
PerkinElmer, Inc. | 441,300 | 12,281,379 | |
Pharmaceutical Product Development, Inc. | 39,400 | 1,319,900 | |
QIAGEN NV (a) | 126,500 | 2,175,800 | |
Thermo Fisher Scientific, Inc. (a) | 287,100 | 14,989,491 | |
Third Wave Technologies, Inc. (a) | 46,900 | 341,901 | |
Waters Corp. (a) | 89,800 | 5,231,748 | |
65,101,310 | |||
MACHINERY - 0.0% | |||
Industrial Machinery - 0.0% | |||
Pall Corp. | 9,100 | 377,832 | |
PERSONAL PRODUCTS - 0.9% | |||
Personal Products - 0.9% | |||
Bare Escentuals, Inc. | 138,692 | 3,912,501 | |
Hengan International Group Co. Ltd. | 656,000 | 2,204,930 | |
6,117,431 | |||
PHARMACEUTICALS - 33.6% | |||
Pharmaceuticals - 33.6% | |||
Adams Respiratory Therapeutics, Inc. (a)(d) | 135,700 | 5,022,257 | |
Akorn, Inc. (a) | 47,000 | 318,660 | |
Allergan, Inc. (d) | 306,220 | 17,800,569 | |
Aurobindo Pharma Ltd. | 14,696 | 237,974 | |
Barr Pharmaceuticals, Inc. (a) | 117,400 | 6,013,228 | |
BioMimetic Therapeutics, Inc. | 331,162 | 4,778,668 | |
Bristol-Myers Squibb Co. (d) | 751,200 | 21,341,592 | |
Cadence Pharmaceuticals, Inc. (d) | 33,446 | 411,386 | |
China Shineway Pharmaceutical Group Ltd. | 1,608,000 | 1,155,553 | |
Collagenex Pharmaceuticals, Inc. (a) | 72,600 | 846,516 | |
Eczacibasi ILAC Sanayi TAS (a) | 82,000 | 351,164 | |
Elan Corp. PLC sponsored ADR (a) | 78,100 | 1,462,813 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 41,500 | 1,411,415 | |
Eurand NV | 52,068 | 746,655 | |
Forest Laboratories, Inc. (a) | 45,300 | 1,821,060 | |
Shares | Value | ||
Inspire Pharmaceuticals, Inc. (a) | 65,500 | $ 360,250 | |
Jazz Pharmaceuticals, Inc. (a) | 34,787 | 493,628 | |
Johnson & Johnson | 799,458 | 48,367,209 | |
Merck & Co., Inc. | 1,011,500 | 50,220,970 | |
Nexmed, Inc. (a) | 156,500 | 259,790 | |
Novo Nordisk AS Series B sponsored ADR | 3,200 | 335,712 | |
Pfizer, Inc. | 496,820 | 11,680,238 | |
Schering-Plough Corp. | 824,700 | 23,536,938 | |
Shire PLC sponsored ADR | 112,600 | 8,308,754 | |
Sirtris Pharmaceuticals, Inc. | 3,400 | 42,364 | |
Stada Arzneimittel AG | 14,100 | 922,819 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 8,100 | 340,362 | |
Wyeth | 238,942 | 11,593,466 | |
Xenoport, Inc. (a) | 53,000 | 2,262,570 | |
222,444,580 | |||
SOFTWARE - 0.2% | |||
Systems Software - 0.2% | |||
Quality Systems, Inc. | 27,648 | 1,071,084 | |
TOTAL COMMON STOCKS (Cost $569,972,738) | 658,013,234 | ||
Convertible Bonds - 0.1% | ||||
Principal Amount | ||||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% | ||||
Health Care Supplies - 0.1% | ||||
Inverness Medical Innovations, Inc. 3% 5/15/16 (e) | $ 719,000 | 852,015 | ||
Money Market Funds - 5.8% | |||
Shares | |||
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 38,199,751 | 38,199,751 | |
TOTAL INVESTMENT PORTFOLIO - 105.2% (Cost $608,891,489) | 697,065,000 |
NET OTHER ASSETS - (5.2)% | (34,704,034) | ||
NET ASSETS - 100% | $ 662,360,966 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $852,015 or 0.1% of net assets. |
(f) 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 $202,068 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Electro-Optical Sciences, Inc. warrants 11/2/11 | 11/1/06 | $ 6 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 215,043 |
Fidelity Securities Lending Cash Central Fund | 219,537 |
Total | $ 434,580 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.5% |
Germany | 2.2% |
Brazil | 1.7% |
United Kingdom | 1.4% |
Others (individually less than 1%) | 6.2% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $36,931,789) - See accompanying schedule: Unaffiliated issuers (cost $570,691,738) | $ 658,865,249 | |
Fidelity Central Funds (cost $38,199,751) | 38,199,751 | |
Total Investments (cost $608,891,489) | $ 697,065,000 | |
Receivable for investments sold | 23,440,698 | |
Receivable for fund shares sold | 556,030 | |
Dividends receivable | 300,696 | |
Interest receivable | 4,554 | |
Distributions receivable from Fidelity Central Funds | 65,357 | |
Prepaid expenses | 1,347 | |
Other receivables | 18,724 | |
Total assets | 721,452,406 | |
Liabilities | ||
Payable to custodian bank | $ 1,121,602 | |
Payable for investments purchased | 16,601,639 | |
Payable for fund shares redeemed | 2,243,497 | |
Accrued management fee | 322,082 | |
Distribution fees payable | 324,409 | |
Other affiliated payables | 194,064 | |
Other payables and accrued expenses | 84,396 | |
Collateral on securities loaned, at value | 38,199,751 | |
Total liabilities | 59,091,440 | |
Net Assets | $ 662,360,966 | |
Net Assets consist of: | ||
Paid in capital | $ 526,959,442 | |
Accumulated net investment loss | (199) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 47,267,140 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 88,134,583 | |
Net Assets | $ 662,360,966 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 22.90 | |
Maximum offering price per share (100/94.25 of $22.90) | $ 24.30 | |
Class T: | $ 22.39 | |
Maximum offering price per share (100/96.50 of $22.39) | $ 23.20 | |
Class B: | $ 21.29 | |
Class C: | $ 21.29 | |
Institutional Class: | $ 23.62 | |
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
Fund Name
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 7,225,654 | |
Interest | 8,234 | |
Income from Fidelity Central Funds | 434,580 | |
Total income | 7,668,468 | |
Expenses | ||
Management fee | $ 4,031,988 | |
Transfer agent fees | 2,310,550 | |
Distribution fees | 4,245,973 | |
Accounting and security lending fees | 264,496 | |
Custodian fees and expenses | 38,150 | |
Independent trustees' compensation | 2,379 | |
Registration fees | 87,759 | |
Audit | 53,006 | |
Legal | 11,793 | |
Miscellaneous | 170,794 | |
Total expenses before reductions | 11,216,888 | |
Expense reductions | (87,066) | 11,129,822 |
Net investment income (loss) | (3,461,354) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 78,376,128 | |
Foreign currency transactions | (66,522) | |
Total net realized gain (loss) | 78,309,606 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $37,025) | (16,375,226) | |
Assets and liabilities in foreign currencies | (1,912) | |
Total change in net unrealized appreciation (depreciation) | (16,377,138) | |
Net gain (loss) | 61,932,468 | |
Net increase (decrease) in net assets resulting from operations | $ 58,471,114 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (3,461,354) | $ (6,125,419) |
Net realized gain (loss) | 78,309,606 | 99,186,502 |
Change in net unrealized appreciation (depreciation) | (16,377,138) | (66,787,109) |
Net increase (decrease) in net assets resulting from operations | 58,471,114 | 26,273,974 |
Distributions to shareholders from net realized gain | (83,314,166) | (1,408,688) |
Share transactions - net increase (decrease) | (46,973,972) | (90,540,183) |
Redemption fees | 16,966 | 29,238 |
Total increase (decrease) in net assets | (71,800,058) | (65,645,659) |
Net Assets | ||
Beginning of period | 734,161,024 | 799,806,683 |
End of period (including accumulated net investment loss of $199 and accumulated net investment loss of $327, respectively) | $ 662,360,966 | $ 734,161,024 |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.77 | $ 22.94 | $ 18.91 | $ 18.29 | $ 16.51 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.03) | (.09) | (.05) | (.05) | - G |
Net realized and unrealized gain (loss) | 1.91 | .96 | 4.08 | .67 | 1.78 |
Total from investment operations | 1.88 | .87 | 4.03 | .62 | 1.78 |
Distributions from net realized gain | (2.75) | (.04) | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 | $ 18.29 |
Total Return A,B | 8.54% | 3.79% | 21.31% | 3.39% | 10.78% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.22% | 1.25% | 1.28% | 1.32% | 1.34% |
Expenses net of fee waivers, if any | 1.22% | 1.25% | 1.28% | 1.32% | 1.34% |
Expenses net of all reductions | 1.21% | 1.21% | 1.26% | 1.29% | 1.27% |
Net investment income (loss) | (.14)% | (.38)% | (.22)% | (.26)% | (.01)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 234,656 | $ 199,221 | $ 139,158 | $ 104,258 | $ 108,692 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 23.26 | $ 22.50 | $ 18.60 | $ 18.03 | $ 16.31 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.15) | (.09) | (.09) | (.04) |
Net realized and unrealized gain (loss) | 1.87 | .95 | 3.99 | .66 | 1.76 |
Total from investment operations | 1.78 | .80 | 3.90 | .57 | 1.72 |
Distributions from net realized gain | (2.65) | (.04) | - | - | - |
Redemption fees added to paid in capital C | -G | -G | -G | -G | - G |
Net asset value, end of period | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 | $ 18.03 |
Total Return A,B | 8.25% | 3.55% | 20.97% | 3.16% | 10.55% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.48% | 1.50% | 1.53% | 1.56% | 1.59% |
Expenses net of fee waivers, if any | 1.48% | 1.50% | 1.53% | 1.56% | 1.59% |
Expenses net of all reductions | 1.47% | 1.47% | 1.51% | 1.53% | 1.51% |
Net investment income (loss) | (.40)% | (.63)% | (.47)% | (.51)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 186,628 | $ 218,280 | $ 243,353 | $ 243,176 | $ 264,115 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.17 | $ 21.55 | $ 17.91 | $ 17.45 | $ 15.86 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.20) | (.25) | (.19) | (.18) | (.12) |
Net realized and unrealized gain (loss) | 1.79 | .91 | 3.83 | .64 | 1.71 |
Total from investment operations | 1.59 | .66 | 3.64 | .46 | 1.59 |
Distributions from net realized gain | (2.47) | (.04) | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | -G |
Net asset value, end of period | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 | $ 17.45 |
Total Return A,B | 7.66% | 3.06% | 20.32% | 2.64% | 10.03% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.99% | 2.01% | 2.04% | 2.06% | 2.05% |
Expenses net of fee waivers, if any | 1.99% | 2.01% | 2.04% | 2.06% | 2.05% |
Expenses net of all reductions | 1.98% | 1.98% | 2.01% | 2.03% | 1.98% |
Net investment income (loss) | (.91)% | (1.14)% | (.98)% | (1.01)% | (.73)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 113,384 | $ 180,364 | $ 266,319 | $ 285,299 | $ 317,906 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.24 | $ 21.61 | $ 17.94 | $ 17.47 | $ 15.87 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.19) | (.24) | (.17) | (.17) | (.11) |
Net realized and unrealized gain (loss) | 1.79 | .91 | 3.84 | .64 | 1.71 |
Total from investment operations | 1.60 | .67 | 3.67 | .47 | 1.60 |
Distributions from net realized gain | (2.55) | (.04) | - | - | - |
Redemption fees added to paid in capital C | -G | -G | -G | - G | - G |
Net asset value, end of period | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 | $ 17.47 |
Total Return A,B | 7.75% | 3.10% | 20.46% | 2.69% | 10.08% |
Ratios to Average Net Assets D, F | |||||
Expenses before reductions | 1.94% | 1.94% | 1.97% | 2.00% | 2.00% |
Expenses net of fee waivers, if any | 1.94% | 1.94% | 1.97% | 2.00% | 2.00% |
Expenses net of all reductions | 1.93% | 1.91% | 1.94% | 1.97% | 1.92% |
Net investment income (loss) | (.86)% | (1.07)% | (.91)% | (.95)% | (.67)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 105,519 | $ 115,644 | $ 131,277 | $ 130,184 | $ 150,576 |
Portfolio turnover rate E | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Health Care
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 24.43 | $ 23.48 | $ 19.28 | $ 18.58 | $ 16.70 |
Income from Investment Operations | |||||
Net investment income (loss) B | .05 | - F | .04 | .03 | .06 |
Net realized and unrealized gain (loss) | 1.96 | .99 | 4.16 | .67 | 1.82 |
Total from investment operations | 2.01 | .99 | 4.20 | .70 | 1.88 |
Distributions from net realized gain | (2.82) | (.04) | - | - | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | - F |
Net asset value, end of period | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 | $ 18.58 |
Total Return A | 8.90% | 4.21% | 21.78% | 3.77% | 11.26% |
Ratios to Average Net Assets C,E | |||||
Expenses before reductions | .88% | .86% | .88% | .91% | .96% |
Expenses net of fee waivers, if any | .88% | .86% | .88% | .91% | .96% |
Expenses net of all reductions | .87% | .83% | .85% | .88% | .88% |
Net investment income (loss) | .19% | .01% | .18% | .14% | .37% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 22,174 | $ 20,652 | $ 19,698 | $ 20,358 | $ 23,364 |
Portfolio turnover rate D | 141% | 99% | 71% | 60% | 120% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Health Care Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income and capital gain distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, deferred trustees compensation 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 | $ 106,392,713 | |
Unrealized depreciation | (19,142,336) | |
Net unrealized appreciation (depreciation) | 87,250,377 | |
Undistributed ordinary income | 6,698,838 | |
Undistributed long-term capital gain | 37,019,576 | |
Cost for federal income tax purposes | $ 609,814,623 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 9,215,258 | $ - |
Long-term Capital Gains | 74,098,908 | 1,408,688 |
Total | $ 83,314,166 | $ 1,408,688 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
Health Care
3. Significant Accounting Policies - continued
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,004,019,333 and $1,136,601,966, respectively.
6. 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 .26% 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 .56% 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% | $ 560,826 | $ 25,284 |
Class T | .25% | .25% | 1,042,480 | 8,440 |
Class B | .75% | .25% | 1,498,719 | 1,129,920 |
Class C | .75% | .25% | 1,143,948 | 68,529 |
$ 4,245,973 | $ 1,232,173 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 57,177 |
Class T | 24,588 |
Class B* | 214,242 |
Class C* | 5,686 |
$ 301,693 |
* 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 | $ 725,923 | .32 |
Class T | 685,061 | .33 |
Class B | 514,752 | .34 |
Class C | 335,870 | .29 |
Institutional Class | 48,944 | .24 |
$ 2,310,550 |
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.
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 $4,268 for the period.
7. 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, which amounted to $1,365 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $219,537.
Health Care
9. 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 $55,299 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 15,349 | |
Class B | 505 | |
Class C | 1,600 | |
Institutional Class | 273 | |
$ 17,727 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to each of the Funds is not anticipated to have a material impact on such Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net realized gain | ||
Class A | $ 23,887,113 | $ 268,383 |
Class T | 24,697,844 | 418,518 |
Class B | 18,914,669 | 451,789 |
Class C | 13,345,526 | 237,307 |
Institutional Class | 2,469,014 | 32,691 |
Total | $ 83,314,166 | $ 1,408,688 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 3,628,491 | 4,246,771 | $ 84,047,399 | $ 100,545,647 |
Reinvestment of distributions | 919,326 | 9,593 | 20,489,356 | 231,281 |
Shares redeemed | (2,679,409) | (1,943,098) | (62,216,884) | (45,790,984) |
Net increase (decrease) | 1,868,408 | 2,313,266 | $ 42,319,871 | $ 54,985,944 |
Class T | ||||
Shares sold | 811,354 | 1,483,213 | $ 18,411,031 | $ 34,397,018 |
Reinvestment of distributions | 1,065,004 | 16,686 | 23,268,418 | 394,126 |
Shares redeemed | (2,924,887) | (2,931,043) | (66,315,193) | (67,817,881) |
Net increase (decrease) | (1,048,529) | (1,431,144) | $ (24,635,744) | $ (33,026,737) |
Class B | ||||
Shares sold | 416,759 | 602,620 | $ 8,968,832 | $ 13,347,616 |
Reinvestment of distributions | 800,087 | 17,559 | 16,715,113 | 396,669 |
Shares redeemed | (4,028,295) | (4,838,970) | (87,078,801) | (107,126,893) |
Net increase (decrease) | (2,811,449) | (4,218,791) | $ (61,394,856) | $ (93,382,608) |
Class C | ||||
Shares sold | 498,290 | 622,433 | $ 10,716,280 | $ 13,817,015 |
Reinvestment of distributions | 508,339 | 8,336 | 10,614,471 | 188,806 |
Shares redeemed | (1,249,593) | (1,506,077) | (26,990,765) | (33,350,524) |
Net increase (decrease) | (242,964) | (875,308) | $ (5,660,014) | $ (19,344,703) |
Institutional Class | ||||
Shares sold | 415,448 | 197,168 | $ 10,086,881 | $ 4,832,048 |
Reinvestment of distributions | 77,688 | 990 | 1,779,821 | 24,473 |
Shares redeemed | (399,590) | (191,717) | (9,469,931) | (4,628,600) |
Net increase (decrease) | 93,546 | 6,441 | $ 2,396,771 | $ 227,921 |
Health Care
Advisor Industrials 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, 2007 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 25.53% | 19.60% | 10.72% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Industrials Fund - Institutional Class on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 25.13%, 24.82%, 24.18% and 24.25%, respectively (excluding sales charges), trailing the 26.68% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Industrials Index and the 26.28% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Cyclical Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly lagged the Goldman Sachs index during the first two months of the period. An overweighting and unfavorable stock selection in the construction and engineering group worked against the fund, along with mediocre stock picking in heavy electrical equipment and diversified chemicals. Conversely, stock picking in three groups - auto manufacturers, steel, and construction and farm machinery/heavy trucks - was beneficial. Among individual holdings, engineering and construction holdings Fluor and Netherlands-based Chicago Bridge & Iron were weak, as falling energy prices threatened the cancellation of some of the companies' projects. On the positive side, not owning weak-performing auto manufacturer and major index component DaimlerChrysler during this two-month stretch aided our results. During the final 10 months of the period, the fund's return fell slightly short of the MSCI index. Stock selection in industrial conglomerates dragged down our performance, along with a sizable underweighting in the strong-performing construction and farm machinery/heavy trucks segment. On the positive side, the fund's performance benefited from an overweighting and effective stock selection in construction and engineering. Additionally, our picks in heavy electrical equipment added value. Among individual holdings, overweighting US Airways was a mistake. This stock was hampered by difficult earnings comparisons from the prior year, as well as by investors' disappointment over unfulfilled hopes for industry consolidation, rising fuel costs and the increasing number of airline shares available for purchase due to another carrier's emergence from bankruptcy. An underweighting and untimely ownership of heavy equipment maker Caterpillar also detracted, as did shying away from commercial aircraft maker and index component Boeing. Looking at contributors, Shaw Group and Foster Wheeler both rode strong global markets in commercial construction. Switzerland-based ABB, a provider of power transmission and automation equipment for utility and industrial customers, also contributed to performance. Caterpillar and Foster Wheeler were sold by period end.
During the past year, the fund's Institutional Class shares returned 25.53%, trailing the 26.68% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Industrials Index and the 26.28% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Cyclical Industries Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly lagged the Goldman Sachs index during the first two months of the period. An overweighting and unfavorable stock selection in the construction and engineering group worked against the fund, along with mediocre stock picking in heavy electrical equipment and diversified chemicals. Conversely, stock picking in three groups - auto manufacturers, steel, and construction and farm machinery/heavy trucks - was beneficial. Among individual holdings, engineering and construction holdings Fluor and Netherlands-based Chicago Bridge & Iron were weak, as falling energy prices threatened the cancellation of some of the companies' projects. On the positive side, not owning weak-performing auto manufacturer and major index component DaimlerChrysler during this two-month stretch aided our results. During the final 10 months of the period, the fund's return fell slightly short of the MSCI index. Stock selection in industrial conglomerates dragged down our performance, along with a sizable underweighting in the strong-performing construction and farm machinery/heavy trucks segment. On the positive side, the fund's performance benefited from an overweighting and effective stock selection in construction and engineering. Additionally, our picks in heavy electrical equipment added value. Among individual holdings, overweighting US Airways was a mistake. This stock was hampered by difficult earnings comparisons from the prior year as well as by investors' disappointment over unfulfilled hopes for industry consolidation, rising fuel costs and the increasing number of airline shares available for purchase due to another carrier's emergence from bankruptcy. An underweighting and untimely ownership of heavy equipment maker Caterpillar also detracted, as did shying away from commercial aircraft maker and index component Boeing. Looking at contributors, Shaw Group and Foster Wheeler both rode strong global markets in commercial construction. Switzerland-based ABB, a provider of power transmission and automation equipment for utility and industrial customers, also contributed to performance. Caterpillar and Foster Wheeler were sold by period end.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Cyclical Industries Index, which returned 4.40% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Industrials Index, which returned 20.97% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 26.28%.
Annual Report
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Industrials
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,107.30 | $ 6.11 |
HypotheticalA | $ 1,000.00 | $ 1,018.99 | $ 5.86 |
Class T | |||
Actual | $ 1,000.00 | $ 1,105.90 | $ 7.41 |
HypotheticalA | $ 1,000.00 | $ 1,017.75 | $ 7.10 |
Class B | |||
Actual | $ 1,000.00 | $ 1,103.10 | $ 10.17 |
HypotheticalA | $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Class C | |||
Actual | $ 1,000.00 | $ 1,103.20 | $ 9.96 |
HypotheticalA | $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,109.00 | $ 4.71 |
HypotheticalA | $ 1,000.00 | $ 1,020.33 | $ 4.51 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.17% |
Class T | 1.42% |
Class B | 1.95% |
Class C | 1.91% |
Institutional Class | .90% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
General Electric Co. | 9.8 | 20.0 |
United Technologies Corp. | 7.2 | 7.8 |
Honeywell International, Inc. | 4.0 | 5.6 |
3M Co. | 3.6 | 2.3 |
Emerson Electric Co. | 3.0 | 3.1 |
Danaher Corp. | 2.6 | 3.5 |
Union Pacific Corp. | 2.5 | 1.9 |
Burlington Northern Santa Fe Corp. | 2.3 | 2.8 |
Illinois Tool Works, Inc. | 2.3 | 2.4 |
Lockheed Martin Corp. | 2.3 | 0.0 |
39.6 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Aerospace & Defense | 18.8% | |
| Machinery | 17.7% | |
 | Industrial Conglomerates | 16.5% | |
| Road & Rail | 8.4% | |
| Electrical Equipment | 8.1% | |
| All Others* | 30.5% | |
As of January 31, 2007 | |||
| Industrial Conglomerates | 28.8% | |
| Aerospace & Defense | 18.6% | |
| Machinery | 13.9% | |
| Road & Rail | 8.6% | |
| Electrical Equipment | 6.6% | |
| All Others* | 23.5% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 18.8% | |||
Aerospace & Defense - 18.8% | |||
General Dynamics Corp. | 84,600 | $ 6,646,176 | |
Honeywell International, Inc. | 247,500 | 14,233,725 | |
Lockheed Martin Corp. | 81,900 | 8,065,512 | |
Raytheon Co. | 145,600 | 8,060,416 | |
Rockwell Collins, Inc. | 27,100 | 1,861,770 | |
Spirit AeroSystems Holdings, Inc. Class A | 63,600 | 2,308,680 | |
United Technologies Corp. | 351,500 | 25,648,955 | |
66,825,234 | |||
AIR FREIGHT & LOGISTICS - 1.1% | |||
Air Freight & Logistics - 1.1% | |||
C.H. Robinson Worldwide, Inc. | 50,400 | 2,451,960 | |
Panalpina Welttransport Holding AG | 6,800 | 1,341,889 | |
3,793,849 | |||
AIRLINES - 2.3% | |||
Airlines - 2.3% | |||
Delta Air Lines, Inc. (a)(d) | 104,147 | 1,855,900 | |
Northwest Airlines Corp. (a) | 27,100 | 472,353 | |
UAL Corp. (a)(d) | 57,700 | 2,546,878 | |
US Airways Group, Inc. (a) | 110,000 | 3,411,100 | |
8,286,231 | |||
AUTO COMPONENTS - 1.0% | |||
Auto Parts & Equipment - 1.0% | |||
Johnson Controls, Inc. | 31,800 | 3,598,170 | |
AUTOMOBILES - 1.0% | |||
Automobile Manufacturers - 1.0% | |||
DaimlerChrysler AG | 40,800 | 3,702,600 | |
BUILDING PRODUCTS - 1.9% | |||
Building Products - 1.9% | |||
American Standard Companies, Inc. | 35,900 | 1,940,395 | |
Masco Corp. | 181,800 | 4,946,778 | |
6,887,173 | |||
CHEMICALS - 3.4% | |||
Fertilizers & Agricultural Chemicals - 1.0% | |||
Agrium, Inc. | 85,400 | 3,590,691 | |
Industrial Gases - 1.4% | |||
Airgas, Inc. | 108,400 | 5,062,280 | |
Specialty Chemicals - 1.0% | |||
Ecolab, Inc. | 40,700 | 1,713,877 | |
Minerals Technologies, Inc. | 27,800 | 1,797,826 | |
3,511,703 | |||
TOTAL CHEMICALS | 12,164,674 | ||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 5.5% | |||
Diversified Commercial & Professional Services - 1.6% | |||
Equifax, Inc. | 20,300 | $ 821,338 | |
The Brink's Co. | 78,800 | 4,818,620 | |
5,639,958 | |||
Environmental & Facility Services - 3.9% | |||
Allied Waste Industries, Inc. (a) | 481,600 | 6,198,192 | |
Casella Waste Systems, Inc. Class A (a) | 8,400 | 93,492 | |
Covanta Holding Corp. (a) | 13,600 | 308,448 | |
Waste Connections, Inc. (a) | 41,400 | 1,283,400 | |
Waste Management, Inc. | 155,100 | 5,898,453 | |
13,781,985 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 19,421,943 | ||
CONSTRUCTION & ENGINEERING - 6.5% | |||
Construction & Engineering - 6.5% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 53,900 | 2,188,340 | |
Fluor Corp. | 47,800 | 5,521,378 | |
Granite Construction, Inc. | 31,500 | 2,047,185 | |
Infrasource Services, Inc. (a) | 21,000 | 727,020 | |
Jacobs Engineering Group, Inc. (a) | 37,600 | 2,317,288 | |
Outotec Oyj | 13,600 | 816,215 | |
Quanta Services, Inc. (a) | 48,700 | 1,384,541 | |
Shaw Group, Inc. (a) | 150,950 | 8,033,559 | |
23,035,526 | |||
ELECTRICAL EQUIPMENT - 8.1% | |||
Electrical Components & Equipment - 5.0% | |||
AMETEK, Inc. | 58,000 | 2,263,160 | |
Cooper Industries Ltd. Class A | 92,300 | 4,884,516 | |
Emerson Electric Co. | 224,200 | 10,553,094 | |
Prysmian SpA | 3,900 | 106,838 | |
17,807,608 | |||
Heavy Electrical Equipment - 3.1% | |||
ABB Ltd. sponsored ADR | 257,700 | 6,202,839 | |
Alstom SA | 11,700 | 2,142,097 | |
Suzlon Energy Ltd. | 34,129 | 1,079,365 | |
Vestas Wind Systems AS (a) | 20,400 | 1,380,546 | |
10,804,847 | |||
TOTAL ELECTRICAL EQUIPMENT | 28,612,455 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.7% | |||
Electronic Equipment & Instruments - 0.7% | |||
Itron, Inc. (a)(d) | 30,100 | 2,390,843 | |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.4% | |||
Independent Power Producers & Energy Traders - 0.4% | |||
NRG Energy, Inc. (a) | 33,900 | 1,306,845 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIAL CONGLOMERATES - 16.5% | |||
Industrial Conglomerates - 16.5% | |||
3M Co. (d) | 146,100 | $ 12,991,212 | |
General Electric Co. | 897,300 | 34,779,348 | |
Siemens AG sponsored ADR | 38,200 | 4,837,266 | |
Tyco International Ltd. | 127,125 | 6,011,741 | |
58,619,567 | |||
MACHINERY - 17.7% | |||
Construction & Farm Machinery & Heavy Trucks - 4.6% | |||
Bucyrus International, Inc. Class A | 59,800 | 3,800,888 | |
Cummins, Inc. | 63,366 | 7,521,544 | |
Navistar International Corp. (a) | 13,500 | 850,500 | |
Oshkosh Truck Co. | 72,408 | 4,145,358 | |
16,318,290 | |||
Industrial Machinery - 13.1% | |||
Danaher Corp. | 125,600 | 9,379,808 | |
Donaldson Co., Inc. | 61,100 | 2,223,429 | |
Dover Corp. | 104,100 | 5,309,100 | |
Eaton Corp. | 44,800 | 4,353,664 | |
Flowserve Corp. | 58,600 | 4,235,022 | |
IDEX Corp. | 70,300 | 2,545,563 | |
Illinois Tool Works, Inc. | 148,000 | 8,147,400 | |
Ingersoll-Rand Co. Ltd. Class A | 89,400 | 4,498,608 | |
SPX Corp. | 51,200 | 4,806,144 | |
Sulzer AG (Reg.) | 651 | 868,000 | |
46,366,738 | |||
TOTAL MACHINERY | 62,685,028 | ||
MARINE - 0.9% | |||
Marine - 0.9% | |||
Kirby Corp. (a) | 79,600 | 3,224,596 | |
METALS & MINING - 3.2% | |||
Diversified Metals & Mining - 1.0% | |||
Titanium Metals Corp. (a) | 108,600 | 3,629,412 | |
Steel - 2.2% | |||
Carpenter Technology Corp. | 19,000 | 2,255,110 | |
Reliance Steel & Aluminum Co. | 71,600 | 3,761,864 | |
Steel Dynamics, Inc. | 40,700 | 1,706,551 | |
7,723,525 | |||
TOTAL METALS & MINING | 11,352,937 | ||
OIL, GAS & CONSUMABLE FUELS - 0.7% | |||
Coal & Consumable Fuels - 0.7% | |||
Massey Energy Co. | 68,800 | 1,468,880 | |
Peabody Energy Corp. | 21,200 | 895,912 | |
2,364,792 | |||
Shares | Value | ||
ROAD & RAIL - 8.4% | |||
Railroads - 4.8% | |||
Burlington Northern Santa Fe Corp. | 100,000 | $ 8,214,000 | |
Union Pacific Corp. | 74,700 | 8,899,758 | |
17,113,758 | |||
Trucking - 3.6% | |||
Hertz Global Holdings, Inc. | 90,500 | 2,026,295 | |
Landstar System, Inc. | 64,226 | 2,919,714 | |
Old Dominion Freight Lines, Inc. (a) | 118,136 | 3,409,405 | |
Ryder System, Inc. | 78,000 | 4,240,860 | |
12,596,274 | |||
TOTAL ROAD & RAIL | 29,710,032 | ||
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Trading Companies & Distributors - 0.5% | |||
Rush Enterprises, Inc. Class A (a) | 64,970 | 1,815,912 | |
TOTAL COMMON STOCKS (Cost $309,449,857) | 349,798,407 | ||
Nonconvertible Bonds - 0.1% | ||||
Principal Amount | ||||
AIRLINES - 0.1% | ||||
Airlines - 0.1% | ||||
Delta Air Lines, Inc. 8.3% 12/15/29 (a) | $ 2,690,000 | 174,850 | ||
Money Market Funds - 4.3% | |||
Shares | |||
Fidelity Cash Central Fund, 5.38% (b) | 4,425,923 | 4,425,923 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 10,826,000 | 10,826,000 | |
TOTAL MONEY MARKET FUNDS (Cost $15,251,923) | 15,251,923 | ||
TOTAL INVESTMENT PORTFOLIO - 103.0% (Cost $324,779,530) | 365,225,180 |
NET OTHER ASSETS - (3.0)% | (10,554,466) | ||
NET ASSETS - 100% | $ 354,670,714 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 255,049 |
Fidelity Securities Lending Cash Central Fund | 42,601 |
Total | $ 297,650 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.9% |
Bermuda | 3.1% |
Switzerland | 2.5% |
Germany | 2.4% |
Canada | 1.0% |
Others (individually less than 1%) | 2.1% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $10,404,564) - See accompanying schedule: Unaffiliated issuers (cost $309,527,607) | $ 349,973,257 | |
Fidelity Central Funds (cost $15,251,923) | 15,251,923 | |
Total Investments (cost $324,779,530) | $ 365,225,180 | |
Receivable for investments sold | 2,183,677 | |
Receivable for fund shares sold | 1,526,465 | |
Dividends receivable | 110,857 | |
Distributions receivable from Fidelity Central Funds | 21,886 | |
Prepaid expenses | 464 | |
Other receivables | 400 | |
Total assets | 369,068,929 | |
Liabilities | ||
Payable for investments purchased | $ 2,714,643 | |
Payable for fund shares redeemed | 409,349 | |
Accrued management fee | 168,773 | |
Distribution fees payable | 153,288 | |
Other affiliated payables | 87,866 | |
Other payables and accrued expenses | 38,296 | |
Collateral on securities loaned, at value | 10,826,000 | |
Total liabilities | 14,398,215 | |
Net Assets | $ 354,670,714 | |
Net Assets consist of: | ||
Paid in capital | $ 286,208,806 | |
Distributions in excess of net investment income | (6) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 28,016,324 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 40,445,590 | |
Net Assets | $ 354,670,714 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 25.49 | |
Maximum offering price per share (100/94.25 of $25.49) | $ 27.05 | |
Class T: | $ 25.17 | |
Maximum offering price per share (100/96.50 of $25.17) | $ 26.08 | |
Class B: | $ 24.19 | |
Class C: | $ 24.26 | |
Institutional Class: | $ 26.26 | |
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, 2007 | ||
Investment Income | ||
Dividends | $ 4,558,254 | |
Interest | 1,796 | |
Income from Fidelity Central Funds | 297,650 | |
Total income | 4,857,700 | |
Expenses | ||
Management fee | $ 1,719,635 | |
Transfer agent fees | 867,389 | |
Distribution fees | 1,583,822 | |
Accounting and security lending fees | 125,061 | |
Custodian fees and expenses | 11,611 | |
Independent trustees' compensation | 962 | |
Registration fees | 89,463 | |
Audit | 48,257 | |
Legal | 4,217 | |
Miscellaneous | 69,453 | |
Total expenses before reductions | 4,519,870 | |
Expense reductions | (10,308) | 4,509,562 |
Net investment income (loss) | 348,138 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 35,393,475 | |
Foreign currency transactions | (5,404) | |
Total net realized gain (loss) | 35,388,071 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $60) | 31,234,023 | |
Assets and liabilities in foreign currencies | (114) | |
Total change in net unrealized appreciation (depreciation) | 31,233,909 | |
Net gain (loss) | 66,621,980 | |
Net increase (decrease) in net assets resulting from operations | $ 66,970,118 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 348,138 | $ 67,497 |
Net realized gain (loss) | 35,388,071 | 16,800,474 |
Change in net unrealized appreciation (depreciation) | 31,233,909 | (9,655,014) |
Net increase (decrease) in net assets resulting from operations | 66,970,118 | 7,212,957 |
Distributions to shareholders from net investment income | (473,352) | - |
Distributions to shareholders from net realized gain | (21,383,547) | (7,122,799) |
Total distributions | (21,856,899) | (7,122,799) |
Share transactions - net increase (decrease) | 61,861,883 | 109,957,564 |
Redemption fees | 14,915 | 25,597 |
Total increase (decrease) in net assets | 106,990,017 | 110,073,319 |
Net Assets | ||
Beginning of period | 247,680,697 | 137,607,378 |
End of period (including distributions in excess of net investment income of $6 and undistributed net investment income of $65,095, respectively) | $ 354,670,714 | $ 247,680,697 |
See accompanying notes which are an integral part of the financial statements.
Industrials
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.16 | $ 21.53 | $ 18.10 | $ 14.15 | $ 12.75 |
Income from Investment Operations | |||||
Net investment income (loss) C | .09 | .08 | .02 | (.02) | .06 |
Net realized and unrealized gain (loss) | 5.11 | 1.63 | 4.35 | 3.96 | 1.36 |
Total from investment operations | 5.20 | 1.71 | 4.37 | 3.94 | 1.42 |
Distributions from net investment income | (.06) | - | - | - | (.02) |
Distributions from net realized gain | (1.81) | (1.08) | (.94) | - | - |
Total distributions | (1.87) | (1.08) | (.94) | - | (.02) |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 | $ 14.15 |
Total Return A,B | 25.13% | 8.40% | 25.04% | 27.92% | 11.16% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.21% | 1.26% | 1.34% | 1.65% | 1.99% |
Expenses net of fee waivers, if any | 1.21% | 1.26% | 1.34% | 1.50% | 1.53% |
Expenses net of all reductions | 1.21% | 1.24% | 1.29% | 1.47% | 1.46% |
Net investment income (loss) | .38% | .34% | .09% | (.12)% | .46% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 157,451 | $ 99,255 | $ 40,264 | $ 12,612 | $ 4,272 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.86 | $ 21.27 | $ 17.90 | $ 14.02 | $ 12.66 |
Income from Investment Operations | |||||
Net investment income (loss) C | .03 | .02 | (.03) | (.06) | .03 |
Net realized and unrealized gain (loss) | 5.05 | 1.61 | 4.31 | 3.93 | 1.34 |
Total from investment operations | 5.08 | 1.63 | 4.28 | 3.87 | 1.37 |
Distributions from net investment income | (.03) | - | - | - | (.01) |
Distributions from net realized gain | (1.74) | (1.04) | (.91) | - | - |
Total distributions | (1.77) | (1.04) | (.91) | - | (.01) |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 | $ 14.02 |
Total Return A,B | 24.82% | 8.13% | 24.78% | 27.67% | 10.84% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.46% | 1.49% | 1.57% | 1.90% | 2.25% |
Expenses net of fee waivers, if any | 1.46% | 1.49% | 1.57% | 1.75% | 1.78% |
Expenses net of all reductions | 1.46% | 1.47% | 1.52% | 1.72% | 1.71% |
Net investment income (loss) | .13% | .11% | (.14)% | (.36)% | .22% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 75,530 | $ 55,936 | $ 40,126 | $ 13,089 | $ 5,493 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.02 | $ 20.55 | $ 17.27 | $ 13.61 | $ 12.33 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.09) | (.09) | (.13) | (.14) | (.03) |
Net realized and unrealized gain (loss) | 4.87 | 1.55 | 4.17 | 3.79 | 1.31 |
Total from investment operations | 4.78 | 1.46 | 4.04 | 3.65 | 1.28 |
Distributions from net realized gain | (1.61) | (.99) | (.76) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 | $ 13.61 |
Total Return A,B | 24.18% | 7.54% | 24.12% | 26.89% | 10.38% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 2.00% | 2.04% | 2.11% | 2.37% | 2.68% |
Expenses net of fee waivers, if any | 2.00% | 2.04% | 2.11% | 2.25% | 2.25% |
Expenses net of all reductions | 2.00% | 2.02% | 2.07% | 2.22% | 2.18% |
Net investment income (loss) | (.41)% | (.44)% | (.68)% | (.87)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 44,330 | $ 37,082 | $ 32,242 | $ 14,722 | $ 9,005 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Financial Highlights - Class C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 21.16 | $ 20.68 | $ 17.36 | $ 13.67 | $ 12.39 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.08) | (.08) | (.12) | (.14) | (.03) |
Net realized and unrealized gain (loss) | 4.88 | 1.56 | 4.19 | 3.82 | 1.31 |
Total from investment operations | 4.80 | 1.48 | 4.07 | 3.68 | 1.28 |
Distributions from net realized gain | (1.70) | (1.00) | (.75) | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 | $ 13.67 |
Total Return A,B | 24.25% | 7.59% | 24.16% | 26.99% | 10.33% |
Ratios to Average Net Assets D,F | |||||
Expenses before reductions | 1.94% | 1.99% | 2.07% | 2.28% | 2.57% |
Expenses net of fee waivers, if any | 1.94% | 1.99% | 2.07% | 2.25% | 2.25% |
Expenses net of all reductions | 1.94% | 1.97% | 2.02% | 2.22% | 2.18% |
Net investment income (loss) | (.35)% | (.38)% | (.64)% | (.87)% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 57,862 | $ 42,363 | $ 20,595 | $ 9,507 | $ 5,307 |
Portfolio turnover rate E | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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. Expenses net of fee 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.
Industrials
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 22.77 | $ 22.06 | $ 18.48 | $ 14.41 | $ 12.96 |
Income from Investment Operations | |||||
Net investment income (loss) B | .16 | .16 | .07 | .02 | .09 |
Net realized and unrealized gain (loss) | 5.27 | 1.66 | 4.46 | 4.04 | 1.39 |
Total from investment operations | 5.43 | 1.82 | 4.53 | 4.06 | 1.48 |
Distributions from net investment income | (.13) | - | - | - | (.03) |
Distributions from net realized gain | (1.81) | (1.11) | (.95) | - | - |
Total distributions | (1.94) | (1.11) | (.95) | - | (.03) |
Redemption fees added to paid in capital B | - F | - F | - F | .01 | - F |
Net asset value, end of period | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 | $ 14.41 |
Total Return A | 25.53% | 8.73% | 25.41% | 28.24% | 11.46% |
Ratios to Average Net Assets C,E | |||||
Expenses before reductions | .92% | .91% | 1.06% | 1.38% | 1.55% |
Expenses net of fee waivers, if any | .92% | .91% | 1.06% | 1.25% | 1.25% |
Expenses net of all reductions | .91% | .89% | 1.01% | 1.22% | 1.18% |
Net investment income (loss) | .67% | .69% | .37% | .13% | .74% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 19,498 | $ 13,043 | $ 4,379 | $ 1,490 | $ 1,156 |
Portfolio turnover rate D | 130% | 94% | 116% | 106% | 149% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
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 fee 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
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Industrials Fund (the Fund) (formerly Fidelity Advisor Cyclical Industries) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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, deferred trustees compensation 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 | $ 46,153,238 | |
Unrealized depreciation | (5,803,704) | |
Net unrealized appreciation (depreciation) | 40,349,534 | |
Undistributed ordinary income | 12,422,062 | |
Undistributed long-term capital gain | 13,584,256 | |
Cost for federal income tax purposes | $ 324,875,646 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 8,244,210 | $ 2,645,179 |
Long-term Capital Gains | 13,612,689 | 4,477,620 |
Total | $ 21,856,899 | $ 7,122,799 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
Industrials
3. Significant Accounting Policies - continued
New Accounting Pronouncements - continued
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $423,041,427 and $387,371,157, respectively.
6. 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 .26% 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 .56% 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% | $ 330,340 | $ 30,569 |
Class T | .25% | .25% | 329,136 | 812 |
Class B | .75% | .25% | 412,704 | 311,355 |
Class C | .75% | .25% | 511,642 | 218,738 |
$ 1,583,822 | $ 561,474 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 181,480 |
Class T | 20,555 |
Class B* | 64,543 |
Class C* | 18,873 |
$ 285,451 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 373,182 | .28 |
Class T | 185,704 | .28 |
Class B | 133,809 | .32 |
Class C | 136,524 | .27 |
Institutional Class | 38,170 | .24 |
$ 867,389 |
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.
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 $785 for the period.
7. 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, which amounted to $533 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $42,601.
9. 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 $6,077 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 $31.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the
Industrials
10. Other - continued
conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 317,175 | $ - |
Class T | 81,458 | - |
Institutional Class | 74,719 | - |
Total | $ 473,352 | $ - |
From net realized gain | ||
Class A | $ 9,177,798 | $ 2,209,329 |
Class T | 4,598,164 | 1,993,493 |
Class B | 2,897,402 | 1,595,001 |
Class C | 3,663,404 | 1,032,683 |
Institutional Class | 1,046,779 | 292,293 |
Total | $ 21,383,547 | $ 7,122,799 |
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 3,210,590 | 3,250,873 | $ 74,239,252 | $ 73,798,607 |
Reinvestment of distributions | 397,118 | 97,417 | 8,609,345 | 1,982,904 |
Shares redeemed | (1,910,674) | (738,421) | (44,327,457) | (16,310,331) |
Net increase (decrease) | 1,697,034 | 2,609,869 | $ 38,521,140 | $ 59,471,180 |
Class T | ||||
Shares sold | 851,649 | 1,053,819 | $ 19,483,528 | $ 23,194,479 |
Reinvestment of distributions | 204,709 | 95,171 | 4,388,662 | 1,914,595 |
Shares redeemed | (614,792) | (476,485) | (14,036,675) | (10,217,427) |
Net increase (decrease) | 441,566 | 672,505 | $ 9,835,515 | $ 14,891,647 |
Class B | ||||
Shares sold | 490,419 | 691,509 | $ 10,776,085 | $ 14,823,678 |
Reinvestment of distributions | 118,628 | 68,369 | 2,452,560 | 1,329,447 |
Shares redeemed | (540,505) | (564,827) | (11,926,256) | (11,906,215) |
Net increase (decrease) | 68,542 | 195,051 | $ 1,302,389 | $ 4,246,910 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions - continued
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class C | ||||
Shares sold | 809,623 | 1,219,100 | $ 17,844,285 | $ 26,650,232 |
Reinvestment of distributions | 135,846 | 42,653 | 2,814,613 | 834,597 |
Shares redeemed | (562,223) | (255,670) | (12,468,615) | (5,350,637) |
Net increase (decrease) | 383,246 | 1,006,083 | $ 8,190,283 | $ 22,134,192 |
Institutional Class | ||||
Shares sold | 466,987 | 685,802 | $ 11,092,441 | $ 16,202,741 |
Reinvestment of distributions | 33,033 | 7,337 | 737,185 | 152,999 |
Shares redeemed | (330,519) | (318,752) | (7,817,070) | (7,142,105) |
Net increase (decrease) | 169,501 | 374,387 | $ 4,012,556 | $ 9,213,635 |
Industrials
Advisor Technology 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, 2007 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 32.30% | 16.10% | 5.20% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Technology Fund - Institutional Class on July 31, 2007. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 31.82%, 31.48%, 30.91% and 30.83%, respectively (excluding sales charges), topping both the 29.40% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Information Technology Index and the 29.87% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly trailed the Goldman Sachs index during the first two months of the period. Unfavorable stock picking in communications equipment undermined our results, more than offsetting what we gained from heavily overweighting the group, which performed well. An underweighting and unrewarding stock selection in systems software further hurt performance. On the positive side, my picks in Internet software and services and in computer hardware added value, as did an underweighting in the weak-performing data processing and outsourced services segment. Among individual holdings, not owning two major index components - networking equipment maker Cisco Systems and systems software provider Oracle - during the two-month period was detrimental. Both of these large-caps had become relatively cheap, while their business fundamentals improved, resulting in strong stock price gains. Our overweighted position in wireless infrastructure stock QUALCOMM also hurt. On the positive side, Freescale Semiconductor was a contributor to fund performance, rising sharply after receiving a buyout offer from a group of private-equity firms. I sold Freescale shortly thereafter to lock in profits. Chip maker Broadcom proved rewarding as well. During the period's final 10 months, the fund outperformed the MSCI index, mainly due to systems software, where both favorable stock selection and a sizable underweighting aided our results. My picks in communications equipment also helped. Counterbalancing those benefits to some extent was an underweighting in computer hardware, which was one of the best-performing subsectors in the index. At the stock level, the fund was helped by Canada-based Research In Motion (RIM), maker of the BlackBerry handheld messaging device. During the period, concerns eased about the company's stock options policies, and a solid second-quarter earnings report also helped propel the stock higher. Another Canadian contributor, Sandvine, advanced sharply due to rapid earnings and market share growth, together with an attractive valuation. Juniper Networks helped as well. Both RIM and Sandvine were out-of-index positions. Conversely, insufficient exposure to two strong-performing, large-cap index components held back the fund's returns. Specifically, not owning computer hardware giant International Business Machines and carrying a large underweighting in Cisco Systems detracted from performance.
During the past year, the fund's Institutional Class shares returned 32.30%, topping both the 29.40% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Information Technology Index and the 29.87% advance of a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Technology Index, which the fund was compared with through September 2006, and the new MSCI benchmark mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund handily beat the S&P 500. The fund modestly trailed the Goldman Sachs index during the first two months of the period. Unfavorable stock picking in communications equipment undermined our results, more than offsetting what we gained from heavily overweighting the group, which performed well. An underweighting and unrewarding stock selection in systems software further hurt performance. On the positive side, my picks in Internet software and services and in computer hardware added value, as did an underweighting in the weak-performing data processing and outsourced services segment. Among individual holdings, not owning two major index components - networking equipment maker Cisco Systems and systems software provider Oracle - during the two-month period was detrimental. Both of these large-caps had become relatively cheap, while their business fundamentals improved, resulting in strong stock price gains. Our overweighted position in wireless infrastructure stock QUALCOMM also hurt. On the positive side, Freescale Semiconductor was a contributor to fund performance, rising sharply after receiving a buyout offer from a group of private-equity firms. I sold Freescale shortly thereafter to lock in profits. Chip maker Broadcom proved rewarding as well. During the period's final 10 months, the fund outperformed the MSCI index, mainly due to systems software, where both favorable stock selection and a sizable underweighting aided our results. My picks in communications equipment also helped. Counterbalancing those benefits to some extent was an underweighting in computer hardware, which was one of the best-performing subsectors in the index. At the stock level, the fund was helped by Canada-based Research In Motion (RIM), maker of the BlackBerry handheld messaging device. During the period, concerns eased about the company's stock options policies, and a solid second-quarter earnings report also helped propel the stock higher. Another Canadian contributor, Sandvine, advanced sharply due to rapid earnings and market share growth, together with an attractive valuation. Juniper Networks helped as well. Both RIM and Sandvine were out-of-index positions. Conversely, insufficient exposure to two strong-performing, large-cap index components held back the fund's returns. Specifically, not owning computer hardware giant International Business Machines and carrying a large underweighting in Cisco Systems detracted from performance.
Annual Report
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Technology Index, which returned 12.15% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Information Technology Index, which returned 15.80% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 29.87%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
Technology
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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,119.30 | $ 6.10 |
HypotheticalA | $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | |||
Actual | $ 1,000.00 | $ 1,118.00 | $ 7.35 |
HypotheticalA | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class B | |||
Actual | $ 1,000.00 | $ 1,115.70 | $ 9.81 |
HypotheticalA | $ 1,000.00 | $ 1,015.52 | $ 9.35 |
Class C | |||
Actual | $ 1,000.00 | $ 1,115.10 | $ 9.96 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.49 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,120.70 | $ 4.68 |
HypotheticalA | $ 1,000.00 | $ 1,020.38 | $ 4.46 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.16% |
Class T | 1.40% |
Class B | 1.87% |
Class C | 1.90% |
Institutional Class | .89% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Google, Inc. Class A (sub. vtg.) | 5.9 | 4.6 |
Marvell Technology Group Ltd. | 5.1 | 4.1 |
Apple, Inc. | 4.3 | 5.4 |
Intel Corp. | 3.5 | 3.4 |
Broadcom Corp. Class A | 3.1 | 2.4 |
Juniper Networks, Inc. | 3.0 | 1.8 |
QUALCOMM, Inc. | 2.8 | 4.8 |
Cisco Systems, Inc. | 2.8 | 3.3 |
Research In Motion Ltd. | 2.5 | 5.4 |
F5 Networks, Inc. | 2.1 | 2.0 |
35.1 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 32.0% | |
| Communications Equipment | 24.9% | |
| Computers & Peripherals | 12.0% | |
| Internet Software | 9.5% | |
| Software | 9.1% | |
| All Others* | 12.5% | |
As of January 31, 2007 | |||
| Communications Equipment | 30.1% | |
| Semiconductors & Semiconductor Equipment | 25.6% | |
| Computers & Peripherals | 14.1% | |
| Software | 12.5% | |
| Internet Software | 8.4% | |
| All Others* | 9.3% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Diversified Commercial & Professional Services - 0.1% | |||
Equifax, Inc. | 10,300 | $ 416,738 | |
Human Resource & Employment Services - 0.1% | |||
Kenexa Corp. (a) | 20,400 | 729,912 | |
Taleo Corp. Class A (a) | 4,200 | 90,342 | |
820,254 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,236,992 | ||
COMMUNICATIONS EQUIPMENT - 24.7% | |||
Communications Equipment - 24.7% | |||
AAC Acoustic Technology Holdings, Inc. (a) | 3,518,000 | 4,166,112 | |
Adtran, Inc. | 98,100 | 2,559,429 | |
ADVA AG Optical Networking (a) | 298,245 | 2,979,156 | |
Airvana, Inc. | 274,600 | 1,938,676 | |
Alcatel-Lucent SA sponsored ADR | 632,000 | 7,331,200 | |
AudioCodes Ltd. (a) | 591,750 | 3,290,130 | |
Avocent Corp. (a) | 212,615 | 5,815,020 | |
Balda AG | 111,500 | 1,325,842 | |
Cisco Systems, Inc. (a) | 742,200 | 21,457,002 | |
Comtech Group, Inc. (a) | 420,719 | 5,982,624 | |
Comverse Technology, Inc. (a) | 237,900 | 4,584,333 | |
Corning, Inc. | 305,000 | 7,271,200 | |
Extreme Networks, Inc. (a) | 372,900 | 1,513,974 | |
F5 Networks, Inc. (a) | 192,300 | 16,670,487 | |
Finisar Corp. (a) | 1,025,471 | 3,722,460 | |
Foundry Networks, Inc. (a) | 112,600 | 1,980,634 | |
Foxconn International Holdings Ltd. (a) | 1,490,000 | 4,265,990 | |
Harris Stratex Networks, Inc. (a) | 233,300 | 3,970,766 | |
Infinera Corp. | 2,000 | 45,600 | |
Ixia (a) | 372,500 | 3,486,600 | |
JDS Uniphase Corp. (a) | 49,700 | 712,201 | |
Juniper Networks, Inc. (a) | 770,246 | 23,076,570 | |
Mogem Co. Ltd. | 309,043 | 3,189,999 | |
Motorola, Inc. | 111,800 | 1,899,482 | |
Nokia Corp. sponsored ADR | 137,100 | 3,926,544 | |
Opnext, Inc. | 199,491 | 2,435,785 | |
OZ Optics Ltd. unit (a)(f) | 68,000 | 1,003,000 | |
Powerwave Technologies, Inc. (a) | 844,300 | 5,521,722 | |
QUALCOMM, Inc. | 528,500 | 22,012,025 | |
Research In Motion Ltd. (a) | 90,570 | 19,381,980 | |
Riverbed Technology, Inc. | 27,200 | 1,201,152 | |
Sonus Networks, Inc. (a) | 620,500 | 4,244,220 | |
Starent Networks Corp. | 900 | 16,308 | |
192,978,223 | |||
COMPUTERS & PERIPHERALS - 12.0% | |||
Computer Hardware - 6.9% | |||
Apple, Inc. (a) | 253,255 | 33,368,879 | |
Concurrent Computer Corp. (a) | 1,723,664 | 2,637,206 | |
Diebold, Inc. | 46,600 | 2,361,222 | |
Shares | Value | ||
High Tech Computer Corp. | 62,000 | $ 1,135,725 | |
Palm, Inc. (a) | 231,300 | 3,450,996 | |
Sun Microsystems, Inc. (a) | 2,201,300 | 11,226,630 | |
54,180,658 | |||
Computer Storage & Peripherals - 5.1% | |||
ASUSTeK Computer, Inc. | 456,000 | 1,302,301 | |
EMC Corp. (a) | 532,200 | 9,851,022 | |
Isilon Systems, Inc. (d) | 44,900 | 428,795 | |
Netezza Corp. | 89,200 | 1,360,300 | |
Network Appliance, Inc. (a) | 331,600 | 9,397,544 | |
SanDisk Corp. (a) | 281,400 | 15,091,482 | |
STEC, Inc. (a) | 320,100 | 2,352,735 | |
39,784,179 | |||
TOTAL COMPUTERS & PERIPHERALS | 93,964,837 | ||
DIVERSIFIED CONSUMER SERVICES - 0.7% | |||
Education Services - 0.7% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR | 106,400 | 5,508,328 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.1% | |||
Alternative Carriers - 0.0% | |||
Aruba Networks, Inc. (d) | 9,800 | 196,784 | |
Integrated Telecommunication Services - 0.1% | |||
NeuStar, Inc. Class A (a) | 12,300 | 354,732 | |
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 551,516 | ||
ELECTRICAL EQUIPMENT - 1.0% | |||
Electrical Components & Equipment - 1.0% | |||
Evergreen Solar, Inc. (a)(d) | 379,297 | 3,159,544 | |
Q-Cells AG | 1,200 | 106,239 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 99,300 | 4,004,769 | |
Superior Essex, Inc. (a) | 20,300 | 707,455 | |
7,978,007 | |||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.7% | |||
Electronic Equipment & Instruments - 2.1% | |||
Chi Mei Optoelectronics Corp. | 1,723,920 | 1,930,996 | |
China Security & Surveillance Tech, Inc. (a) | 336,100 | 5,948,970 | |
Chunghwa Picture Tubes LTD. (a) | 5,891,000 | 1,684,220 | |
Cognex Corp. | 13,600 | 286,008 | |
Cyntec Co. Ltd. | 504,637 | 936,706 | |
Motech Industries, Inc. | 183,000 | 2,286,873 | |
Motech Industries, Inc. GDR (a)(e) | 77,787 | 968,448 | |
National Instruments Corp. | 13,100 | 423,785 | |
Tektronix, Inc. | 58,200 | 1,911,870 | |
16,377,876 | |||
Electronic Manufacturing Services - 2.3% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 662,453 | 5,492,006 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - CONTINUED | |||
Electronic Manufacturing Services - continued | |||
Jabil Circuit, Inc. | 271,300 | $ 6,112,389 | |
KEMET Corp. (a) | 324,168 | 2,282,143 | |
Molex, Inc. | 111,200 | 3,151,408 | |
Trimble Navigation Ltd. (a) | 22,400 | 739,872 | |
17,777,818 | |||
Technology Distributors - 0.3% | |||
Mellanox Technologies Ltd. | 800 | 15,496 | |
Wolfson Microelectronics PLC (a) | 383,900 | 2,175,794 | |
2,191,290 | |||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 36,346,984 | ||
HEALTH CARE TECHNOLOGY - 0.0% | |||
Health Care Technology - 0.0% | |||
Cerner Corp. (a) | 2,000 | 105,740 | |
HOUSEHOLD DURABLES - 0.8% | |||
Consumer Electronics - 0.8% | |||
Directed Electronics, Inc. (a) | 90,928 | 686,506 | |
Merry Electronics Co. Ltd. | 194,579 | 687,956 | |
Tele Atlas NV (a)(d) | 161,206 | 4,601,429 | |
5,975,891 | |||
Household Appliances - 0.0% | |||
iRobot Corp. (a) | 1,400 | 25,032 | |
TOTAL HOUSEHOLD DURABLES | 6,000,923 | ||
INTERNET & CATALOG RETAIL - 0.0% | |||
Catalog Retail - 0.0% | |||
Acorn International, Inc. sponsored ADR | 1,300 | 22,958 | |
INTERNET SOFTWARE & SERVICES - 9.5% | |||
Internet Software & Services - 9.5% | |||
Equinix, Inc. (a) | 35,200 | 3,059,232 | |
Google, Inc. Class A (sub. vtg.) (a) | 90,850 | 46,333,500 | |
Liquidity Services, Inc. (a) | 67,900 | 1,049,734 | |
LivePerson, Inc. (a) | 454,600 | 2,382,104 | |
Marchex, Inc. Class B | 144,260 | 1,944,625 | |
Omniture, Inc. (d) | 222,668 | 5,087,964 | |
Openwave Systems, Inc. | 378,093 | 1,988,769 | |
SAVVIS, Inc. (a) | 76,400 | 2,869,584 | |
Switch & Data Facilities Co., Inc. | 2,600 | 41,080 | |
TechTarget, Inc. | 3,900 | 52,572 | |
Visual Sciences, Inc. (a)(d) | 359,095 | 6,108,206 | |
Yahoo!, Inc. (a) | 142,600 | 3,315,450 | |
74,232,820 | |||
IT SERVICES - 3.3% | |||
Data Processing & Outsourced Services - 1.1% | |||
ExlService Holdings, Inc. | 59,700 | 1,009,527 | |
Shares | Value | ||
The Western Union Co. | 244,600 | $ 4,879,770 | |
WNS Holdings Ltd. ADR | 114,500 | 2,862,500 | |
8,751,797 | |||
IT Consulting & Other Services - 2.2% | |||
Cognizant Technology Solutions Corp. Class A (a) | 169,600 | 13,734,208 | |
RightNow Technologies, Inc. (a)(d) | 226,948 | 2,995,714 | |
16,729,922 | |||
TOTAL IT SERVICES | 25,481,719 | ||
MACHINERY - 0.3% | |||
Industrial Machinery - 0.3% | |||
Hi-P International Ltd. | 2,622,000 | 1,444,175 | |
Shin Zu Shing Co. Ltd. | 135,000 | 923,756 | |
2,367,931 | |||
MEDIA - 1.1% | |||
Advertising - 1.1% | |||
Focus Media Holding Ltd. ADR (a)(d) | 207,700 | 8,580,087 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Management & Development - 0.1% | |||
Move, Inc. (a) | 295,625 | 990,344 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 32.0% | |||
Semiconductor Equipment - 2.3% | |||
Applied Materials, Inc. | 188,100 | 4,145,724 | |
ASML Holding NV (NY Shares) (a) | 185,600 | 5,486,336 | |
Eagle Test Systems, Inc. (a) | 106,800 | 1,600,932 | |
FormFactor, Inc. (a) | 61,200 | 2,349,468 | |
Global Unichip Corp. | 260,807 | 3,084,310 | |
ICOS Vision Systems NV (a) | 9,100 | 411,040 | |
PDF Solutions, Inc. (a) | 18,300 | 202,947 | |
Rudolph Technologies, Inc. (a) | 42,920 | 671,698 | |
17,952,455 | |||
Semiconductors - 29.7% | |||
Advanced Analog Technology, Inc. | 450,000 | 4,430,187 | |
Advanced Micro Devices, Inc. (a)(d) | 1,089,536 | 14,752,317 | |
Altera Corp. | 199,500 | 4,628,400 | |
AMIS Holdings, Inc. (a) | 288,000 | 2,969,280 | |
Applied Micro Circuits Corp. (a) | 1,428,800 | 4,172,096 | |
Atheros Communications, Inc. (a) | 259,900 | 7,246,012 | |
Atmel Corp. (a) | 825,500 | 4,449,445 | |
AuthenTec, Inc. | 154,900 | 1,871,192 | |
Broadcom Corp. Class A (a) | 729,422 | 23,932,336 | |
Cavium Networks, Inc. (d) | 148,322 | 3,522,648 | |
Cypress Semiconductor Corp. (a) | 273,700 | 6,858,922 | |
Diodes, Inc. (a) | 29,100 | 773,187 | |
Global Mixed-Mode Tech, Inc. | 305,900 | 3,333,209 | |
Hittite Microwave Corp. (a) | 99,500 | 4,001,890 | |
Ikanos Communications, Inc. (a) | 439,739 | 3,166,121 | |
Infineon Technologies AG sponsored ADR (a) | 681,000 | 11,147,970 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Integrated Device Technology, Inc. (a) | 254,500 | $ 4,140,715 | |
Intel Corp. | 1,167,200 | 27,569,264 | |
Lanoptics Ltd. (a) | 152,600 | 2,307,312 | |
Lattice Semiconductor Corp. (a) | 379,600 | 1,795,508 | |
LSI Corp. (a) | 385,208 | 2,773,498 | |
Marvell Technology Group Ltd. (a) | 2,212,000 | 39,816,000 | |
Maxim Integrated Products, Inc. | 306,900 | 9,728,730 | |
Micrel, Inc. | 67,100 | 694,485 | |
Microsemi Corp. (a) | 35,800 | 834,498 | |
Mindspeed Technologies, Inc. (a) | 2,138,253 | 3,891,620 | |
Monolithic Power Systems, Inc. (a) | 127,100 | 2,125,112 | |
MoSys, Inc. (a) | 32,100 | 269,961 | |
Omnivision Technologies, Inc. (a) | 95,700 | 1,643,169 | |
Pericom Semiconductor Corp. (a) | 37,400 | 399,432 | |
PixArt Imaging, Inc. | 184,000 | 2,355,451 | |
PLX Technology, Inc. (a) | 45,400 | 501,216 | |
PMC-Sierra, Inc. (a) | 466,365 | 3,553,701 | |
Richtek Technology Corp. | 435,850 | 6,250,341 | |
Semtech Corp. (a) | 185,700 | 3,017,625 | |
Silicon Laboratories, Inc. (a) | 78,576 | 2,736,802 | |
SiRF Technology Holdings, Inc. (a)(d) | 213,000 | 4,992,720 | |
Spreadtrum Communications, Inc. ADR | 10,700 | 151,940 | |
Supertex, Inc. (a) | 76,800 | 2,681,088 | |
Taiwan Semiconductor Co. Ltd. | 704,000 | 1,538,505 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 4,449 | 8,814 | |
Volterra Semiconductor Corp. (a) | 106,900 | 1,228,281 | |
Xilinx, Inc. | 144,700 | 3,617,500 | |
231,878,500 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 249,830,955 | ||
SOFTWARE - 9.1% | |||
Application Software - 5.2% | |||
Ansys, Inc. (a) | 137,000 | 3,567,480 | |
BEA Systems, Inc. (a) | 203,000 | 2,513,140 | |
BladeLogic, Inc. | 28,600 | 736,450 | |
Concur Technologies, Inc. (a)(d) | 52,800 | 1,259,808 | |
Global Digital Creations Holdings Ltd. (a) | 884,000 | 375,351 | |
Informatica Corp. (a) | 191,650 | 2,671,601 | |
NAVTEQ Corp. (a) | 170,456 | 9,226,783 | |
Salesforce.com, Inc. (a) | 255,600 | 9,932,616 | |
Smith Micro Software, Inc. (a)(d) | 511,400 | 6,980,610 | |
Ulticom, Inc. (a) | 410,126 | 3,342,527 | |
40,606,366 | |||
Home Entertainment Software - 1.5% | |||
Nintendo Co. Ltd. | 21,400 | 10,486,000 | |
Shares | Value | ||
Perfect World Co. Ltd. sponsored ADR Class B | 2,400 | $ 57,840 | |
THQ, Inc. (a) | 37,900 | 1,090,004 | |
11,633,844 | |||
Systems Software - 2.4% | |||
Double-Take Software, Inc. | 100 | 1,526 | |
Oracle Corp. (a) | 100,400 | 1,919,648 | |
Red Hat, Inc. (a) | 285,793 | 5,950,210 | |
Sandvine Corp. (a) | 979,700 | 5,510,640 | |
Sandvine Corp. (U.K.) (a) | 982,200 | 5,387,151 | |
Sourcefire, Inc. | 1,300 | 15,795 | |
18,784,970 | |||
TOTAL SOFTWARE | 71,025,180 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.3% | |||
Wireless Telecommunication Services - 0.3% | |||
American Tower Corp. Class A (a) | 28,400 | 1,183,144 | |
Crown Castle International Corp. (a) | 32,600 | 1,181,750 | |
2,364,894 | |||
TOTAL COMMON STOCKS (Cost $771,190,533) | 779,568,438 | ||
Convertible Bonds - 0.2% | ||||
Principal Amount | ||||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 1,270,000 | 1,320,260 | ||
Money Market Funds - 4.8% | |||
Shares | |||
Fidelity Cash Central Fund, 5.38% (b) | 7,735,356 | 7,735,356 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 29,452,386 | 29,452,386 | |
TOTAL MONEY MARKET FUNDS (Cost $37,187,742) | 37,187,742 | ||
TOTAL INVESTMENT PORTFOLIO - 104.9% (Cost $809,648,275) | 818,076,440 |
NET OTHER ASSETS - (4.9)% | (37,893,093) | ||
NET ASSETS - 100% | $ 780,183,347 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $968,448 or 0.1% of net assets. |
(f) 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 $1,003,000 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
OZ Optics Ltd. unit | 8/18/00 | $ 1,003,680 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 268,801 |
Fidelity Securities Lending Cash Central Fund | 303,499 |
Total | $ 572,300 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 74.4% |
Bermuda | 5.1% |
Taiwan | 5.0% |
Canada | 4.0% |
Cayman Islands | 2.2% |
Germany | 2.0% |
Japan | 1.4% |
Netherlands | 1.3% |
China | 1.1% |
Others (individually less than 1%) | 3.5% |
100.0% |
Income Tax Information |
At July 31, 2007, the fund had a capital loss carryforward of approximately $1,419,316,323 of which $919,509,540 and $499,806,783 will expire on July 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $28,529,325) - See accompanying schedule: Unaffiliated issuers (cost $772,460,533) | $ 780,888,698 | |
Fidelity Central Funds (cost $37,187,742) | 37,187,742 | |
Total Investments (cost $809,648,275) | $ 818,076,440 | |
Receivable for investments sold | 14,553,415 | |
Receivable for fund shares sold | 1,381,856 | |
Dividends receivable | 140,340 | |
Interest receivable | 785 | |
Distributions receivable from Fidelity Central Funds | 26,150 | |
Prepaid expenses | 1,383 | |
Other receivables | 21,231 | |
Total assets | 834,201,600 | |
Liabilities | ||
Payable for investments purchased | $ 20,619,168 | |
Payable for fund shares redeemed | 2,948,927 | |
Accrued management fee | 377,283 | |
Distribution fees payable | 345,764 | |
Other affiliated payables | 215,945 | |
Other payables and accrued expenses | 58,780 | |
Collateral on securities loaned, at value | 29,452,386 | |
Total liabilities | 54,018,253 | |
Net Assets | $ 780,183,347 | |
Net Assets consist of: | ||
Paid in capital | $ 2,195,995,249 | |
Accumulated net investment loss | (288) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,424,241,310) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 8,429,696 | |
Net Assets | $ 780,183,347 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Class A: | $ 20.55 | |
Maximum offering price per share (100/94.25 of $20.55) | $ 21.80 | |
Class T: | $ 20.09 | |
Maximum offering price per share (100/96.50 of $20.09) | $ 20.82 | |
Class B: | $ 19.10 | |
Class C: | $ 19.18 | |
Institutional Class: | $ 21.26 | |
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
Advisor Technology Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 2,010,038 | |
Interest | 17,430 | |
Income from Fidelity Central Funds (including $303,499 from security lending) | 572,300 | |
Total income | 2,599,768 | |
Expenses | ||
Management fee | $ 4,410,027 | |
Transfer agent fees | 2,657,408 | |
Distribution fees | 4,421,239 | |
Accounting and security lending fees | 286,014 | |
Custodian fees and expenses | 78,616 | |
Independent trustees' compensation | 2,570 | |
Registration fees | 95,509 | |
Audit | 54,386 | |
Legal | 12,987 | |
Interest | 27,912 | |
Miscellaneous | 265,473 | |
Total expenses before reductions | 12,312,141 | |
Expense reductions | (115,917) | 12,196,224 |
Net investment income (loss) | (9,596,456) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 101,172,062 | |
Foreign currency transactions | (32,896) | |
Total net realized gain (loss) | 101,139,166 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 120,840,676 | |
Assets and liabilities in foreign currencies | 980 | |
Total change in net unrealized appreciation (depreciation) | 120,841,656 | |
Net gain (loss) | 221,980,822 | |
Net increase (decrease) in net assets resulting from operations | $ 212,384,366 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ (9,596,456) | $ (11,357,485) |
Net realized gain (loss) | 101,139,166 | 133,807,053 |
Change in net unrealized appreciation (depreciation) | 120,841,656 | (146,818,598) |
Net increase (decrease) in net assets resulting from operations | 212,384,366 | (24,369,030) |
Share transactions - net increase (decrease) | (169,547,974) | (128,197,659) |
Redemption fees | 20,415 | 46,191 |
Total increase (decrease) in net assets | 42,856,807 | (152,520,498) |
Net Assets | ||
Beginning of period | 737,326,540 | 889,847,038 |
End of period (including accumulated net investment loss of $288 and accumulated net investment loss of $473, respectively) | $ 780,183,347 | $ 737,326,540 |
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.59 | $ 16.16 | $ 13.98 | $ 13.36 | $ 10.03 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.17) | (.15) | .02 F | (.17) | (.11) |
Net realized and unrealized gain (loss) | 5.13 | (.42) | 2.24 | .79 | 3.44 |
Total from investment operations | 4.96 | (.57) | 2.26 | .62 | 3.33 |
Distributions from net investment income | - | - | (.08) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 | $ 13.36 |
Total Return A,B | 31.82% | (3.53)% | 16.20% | 4.64% | 33.20% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.25% | 1.30% | 1.37% | 1.44% | 1.70% |
Expenses net of fee waivers, if any | 1.25% | 1.30% | 1.37% | 1.44% | 1.59% |
Expenses net of all reductions | 1.24% | 1.20% | 1.26% | 1.35% | 1.38% |
Net investment income (loss) | (.91)% | (.88)% | .12% F | (1.10)% | (1.03)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 309,105 | $ 189,054 | $ 144,970 | $ 123,389 | $ 123,604 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.87)%.
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. Expenses net of fee 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 T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 15.28 | $ 15.88 | $ 13.76 | $ 13.17 | $ 9.91 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.21) | (.19) | (.02) F | (.19) | (.14) |
Net realized and unrealized gain (loss) | 5.02 | (.41) | 2.21 | .78 | 3.40 |
Total from investment operations | 4.81 | (.60) | 2.19 | .59 | 3.26 |
Distributions from net investment income | - | - | (.07) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 | $ 13.17 |
Total Return A,B | 31.48% | (3.78)% | 15.94% | 4.48% | 32.90% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.51% | 1.55% | 1.60% | 1.62% | 1.85% |
Expenses net of fee waivers, if any | 1.51% | 1.55% | 1.60% | 1.62% | 1.83% |
Expenses net of all reductions | 1.49% | 1.44% | 1.48% | 1.53% | 1.63% |
Net investment income (loss) | (1.16)% | (1.13)% | (.11)% F | (1.28)% | (1.28)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 260,339 | $ 260,966 | $ 315,930 | $ 363,399 | $ 367,257 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.10)%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.59 | $ 15.24 | $ 13.25 | $ 12.76 | $ 9.64 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.28) | (.27) | (.09) F | (.27) | (.17) |
Net realized and unrealized gain (loss) | 4.79 | (.38) | 2.12 | .76 | 3.29 |
Total from investment operations | 4.51 | (.65) | 2.03 | .49 | 3.12 |
Distributions from net investment income | - | - | (.04) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 | $ 12.76 |
Total Return A,B | 30.91% | (4.27)% | 15.33% | 3.84% | 32.37% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 2.01% | 2.05% | 2.13% | 2.21% | 2.38% |
Expenses net of fee waivers, if any | 2.01% | 2.05% | 2.13% | 2.21% | 2.25% |
Expenses net of all reductions | 2.00% | 1.94% | 2.02% | 2.12% | 2.05% |
Net investment income (loss) | (1.67)% | (1.63)% | (.65)% F | (1.87)% | (1.69)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 102,655 | $ 192,790 | $ 309,020 | $ 355,927 | $ 391,832 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.64)%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 14.66 | $ 15.31 | $ 13.31 | $ 12.80 | $ 9.67 |
Income from Investment Operations | |||||
Net investment income (loss) C | (.29) | (.27) | (.08) F | (.26) | (.17) |
Net realized and unrealized gain (loss) | 4.81 | (.38) | 2.12 | .77 | 3.30 |
Total from investment operations | 4.52 | (.65) | 2.04 | .51 | 3.13 |
Distributions from net investment income | - | - | (.04) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 | $ 12.80 |
Total Return A,B | 30.83% | (4.25)% | 15.34% | 3.98% | 32.37% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 2.01% | 2.05% | 2.10% | 2.13% | 2.28% |
Expenses net of fee waivers, if any | 2.01% | 2.05% | 2.10% | 2.13% | 2.25% |
Expenses net of all reductions | 1.99% | 1.94% | 1.99% | 2.04% | 2.05% |
Net investment income (loss) | (1.66)% | (1.63)% | (.61)% F | (1.79)% | (1.69)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 86,974 | $ 82,835 | $ 108,287 | $ 125,926 | $ 139,654 |
Portfolio turnover rate E | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
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. Expenses net of fee 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.
Technology
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.07 | $ 16.60 | $ 14.32 | $ 13.61 | $ 10.15 |
Income from Investment Operations | |||||
Net investment income (loss) B | (.11) | (.09) | .09 E | (.09) | (.05) |
Net realized and unrealized gain (loss) | 5.30 | (.44) | 2.30 | .80 | 3.51 |
Total from investment operations | 5.19 | (.53) | 2.39 | .71 | 3.46 |
Distributions from net investment income | - | - | (.11) | - | - |
Redemption fees added to paid in capital B | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 | $ 13.61 |
Total Return A | 32.30% | (3.19)% | 16.73% | 5.22% | 34.09% |
Ratios to Average Net Assets C,F | |||||
Expenses before reductions | .93% | .90% | .92% | .93% | .99% |
Expenses net of fee waivers, if any | .93% | .90% | .92% | .93% | .99% |
Expenses net of all reductions | .92% | .80% | .81% | .84% | .79% |
Net investment income (loss) | (.59)% | (.49)% | .57% E | (.59)% | (.43)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 21,111 | $ 11,681 | $ 11,640 | $ 10,984 | $ 11,511 |
Portfolio turnover rate D | 208% | 258% | 180% | 105% | 140% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.42)%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 return of capital distributions or capital gain distributions. Interest income and income and capital gain distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 68,788,299 | |
Unrealized depreciation | (65,283,562) | |
Net unrealized appreciation (depreciation) | 3,504,737 | |
Capital loss carryforward | (1,419,316,323) | |
Cost for federal income tax purposes | $ 814,571,703 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Technology
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,608,479,872 and $1,790,613,658, respectively.
6. 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 .26% 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 .56% 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% | $ 644,282 | $ 44,835 |
Class T | .25% | .25% | 1,346,192 | 7,898 |
Class B | .75% | .25% | 1,545,100 | 1,162,780 |
Class C | .75% | .25% | 885,665 | 50,228 |
$ 4,421,239 | $ 1,265,741 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 30,734 |
Class T | 26,991 |
Class B* | 210,237 |
Class C* | 6,377 |
$ 274,339 |
* 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
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
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 | $ 866,525 | .34 |
Class T | 916,127 | .34 |
Class B | 533,526 | .35 |
Class C | 300,737 | .34 |
Institutional Class | 40,493 | .27 |
$ 2,657,408 |
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.
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 $50,241 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Borrower | $ 5,313,457 | 5.40% | $ 27,912 |
7. 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, which amounted to $1,476 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. 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 $100,745 for the period. In addition, through arrangements with the each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced
Technology
9. Expense Reductions - continued
each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 8,049 | |
Class B | 1,907 | |
Class C | 2,925 | |
Institutional Class | 11 | |
$ 12,892 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to each of the Funds is not anticipated to have a material impact on such Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 7,888,385 | 5,933,920 | $ 145,922,304 | $ 105,071,198 |
Shares redeemed | (4,978,587) | (2,775,104) | (92,460,573) | (47,788,058) |
Net increase (decrease) | 2,909,798 | 3,158,816 | $ 53,461,731 | $ 57,283,140 |
Class T | ||||
Shares sold | 1,926,573 | 3,384,477 | $ 34,966,338 | $ 58,748,287 |
Shares redeemed | (6,053,307) | (6,198,789) | (109,073,221) | (105,287,546) |
Net increase (decrease) | (4,126,734) | (2,814,312) | $ (74,106,883) | $ (46,539,259) |
Class B | ||||
Shares sold | 357,014 | 539,586 | $ 6,182,320 | $ 8,903,373 |
Shares redeemed | (8,194,716) | (7,601,103) | (140,978,328) | (125,479,671) |
Net increase (decrease) | (7,837,702) | (7,061,517) | $ (134,796,008) | $ (116,576,298) |
Class C | ||||
Shares sold | 490,290 | 570,438 | $ 8,483,174 | $ 9,501,649 |
Shares redeemed | (1,608,094) | (1,991,739) | (27,833,773) | (32,610,461) |
Net increase (decrease) | (1,117,804) | (1,421,301) | $ (19,350,599) | $ (23,108,812) |
Institutional Class | ||||
Shares sold | 640,632 | 258,108 | $ 12,507,491 | $ 4,843,216 |
Shares redeemed | (374,535) | (232,556) | (7,263,706) | (4,099,646) |
Net increase (decrease) | 266,097 | 25,552 | $ 5,243,785 | $ 743,570 |
Annual Report
Advisor Utilities 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, 2007 | Past 1 | Past 5 | Past 10 | |
Institutional Class | 22.54% | 21.22% | 8.75% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Utilities Fund - Institutional Class on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
For the year ending July 31, 2007, the fund's Class A, Class T, Class B and Class C shares returned 22.14%, 21.74%, 21.18% and 21.23%, respectively (excluding sales charges), compared with a gain of 15.12% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Utilities Index, and an advance of 18.45% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Utilities Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund also beat the S&P 500. For the first two months of the period, the fund outperformed the Goldman Sachs benchmark due its overweighting of integrated telecommunication services stocks, positive security selection and an overweighting in alternative carriers, and underweighting of multi-utilities stocks. Conversely, less-successful security selection in wireless telecom services and underweighting broadcasting and cable TV hurt relative returns. Four telecommunications stocks - Level 3 Communications, BellSouth, Verizon Communications and AT&T - were the top contributors during this two-month time frame. Not owning two index components that fared well - - Canadian integrated telecom services provider BCE and satellite TV company DirecTV - held back our results along with underweighting another Canadian telecom stock, Telus. The fund's outperformance of its new MSCI benchmark during the last 10 months of the period resulted from strong stock selection in electric utilities, as well as positive security selection and an underweighting in multi-utilities. Detractors during this 10-month time frame included weak-performing out-of-benchmark holdings in both oil and gas storage/transport stocks and integrated telecom services. The telecom positions had been acquired prior to the fund's restructuring on October 1, 2006, when it began focusing on utilities only, at which point the telecom stocks were all sold from the portfolio. Top contributors to the fund's outperformance of the MSCI index during the last 10 months of the period included power generator and utility operator Constellation Energy Group, multi-utility Public Service Enterprise Group, electric utility Entergy - no longer held - - and an underweighted position in electric utility Southern Company. Among the detractors were oil and gas storage/transport firm Spectra Energy, global power infrastructure player AES and an underweighted position in power producer Mirant.
For the year ending July 31, 2007, the fund's Institutional Class shares returned 22.54%, compared with a gain of 15.12% for its new benchmark, the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Utilities Index, and an advance of 18.45% for a blended index specific to this fund. This blended index is a combination of the Goldman Sachs® Utilities Index, which the fund was compared with through September 2006, and the new MSCI index mentioned above, which the fund was compared with during the period's final 10 months1. During the same 12-month period, the fund also beat the S&P 500. For the first two months of the period, the fund outperformed the Goldman Sachs benchmark due its overweighting of integrated telecommunication services stocks, positive security selection and an overweighting in alternative carriers, and underweighting of multi-utilities stocks. Conversely, less-successful security selection in wireless telecom services and underweighting broadcasting and cable TV hurt relative returns. Four telecommunications stocks - Level 3 Communications, BellSouth, Verizon Communications and AT&T - were the top contributors during this two-month time frame. Not owning two index components that fared well - Canadian integrated telecom services provider BCE and satellite TV company DirecTV - held back our results, along with underweighting another Canadian telecom stock, Telus. The fund's outperformance of its new MSCI benchmark during the last 10 months of the period resulted from strong stock selection in electric utilities, as well as positive security selection and an underweighting in multi-utilities. Detractors during this 10-month time frame included weak-performing out-of-benchmark holdings in both oil and gas storage/transport stocks and integrated telecom services. The telecom positions had been acquired prior to the fund's restructuring on October 1, 2006, when it began focusing on utilities only, at which point the telecom stocks were all sold from the portfolio. Top contributors to the fund's outperformance of the MSCI index during the last 10 months of the period included power generator and utility operator Constellation Energy Group, multi-utility Public Service Enterprise Group, electric utility Entergy and an underweighted position in electric utility Southern Company. Among the detractors were oil and gas storage/transport firm Spectra Energy - no longer held - global power infrastructure player AES and an underweighted position in power producer Mirant.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending July 31, 2007. From August 1, 2006, through September 30, 2006, the fund compared its performance with the Goldman Sachs Utilities Index, which returned 3.55% during that period. On October 1, 2006, the fund began comparing its performance with a different index, the MSCI US Investable Market Utilities Index, which returned 14.39% from October 1, 2006, through July 31, 2007. For the 12-month period ending July 31, 2007, the blended index (Goldman Sachs and MSCI) returned 18.45%.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
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 | $ 1,071.80 | $ 6.22 |
HypotheticalA | $ 1,000.00 | $ 1,018.79 | $ 6.06 |
Class T | |||
Actual | $ 1,000.00 | $ 1,070.80 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,017.60 | $ 7.25 |
Class B | |||
Actual | $ 1,000.00 | $ 1,068.10 | $ 9.90 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | |||
Actual | $ 1,000.00 | $ 1,068.10 | $ 9.95 |
HypotheticalA | $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,073.80 | $ 4.63 |
HypotheticalA | $ 1,000.00 | $ 1,020.33 | $ 4.51 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.21% |
Class T | 1.45% |
Class B | 1.93% |
Class C | 1.94% |
Institutional Class | .90% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
TXU Corp. | 9.5 | 4.5 |
Exelon Corp. | 8.1 | 5.3 |
Constellation Energy Group, Inc. | 5.8 | 6.4 |
AES Corp. | 5.4 | 5.3 |
Public Service Enterprise Group, Inc. | 5.3 | 5.0 |
Dominion Resources, Inc. | 5.2 | 0.0 |
PPL Corp. | 5.2 | 2.9 |
Entergy Corp. | 5.0 | 6.1 |
Southern Co. | 4.3 | 0.0 |
Sempra Energy | 4.1 | 5.2 |
57.9 | ||
Top Industries (% of fund's net assets) | |||
As of July 31, 2007 | |||
| Electric Utilities | 42.4% | |
| Multi-utilities | 26.6% | |
| Independent Power Producers & Energy Traders | 26.0% | |
| Gas Utilities | 4.3% | |
| Water Utilities | 0.6% | |
| All Others* | 0.1% | |
As of January 31, 2007 | |||
| Electric Utilities | 45.7% | |
| Multi-utilities | 24.2% | |
| Independent Power Producers & Energy Traders | 19.1% | |
| Gas Utilities | 4.0% | |
| Oil, Gas & Consumable Fuels | 3.9% | |
| All Others* | 3.1% | |
* Includes short-term investments and net other assets. |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications. |
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 42.4% | |||
Electric Utilities - 42.4% | |||
Allegheny Energy, Inc. (a) | 80,100 | $ 4,183,623 | |
American Electric Power Co., Inc. | 174,600 | 7,593,354 | |
Cleco Corp. | 27,400 | 650,750 | |
DPL, Inc. | 50,500 | 1,342,290 | |
Duke Energy Corp. | 193,400 | 3,293,602 | |
Edison International | 59,600 | 3,152,244 | |
Entergy Corp. | 129,400 | 12,934,824 | |
Exelon Corp. | 295,900 | 20,757,385 | |
FirstEnergy Corp. | 134,800 | 8,189,100 | |
FPL Group, Inc. | 168,700 | 9,739,051 | |
Great Plains Energy, Inc. | 37,300 | 1,035,448 | |
ITC Holdings Corp. | 45,800 | 1,925,890 | |
Northeast Utilities | 70,100 | 1,916,534 | |
Pepco Holdings, Inc. | 103,900 | 2,812,573 | |
PPL Corp. | 282,200 | 13,302,908 | |
Reliant Energy, Inc. (a) | 135,600 | 3,482,208 | |
Sierra Pacific Resources | 106,500 | 1,692,285 | |
Southern Co. | 330,600 | 11,121,384 | |
109,125,453 | |||
GAS UTILITIES - 4.3% | |||
Gas Utilities - 4.3% | |||
Equitable Resources, Inc. | 62,000 | 2,920,820 | |
ONEOK, Inc. | 51,000 | 2,588,250 | |
Questar Corp. | 83,400 | 4,294,266 | |
Southern Union Co. | 45,200 | 1,395,776 | |
11,199,112 | |||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 26.0% | |||
Independent Power Producers & Energy Traders - 26.0% | |||
AES Corp. (a) | 710,200 | 13,955,430 | |
Constellation Energy Group, Inc. | 177,400 | 14,866,120 | |
Dynegy, Inc. Class A (a) | 175,400 | 1,562,814 | |
Mirant Corp. (a) | 121,500 | 4,596,345 | |
NRG Energy, Inc. (a) | 191,800 | 7,393,890 | |
TXU Corp. | 376,300 | 24,553,575 | |
66,928,174 | |||
MULTI-UTILITIES - 26.6% | |||
Multi-Utilities - 26.6% | |||
Alliant Energy Corp. | 72,200 | 2,667,790 | |
Ameren Corp. | 109,000 | 5,229,820 | |
CenterPoint Energy, Inc. (d) | 162,500 | 2,678,000 | |
Shares | Value | ||
CMS Energy Corp. | 185,590 | $ 2,999,134 | |
Dominion Resources, Inc. | 158,300 | 13,332,026 | |
DTE Energy Co. (d) | 31,900 | 1,479,522 | |
Integrys Energy Group, Inc. | 32,100 | 1,588,629 | |
MDU Resources Group, Inc. | 74,400 | 2,028,144 | |
NiSource, Inc. | 123,600 | 2,357,052 | |
PG&E Corp. (d) | 156,900 | 6,716,889 | |
Public Service Enterprise Group, Inc. | 157,300 | 13,551,395 | |
Puget Energy, Inc. | 32,900 | 761,635 | |
Sempra Energy | 202,100 | 10,654,712 | |
Wisconsin Energy Corp. | 55,600 | 2,386,908 | |
68,431,656 | |||
WATER UTILITIES - 0.6% | |||
Water Utilities - 0.6% | |||
Aqua America, Inc. (d) | 68,200 | 1,492,216 | |
TOTAL COMMON STOCKS (Cost $235,462,313) | 257,176,611 | ||
Money Market Funds - 3.0% | |||
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 7,689,350 | 7,689,350 | |
TOTAL INVESTMENT PORTFOLIO - 102.9% (Cost $243,151,663) | 264,865,961 | ||
NET OTHER ASSETS - (2.9)% | (7,472,956) | ||
NET ASSETS - 100% | $ 257,393,005 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 206,614 |
Fidelity Securities Lending Cash Central Fund | 55,343 |
Total | $ 261,957 |
Income Tax Information |
At July 31, 2007, the fund had a capital loss carryforward of approximately $248,189,753 of which $93,777,221 and $154,412,532 will expire on July 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $7,449,338) - See accompanying schedule: Unaffiliated issuers (cost $235,462,313) | $ 257,176,611 | |
Fidelity Central Funds (cost $7,689,350) | 7,689,350 | |
Total Investments (cost $243,151,663) | $ 264,865,961 | |
Receivable for investments sold | 13,511,415 | |
Receivable for fund shares sold | 430,230 | |
Dividends receivable | 158,727 | |
Distributions receivable from Fidelity Central Funds | 5,110 | |
Prepaid expenses | 352 | |
Other receivables | 1,862 | |
Total assets | 278,973,657 | |
Liabilities | ||
Payable to custodian bank | $ 408,424 | |
Payable for investments purchased | 12,080,232 | |
Payable for fund shares redeemed | 1,025,938 | |
Accrued management fee | 130,505 | |
Distribution fees payable | 128,484 | |
Other affiliated payables | 80,730 | |
Other payables and accrued expenses | 36,989 | |
Collateral on securities loaned, at value | 7,689,350 | |
Total liabilities | 21,580,652 | |
Net Assets | $ 257,393,005 | |
Net Assets consist of: | ||
Paid in capital | $ 482,813,379 | |
Undistributed net investment income | 1,153,544 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (248,288,216) | |
Net unrealized appreciation (depreciation) on investments | 21,714,298 | |
Net Assets | $ 257,393,005 | |
Statement of Assets and Liabilities - continued
July 31, 2007 | ||
Calculation of Maximum Offering Price Class A: | $ 20.74 | |
Maximum offering price per share (100/94.25 of $20.74) | $ 22.01 | |
Class T: | $ 20.71 | |
Maximum offering price per share (100/96.50 of $20.71) | $ 21.46 | |
Class B: | $ 20.40 | |
Class C: | $ 20.38 | |
Institutional Class: | $ 20.95 | |
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
Advisor Utilities Fund
Financial Statements - continued
Statement of Operations
Year ended July 31, 2007 | ||
Investment Income | ||
Dividends | $ 5,515,889 | |
Interest | 53 | |
Income from Fidelity Central Funds | 261,957 | |
Total income | 5,777,899 | |
Expenses | ||
Management fee | $ 1,409,020 | |
Transfer agent fees | 825,887 | |
Distribution fees | 1,514,377 | |
Accounting and security lending fees | 103,110 | |
Custodian fees and expenses | 8,603 | |
Independent trustees' compensation | 787 | |
Registration fees | 78,067 | |
Audit | 47,726 | |
Legal | 3,460 | |
Interest | 6,154 | |
Miscellaneous | 69,807 | |
Total expenses before reductions | 4,066,998 | |
Expense reductions | (4,899) | 4,062,099 |
Net investment income (loss) | 1,715,800 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 44,239,668 | |
Foreign currency transactions | 3,147 | |
Total net realized gain (loss) | 44,242,815 | |
Change in net unrealized appreciation (depreciation) on investment securities | (2,387,149) | |
Net gain (loss) | 41,855,666 | |
Net increase (decrease) in net assets resulting from operations | $ 43,571,466 | |
Statement of Changes in Net Assets
Year ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 1,715,800 | $ 1,994,007 |
Net realized gain (loss) | 44,242,815 | 26,815,933 |
Change in net unrealized appreciation (depreciation) | (2,387,149) | (2,675,823) |
Net increase (decrease) in net assets resulting from operations | 43,571,466 | 26,134,117 |
Distributions to shareholders from net investment income | (1,795,359) | (1,886,398) |
Share transactions - net increase (decrease) | 17,609,310 | (30,269,037) |
Redemption fees | 19,962 | 5,377 |
Total increase (decrease) in net assets | 59,405,379 | (6,015,941) |
Net Assets | ||
Beginning of period | 197,987,626 | 204,003,567 |
End of period (including undistributed net investment income of $1,153,544 and undistributed net investment income of $1,237,487, respectively) | $ 257,393,005 | $ 197,987,626 |
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.20 | $ 15.17 | $ 12.09 | $ 10.37 | $ 8.74 |
Income from Investment Operations | |||||
Net investment income (loss) C | .21 | .24 | .28 F | .10 | .13 |
Net realized and unrealized gain (loss) | 3.56 | 2.06 | 3.01 | 1.72 | 1.69 |
Total from investment operations | 3.77 | 2.30 | 3.29 | 1.82 | 1.82 |
Distributions from net investment income | (.23) | (.27) | (.21) | (.10) | (.19) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 | $ 10.37 |
Total Return A,B | 22.14% | 15.38% | 27.48% | 17.67% | 21.22% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.27% | 1.34% | 1.39% | 1.51% | 1.67% |
Expenses net of fee waivers, if any | 1.27% | 1.34% | 1.39% | 1.50% | 1.58% |
Expenses net of all reductions | 1.26% | 1.32% | 1.36% | 1.45% | 1.47% |
Net investment income (loss) | 1.04% | 1.51% | 2.03% F | .87% | 1.46% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 94,842 | $ 40,599 | $ 29,150 | $ 21,987 | $ 21,761 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.39%.
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. Expenses net of fee 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 T
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.18 | $ 15.10 | $ 12.04 | $ 10.33 | $ 8.68 |
Income from Investment Operations | |||||
Net investment income (loss) C | .15 | .19 | .24 F | .07 | .11 |
Net realized and unrealized gain (loss) | 3.56 | 2.08 | 2.99 | 1.72 | 1.68 |
Total from investment operations | 3.71 | 2.27 | 3.23 | 1.79 | 1.79 |
Distributions from net investment income | (.18) | (.19) | (.17) | (.08) | (.14) |
Redemption fees added to paid in capital C | - H | - H | - H | -H | - H |
Net asset value, end of period | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 | $ 10.33 |
Total Return A,B | 21.74% | 15.20% | 27.03% | 17.42% | 20.91% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.54% | 1.60% | 1.67% | 1.79% | 1.94% |
Expenses net of fee waivers, if any | 1.54% | 1.60% | 1.67% | 1.75% | 1.83% |
Expenses net of all reductions | 1.54% | 1.58% | 1.64% | 1.70% | 1.72% |
Net investment income (loss) | .76% | 1.25% | 1.76% F | .62% | 1.21% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 62,592 | $ 52,128 | $ 55,683 | $ 53,255 | $ 55,510 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.12%.
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. Expenses net of fee 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 B
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.90 | $ 14.83 | $ 11.82 | $ 10.15 | $ 8.49 |
Income from Investment Operations | |||||
Net investment income (loss) C | .05 | .12 | .17 F | .01 | .07 |
Net realized and unrealized gain (loss) | 3.52 | 2.03 | 2.95 | 1.69 | 1.65 |
Total from investment operations | 3.57 | 2.15 | 3.12 | 1.70 | 1.72 |
Distributions from net investment income | (.07) | (.08) | (.11) | (.03) | (.06) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 | $ 10.15 |
Total Return A,B | 21.18% | 14.57% | 26.51% | 16.79% | 20.37% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 2.04% | 2.09% | 2.14% | 2.25% | 2.32% |
Expenses net of fee waivers, if any | 2.04% | 2.09% | 2.14% | 2.25% | 2.25% |
Expenses net of all reductions | 2.03% | 2.06% | 2.11% | 2.20% | 2.13% |
Net investment income (loss) | .27% | .76% | 1.28% F | .12% | .79% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 43,845 | $ 65,959 | $ 82,577 | $ 84,742 | $ 87,868 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .64%.
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. Expenses net of fee 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 C
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 16.91 | $ 14.84 | $ 11.84 | $ 10.16 | $ 8.50 |
Income from Investment Operations | |||||
Net investment income (loss) C | .06 | .13 | .18 F | .02 | .07 |
Net realized and unrealized gain (loss) | 3.51 | 2.04 | 2.94 | 1.70 | 1.65 |
Total from investment operations | 3.57 | 2.17 | 3.12 | 1.72 | 1.72 |
Distributions from net investment income | (.10) | (.10) | (.12) | (.04) | (.06) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | - H |
Net asset value, end of period | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 | $ 10.16 |
Total Return A,B | 21.23% | 14.72% | 26.48% | 16.98% | 20.35% |
Ratios to Average Net Assets D,G | |||||
Expenses before reductions | 1.99% | 2.02% | 2.07% | 2.17% | 2.23% |
Expenses net of fee waivers, if any | 1.99% | 2.02% | 2.07% | 2.17% | 2.23% |
Expenses net of all reductions | 1.99% | 2.00% | 2.04% | 2.12% | 2.12% |
Net investment income (loss) | .32% | .83% | 1.36% F | .21% | .80% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 43,292 | $ 32,823 | $ 34,827 | $ 35,038 | $ 37,530 |
Portfolio turnover rate E | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividends, the ratio of net investment income (loss) to average net assets would have been .72%.
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. Expenses net of fee 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.
Utilities
Financial Highlights - Institutional Class
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 17.38 | $ 15.31 | $ 12.20 | $ 10.47 | $ 8.86 |
Income from Investment Operations | |||||
Net investment income (loss) B | .29 | .30 | .33 E | .15 | .18 |
Net realized and unrealized gain (loss) | 3.58 | 2.10 | 3.03 | 1.73 | 1.71 |
Total from investment operations | 3.87 | 2.40 | 3.36 | 1.88 | 1.89 |
Distributions from net investment income | (.30) | (.33) | (.25) | (.15) | (.28) |
Redemption fees added to paid in capital B | - G | - G | - G | - G | - G |
Net asset value, end of period | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 | $ 10.47 |
Total Return A | 22.54% | 15.95% | 27.88% | 18.14% | 21.94% |
Ratios to Average Net Assets C,F | |||||
Expenses before reductions | .92% | .94% | .99% | 1.09% | 1.06% |
Expenses net of fee waivers, if any | .92% | .94% | .99% | 1.09% | 1.06% |
Expenses net of all reductions | .92% | .92% | .96% | 1.04% | .94% |
Net investment income (loss) | 1.39% | 1.91% | 2.44% E | 1.29% | 1.98% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,822 | $ 6,479 | $ 1,766 | $ 2,254 | $ 2,891 |
Portfolio turnover rate D | 118% | 64% | 44% | 38% | 81% |
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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.80%.
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. Expenses net of fee 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.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2007
1. Organization.
Fidelity Advisor Utilities Fund (the Fund) (formerly Fidelity Advisor Telecommunications & Utilities Growth Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. 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 and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution 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 foreign currency transactions, deferred trustees compensation, 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 | $ 27,851,494 |
Unrealized depreciation | (6,238,807) |
Net unrealized appreciation (depreciation) | 21,612,687 |
Undistributed ordinary income | 1,156,741 |
Capital loss carryforward | (248,189,753) |
Cost for federal income tax purposes | $ 243,253,274 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 1,795,359 | $ 1,886,398 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to .75% of the proceeds of the redeemed shares. Prior to October 1, 2006, shares held in the Fund less than 60 days were 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 and Research Company (FMR), are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Utilities
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $315,034,135 and $291,003,084, respectively.
6. 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 .26% 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 .56% 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% | $ 181,993 | $ 6,767 |
Class T | .25% | .25% | 315,786 | 3,058 |
Class B | .75% | .25% | 595,186 | 449,574 |
Class C | .75% | .25% | 421,412 | 61,839 |
$ 1,514,377 | $ 521,238 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 84,821 |
Class T | 22,450 |
Class B* | 59,315 |
Class C* | 8,988 |
$ 175,574 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. 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 | $ 238,880 | .33 |
Class T | 222,763 | .35 |
Class B | 206,830 | .35 |
Class C | 126,421 | .30 |
Institutional Class | 30,993 | .23 |
$ 825,887 |
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.
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 $394 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 4,871,571 | 5.41% | $ 5,125 |
7. 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, which amounted to $420 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $55,343.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $2,241,000. The weighted average interest rate was 5.51%. The interest expense amounted to $1,029 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
Utilities
10. 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 $942 for the period. In addition, through arrangements with the Fund's each class' transfer agent, 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 transfer agent expense as noted in the table below.
Transfer Agent | |
Class A | $ 194 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2007 | 2006 |
From net investment income | ||
Class A | $ 644,012 | $ 515,686 |
Class T | 560,438 | 679,149 |
Class B | 253,871 | 428,719 |
Class C | 209,022 | 227,882 |
Institutional Class | 128,016 | 34,962 |
Total | $ 1,795,359 | $ 1,886,398 |
Annual Report
Notes to Financial Statements - continued
13. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | 2007 | 2006 | 2007 | 2006 |
Class A | ||||
Shares sold | 3,629,587 | 1,157,742 | $ 74,211,808 | $ 18,299,828 |
Reinvestment of distributions | 31,700 | 29,809 | 573,106 | 453,431 |
Shares redeemed | (1,448,205) | (749,911) | (30,175,903) | (11,656,126) |
Net increase (decrease) | 2,213,082 | 437,640 | $ 44,609,011 | $ 7,097,133 |
Class T | ||||
Shares sold | 1,035,618 | 427,549 | $ 20,689,420 | $ 6,679,626 |
Reinvestment of distributions | 29,413 | 41,716 | 530,959 | 634,275 |
Shares redeemed | (1,078,012) | (1,121,239) | (22,011,808) | (17,325,224) |
Net increase (decrease) | (12,981) | (651,974) | $ (791,429) | $ (10,011,323) |
Class B | ||||
Shares sold | 496,053 | 164,555 | $ 9,866,415 | $ 2,522,243 |
Reinvestment of distributions | 12,604 | 24,747 | 221,292 | 371,052 |
Shares redeemed | (2,262,406) | (1,855,539) | (44,828,420) | (28,512,346) |
Net increase (decrease) | (1,753,749) | (1,666,237) | $ (34,740,713) | $ (25,619,051) |
Class C | ||||
Shares sold | 1,008,161 | 246,869 | $ 20,364,886 | $ 3,819,729 |
Reinvestment of distributions | 8,956 | 11,397 | 157,448 | 170,983 |
Shares redeemed | (834,201) | (663,040) | (16,902,583) | (10,076,221) |
Net increase (decrease) | 182,916 | (404,774) | $ 3,619,751 | $ (6,085,509) |
Institutional Class | ||||
Shares sold | 1,116,023 | 292,241 | $ 24,167,100 | $ 4,893,596 |
Reinvestment of distributions | 2,016 | 1,223 | 36,805 | 18,745 |
Shares redeemed | (878,823) | (36,084) | (19,291,215) | (562,628) |
Net increase (decrease) | 239,216 | 257,380 | $ 4,912,690 | $ 4,349,713 |
Utilities
Report of Independent Registered Public Accounting Firm
To the Trustees of Advisor Series VII and the Shareholders of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund (formerly Developing Communications), Fidelity Advisor Consumer Discretionary Fund (formerly Consumer Industries), Fidelity Advisor Electronics Fund, Fidelity Advisor Energy Fund (formerly Natural Resources), Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund (formerly Cyclical Industries), Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (formerly Telecommunications & Utilities Growth)
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund (formerly Developing Communications), Fidelity Advisor Consumer Discretionary Fund (formerly Consumer Industries), Fidelity Advisor Electronics Fund, Fidelity Advisor Energy Fund (formerly Natural Resources), Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund (formerly Cyclical Industries), Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (formerly Telecommunications & Utilities Growth) (collectively, the "Funds"), including the schedules of investments, as of July 31, 2007, 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 audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2007, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. 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 Communications Equipment Fund (formerly Developing Communications), Fidelity Advisor Consumer Discretionary Fund (formerly Consumer Industries), Fidelity Advisor Electronics Fund, Fidelity Advisor Energy Fund (formerly Natural Resources), Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund (formerly Cyclical Industries), Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (formerly Telecommunications & Utilities Growth) as of July 31, 2007, 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 20, 2007
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 James C. Curvey, each of the Trustees oversees 353 funds advised by FMR or an affiliate. Mr. Curvey oversees 317 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. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. 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 may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (77) | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR Corp.; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of Fidelity International Limited (FIL). | |
James C. Curvey (72) | |
Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is Vice Chairman (2006-present) and Director of FMR Corp. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR Corp. (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). | |
* 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.
Independent Trustees:
Correspondence intended for each Independent 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 | |
Dennis J. Dirks (59) | |
Year of Election or Appointment: 2005 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). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). | |
Albert R. Gamper, Jr. (65) | |
Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. | |
George H. Heilmeier (71) | |
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), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). 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), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. | |
James H. Keyes (66) | |
Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). | |
Marie L. Knowles (60) | |
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-present). 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 (63) | |
Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). 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. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. | |
Cornelia M. Small (63) | |
Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) 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 (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
William S. Stavropoulos (68) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus 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), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. 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. | |
Kenneth L. Wolfe (68) | |
Year of Election or Appointment: 2005 Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993-2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003-present), Bausch & Lomb, Inc., and Revlon Inc. (2004-present). | |
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Mauriello 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 | |
Peter S. Lynch (63) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. | |
Joseph Mauriello (62) | |
Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd., (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc., (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). | |
Kimberley H. Monasterio (43) | |
Year of Election or Appointment: 2007 President and Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). 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). | |
Boyce I. Greer (51) | |
Year of Election or Appointment: 2005 Vice President of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Greer also serves as Vice President of certain Equity Funds (2005-present), certain Asset Allocation Funds (2005-present), Fixed-Income Funds (2006-present), and Money Market Funds (2006-present). Mr. Greer is also a Trustee of other investment companies advised by FMR (2003-present). He is an Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005-present), and Senior Vice President of Fidelity Investments Money Management, Inc. (2006-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005), and Executive Vice President (2000-2002) and Money Market Group Leader (1997-2002) of the Fidelity Investments Fixed Income Division. He also served as Vice President of Fidelity's Money Market Funds (1997-2002), Senior Vice President of FMR (1997-2002), and Vice President of FIMM (1998-2002). | |
Eric D. Roiter (58) | |
Year of Election or Appointment: 1998 or 2000 Secretary of Advisor Biotechnology (2000), Advisor Communications Equipment (2000), Advisor Consumer Discretionary (1998), Advisor Electronics (2000), Advisor Energy (1998), Advisor Financial Services (1998), Advisor Health Care (1998), Advisor Industrials (1998), Advisor Technology (1998), and Advisor Utilities (1998). He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). | |
Scott C. Goebel (39) | |
Year of Election or Appointment: 2007 Assistant Secretary of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Goebel also serves as Assistant Secretary of other Fidelity funds (2007-present), Vice President and Secretary of FDC (2006-present), and is an employee of FMR. | |
R. Stephen Ganis (41) | |
Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR Corp. (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). | |
Joseph B. Hollis (59) | |
Year of Election or Appointment: 2006 Chief Financial Officer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). | |
Kenneth A. Rathgeber (60) | |
Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). | |
Bryan A. Mehrmann (46) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). | |
Kenneth B. Robins (37) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). 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). | |
Robert G. Byrnes (40) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). | |
Peter L. Lydecker (53) | |
Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. | |
Gary W. Ryan (48) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). | |
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:
Pay Date | Record Date | Dividends | Capital Gains | |
Fidelity Advisor Biotechnology Fund | ||||
Institutional Class | 09/17/07 | 09/14/07 | $0.000 | $0.360 |
Fidelity Advisor Communications Equipment Fund | ||||
Institutional Class | 09/17/07 | 09/14/07 | $0.000 | $0.135 |
Fidelity Advisor Consumer Discretionary Fund | ||||
Institutional Class | 09/17/07 | 09/14/07 | $0.000 | $1.322 |
Fidelity Advisor Energy Fund | ||||
Institutional Class | 09/10/07 | 09/07/07 | $0.000 | $2.002 |
Fidelity Advisor Financial Services Fund | ||||
Institutional Class | 09/17/07 | 09/14/07 | $0.169 | $1.230 |
Fidelity Advisor Health Care Fund | ||||
Institutional Class | 09/10/07 | 09/07/07 | $0.000 | $1.611 |
Fidelity Advisor Industrials Fund | ||||
Institutional Class | 09/17/07 | 09/14/07 | $0.000 | $1.857 |
Fidelity Advisor Utilities Fund | ||||
Institutional Class | 09/17/07 | 09/14/07 | $0.166 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended July 31, 2007, or, if subsequently determined to be different, the net capital gain of such year.
Fidelity Advisor Biotechnology Fund | $2,585,750 |
Fidelity Advisor Communications Equipment Fund | $145,205 |
Fidelity Advisor Consumer Discretionary Fund | $3,931,159 |
Fidelity Advisor Energy Fund | $59,721,177 |
Fidelity Advisor Financial Services Fund | $44,655,094 |
Fidelity Advisor Health Care Fund | $62,659,668 |
Fidelity Advisor Industrials Fund | $19,549,423 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
September 2006 | December 2006 | |
Fidelity Advisor Consumer Discretionary Fund | ||
Institutional Class | -% | 31% |
Fidelity Advisor Energy Fund | ||
Institutional Class | 8% | -% |
Fidelity Advisor Financial Services Fund | ||
Institutional Class | 100% | 100% |
Fidelity Advisor Health Care Fund | ||
Institutional Class | 39% | 67% |
Fidelity Advisor Industrials Fund | ||
Institutional Class | 25% | 100% |
Fidelity Advisor Utilities Fund | ||
Institutional Class | 100% | 100% |
Annual Report
Distributions - continued
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
September 2006 | December 2006 | |
Fidelity Advisor Consumer Discretionary Fund | ||
Institutional Class | -% | 32% |
Fidelity Advisor Energy Fund | ||
Institutional Class | 10% | -% |
Fidelity Advisor Financial Services Fund | ||
Institutional Class | 100% | 100% |
Fidelity Advisor Health Care Fund | ||
Institutional Class | 41% | 69% |
Fidelity Advisor Industrials Fund | ||
Institutional Class | 31% | 100% |
Fidelity Advisor Utilities Fund | ||
Institutional Class | 100% | 100% |
The funds will notify shareholders in January 2008 of amounts for use in preparing 2007 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on September 28, 2006 and September 30, 2006. The results of votes taken among shareholders on the 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 elect a Board of Trustees. A, C | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 2,206,930,035.62 | 96.925 |
Withheld | 70,013,151.28 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 2,206,929,647.55 | 96.925 |
Withheld | 70,013,539.35 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Robert M. Gates | ||
Affirmative | 2,205,212,761.55 | 96.850 |
Withheld | 71,730,425.35 | 3.150 |
TOTAL | 2,276,943,186.90 | 100.000 |
George H. Heilmeier | ||
Affirmative | 2,204,247,730.70 | 96.807 |
Withheld | 72,695,456.20 | 3.193 |
TOTAL | 2,276,943,186.90 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 2,203,739,123.67 | 96.785 |
Withheld | 73,204,063.23 | 3.215 |
TOTAL | 2,276,943,186.90 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 2,207,154,045.47 | 96.935 |
Withheld | 69,789,141.43 | 3.065 |
TOTAL | 2,276,943,186.90 | 100.000 |
James H. KeyesB | ||
Affirmative | 2,205,258,024.08 | 96.852 |
Withheld | 71,685,162.82 | 3.148 |
TOTAL | 2,276,943,186.90 | 100.000 |
Marie L. Knowles | ||
Affirmative | 2,205,892,060.16 | 96.880 |
Withheld | 71,051,126.74 | 3.120 |
TOTAL | 2,276,943,186.90 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 2,205,297,807.97 | 96.853 |
Withheld | 71,645,378.93 | 3.147 |
TOTAL | 2,276,943,186.90 | 100.000 |
William O. McCoy | ||
Affirmative | 2,204,396,505.93 | 96.814 |
Withheld | 72,546,680.97 | 3.186 |
TOTAL | 2,276,943,186.90 | 100.000 |
# of | % of | |
Robert L. Reynolds | ||
Affirmative | 2,206,981,118.77 | 96.927 |
Withheld | 69,962,068.13 | 3.073 |
TOTAL | 2,276,943,186.90 | 100.000 |
Cornelia M. Small | ||
Affirmative | 2,206,379,820.44 | 96.901 |
Withheld | 70,563,366.46 | 3.099 |
TOTAL | 2,276,943,186.90 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 2,205,403,278.90 | 96.858 |
Withheld | 71,539,908.00 | 3.142 |
TOTAL | 2,276,943,186.90 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 2,205,707,840.10 | 96.871 |
Withheld | 71,235,346.80 | 3.129 |
TOTAL | 2,276,943,186.90 | 100.000 |
PROPOSAL 2A | ||
To modify the fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments) of Fidelity Advisor Consumer Discretionary Fund.D | ||
# of | % of | |
Affirmative | 25,052,022.13 | 70.939 |
Against | 1,507,700.50 | 4.269 |
Abstain | 2,181,277.38 | 6.177 |
Broker Non-Votes | 6,573,990.16 | 18.615 |
TOTAL | 35,314,990.17 | 100.000 |
PROPOSAL 2B | ||
To modify the fundamental concentration policy of Fidelity Advisor Consumer Discretionary Fund.D | ||
# of | % of | |
Affirmative | 24,468,395.75 | 69.286 |
Against | 1,941,580.95 | 5.498 |
Abstain | 2,331,023.31 | 6.601 |
Broker Non-Votes | 6,573,990.16 | 18.615 |
TOTAL | 35,314,990.17 | 100.000 |
PROPOSAL 3A | ||
To modify the fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments) of Fidelity Advisor Industrials Fund.C | ||
# of | % of | |
Affirmative | 103,262,001.88 | 67.400 |
Against | 4,354,979.52 | 2.842 |
Abstain | 6,913,004.08 | 4.513 |
Broker Non-Votes | 38,678,502.70 | 25.246 |
TOTAL | 153,208,488.18 | 100.000 |
PROPOSAL 3B | ||
To modify the fundamental concentration policy of Fidelity Advisor Industrials Fund.C | ||
# of | % of | |
Affirmative | 103,063,141.29 | 67.270 |
Against | 4,478,980.28 | 2.923 |
Abstain | 6,987,863.91 | 4.561 |
Broker Non-Votes | 38,678,502.70 | 25.246 |
TOTAL | 153,208,488.18 | 100.000 |
PROPOSAL 4A | ||
To modify the fundamental concentration policy of Fidelity Advisor Utilities Fund.D | ||
# of | % of | |
Affirmative | 78,803,170.56 | 70.172 |
Against | 3,577,908.42 | 3.186 |
Abstain | 6.541,369.10 | 5.825 |
Broker Non-Votes | 23,378,154.01 | 20.817 |
TOTAL | 112,300,602.09 | 100.000 |
PROPOSAL 5A | ||
To modify the fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments) of Fidelity Advisor Communications Equipment Fund.D | ||
# of | % of | |
Affirmative | 5,159,022.72 | 69.946 |
Against | 285,575.04 | 3.872 |
Abstain | 443,398.62 | 6.011 |
Broker Non-Votes | 1,487,692.54 | 20.170 |
TOTAL | 7,375,688.92 | 100.000 |
PROPOSAL 5B | ||
To modify the fundamental concentration policy of Fidelity Advisor Communications Equipment Fund.D | ||
# of | % of | |
Affirmative | 5,159,987.88 | 69.959 |
Against | 295,440.44 | 4.006 |
Abstain | 432,568.06 | 5.864 |
Broker Non-Votes | 1,487,692.54 | 20.170 |
TOTAL | 7,375,688.92 | 100.000 |
PROPOSAL 6A | ||
To modify the fundamental investment objective of Fidelity Advisor Energy Fund.D | ||
# of | % of | |
Affirmative | 335,212,227.18 | 68.272 |
Against | 23,151,143.88 | 4.716 |
Abstain | 28,129,279.36 | 5.728 |
Broker Non-Votes | 104,499,231.10 | 21.283 |
TOTAL | 490,991,881.52 | 100.000 |
PROPOSAL 6B | ||
To modify the fundamental investment policy of Fidelity Advisor Energy Fund.D | ||
# of | % of | |
Affirmative | 338,904,300.69 | 69.024 |
Against | 21,528,314.89 | 4.385 |
Abstain | 26,060,034.84 | 5.307 |
Broker Non-Votes | 104,499,231.10 | 21.283 |
TOTAL | 490,991,881.52 | 100.000 |
PROPOSAL 6C | ||
To modify the fundamental concentration policy of Fidelity Advisor Energy Fund.D | ||
# of | % of | |
Affirmative | 334,458,778.33 | 68.119 |
Against | 22,220,293.16 | 4.526 |
Abstain | 29,813,578.93 | 6.072 |
Broker Non-Votes | 104,499,231.10 | 21.283 |
TOTAL | 490,991,881.52 | 100.000 |
A Denotes trust-wide proposal and voting results. B Effective on or about January 1, 2007. C The special meeting of shareholders reconvened on September 30, 2006 with respect to this proposal. D The special meeting of shareholders reconvened on September 28, 2006 with respect to this proposal. | ||
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Focus Funds
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2007 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of the management fee and total expenses of each fund; (ii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to each fund's agreements with foreign sub-advisers to clarify that each sub-adviser provides services as an independent contractor.
In determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board also considered that Fidelity voluntarily pays for market data out of its own resources. The Board also considered the agreement reached between the Independent Trustees and Fidelity in December 2006 following an independent review of matters relating to receipt of travel, entertainment, gifts and gratuities in violation of Fidelity policies.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of a fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in July 2006, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fee on Fidelity Advisor Floating Rate High Income Fund; (iii) contractually agreeing to reduce the management fees on Fidelity's California, Massachusetts, New Jersey, and New York AMT Tax-Free Money Market Funds, launching new Institutional Classes and Service Classes of these funds, and contractually agreeing to impose expense limitations on these funds; (iv) eliminating the exchange fee on the Fidelity Select Portfolios and reducing the pricing and bookkeeping fee rates for these funds; (v) reducing the maximum transfer agency fee rates on high income funds and certain equity funds; (vi) proposing amended management contracts that, if approved by shareholders, will add a performance adjustment component to the management fees paid by 18 Fidelity Advisor equity funds; (vii) contractually agreeing to reduce fees for Ultra-Short Central Fund and the money market Central Funds; (viii) waiving the Fidelity Advisor funds' contingent deferred sales charge on certain redemptions made through systematic withdrawal programs; and (ix) amending the management contracts for equity and fixed-income funds whose management contracts incorporate a "group fee" structure by adding four new fee "breakpoints" to the group fee rate schedules.
Investment Performance and Compliance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance for each class, as well as each fund's relative investment performance for each class measured against a third-party-sponsored index that reflects the market sector in which the fund invests over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare any of the funds' performance. The Board also noted that in 2006 FMR implemented changes to the sector fund product line, which included changes to the funds' indices.
For each of Advisor Biotechnology and Advisor Communications Equipment, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2006, the cumulative total returns of Institutional Class (Class I) and Class C of the fund and the cumulative total returns of a third-party-sponsored index ("benchmark"). The returns of Institutional Class (Class I) and Class C show the performance of the highest and lowest performing classes, respectively (based on three-year performance).
For each of Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology and Advisor Utilities, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2006, the cumulative total returns of Institutional Class (Class I) and Class B of the fund and the cumulative total returns of a third-party-sponsored index ("benchmark"). The returns of Institutional Class (Class I) and Class B show the performance of the highest and lowest performing classes, respectively (based on three-year performance).
Advisor Biotechnology
The Board stated that the relative investment performance of the fund was lower than its benchmark for the three- and five-year periods, although the one-year cumulative total return of Institutional Class (Class I) compared favorably to its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Communications Equipment
The Board stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Advisor Consumer Discretionary
The Board stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Electronics
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and three-year periods, although the fund's five-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Energy
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
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Advisor Financial Services
The Board stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.
Advisor Health Care
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
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Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Industrials
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Technology
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Utilities
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how each fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a TMG % of 10% would mean that 90% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee ranked, is also included in the charts and considered by the Board.
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Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Biotechnology
Advisor Communications Equipment
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Advisor Consumer Discretionary
Advisor Electronics
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Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Energy
Advisor Financial Services
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Advisor Health Care
Advisor Industrials
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Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Technology
Advisor Utilities
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2006.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the total expenses of each class of each fund, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of each fund compared to competitive fund median expenses. Each class of each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expenses of the classes of each fund vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Biotechnology ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
Annual Report
The Board noted that the total expenses of each of Class A, Class B and Class C of Advisor Communications Equipment ranked below its competitive median for 2006, the total expenses of Institutional Class ranked equal to its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B and Class C of Advisor Consumer Discretionary ranked below its competitive median for 2006, the total expenses of Institutional Class ranked equal to its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B and Class C of Advisor Electronics ranked below its competitive median for 2006, the total expenses of Institutional Class ranked equal to its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each class of Advisor Energy ranked below its competitive median for 2006.
The Board noted that the total expenses of each class of Advisor Financial Services ranked below its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Health Care ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each class of Advisor Industrials ranked below its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Technology ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institutional Class of Advisor Utilities ranked below its competitive median for 2006, and the total expenses of Class T ranked above its competitive median for 2006.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of each fund were reasonable, although in some cases above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in each fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. In connection with the renewal of each fund's management contract, the Board approved amendments to each fund's management contract that added four new fee breakpoints to the group fee rate schedule for assets under FMR's management above $1,386 billion. The Board considered that the group fee rate declines under both the present and amended schedules, but that under the amended schedule, the group fee rate declines faster as assets under FMR's management exceed $1,386 billion. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on several topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) Fidelity's portfolio manager compensation structure, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (iii) Fidelity's fee structures; (iv) the funds' sub-advisory arrangements; and (v) accounts managed by Fidelity other than the Fidelity funds.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
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Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service 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 Energy Fund only.
(dagger)(dagger) Custodian for Fidelity Advisor Biotechnology Fund, Fidelity Advisor
Communications Equipment Fund, and Fidelity Advisor Electronics Fund only.
AFOCI-UANNPRO-0907
1.789242.103
(Fidelity Investment logo)(registered trademark)
Fidelity® Advisor
Real Estate
Fund - Class A, Class T, Class B
and Class C
Annual Report
July 31, 2007
(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 | ||
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://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.
Annual Report
Notes to Financial Statements - continued
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.
A 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. A 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 a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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.
Average Annual Total Returns
Periods ended July 31, 2007 | Past 1 | Life of Fund A | |
Class A (incl. 5.75% sales charge) | -6.36% | 17.93% | |
Class T (incl. 3.50% sales charge) | -4.36% | 18.17% | |
Class B (incl. contingent deferred sales charge) B | -6.03% | 18.23% | |
Class C (incl. contingent deferred sales charge) C | -2.36% | 18.46% |
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 2%, 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
Fidelity Advisor Real Estate Fund - Class A, T, B, and C
Performance - continued
$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 changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed 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 Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
Following several years of extremely strong results, real estate markets fell sharply late in the period. During the period, the fund's Class A, Class T, Class B and Class C shares lost 0.65%, 0.89%, 1.45% and 1.45%, respectively (excluding sales charges), while the Dow Jones Wilshire Real Estate Securities IndexSM fell 0.55%. The fund's share classes trailed the S&P 500. Not owning the right real estate stocks in the apartment subsector hurt relative to the Dow Jones Wilshire index, with those losses curbed by very good security selection in the office subsector. The fund's biggest individual relative detractor was a significant underweighting in Archstone-Smith Trust, an apartment real estate investment trust (REIT) that agreed to be taken private. A small out-of-benchmark position in mortgage REIT HomeBanc struggled as the housing market slowed and as lenders tightened their credit standards. HomeBanc was sold from the portfolio before period end. Further lagging was Public Storage, an owner and operator of U.S. self-storage facilities. On the positive side, an out-of-benchmark position in Starwood Hotels & Resorts Worldwide helped, benefiting in part from its status as a potential LBO candidate and a very inexpensive relative valuation. Strategic Hotels & Resorts also rose off of a low valuation during the period. Further contributing was prison operator Geo Group, an attractively valued out-of-benchmark holding that benefited in part from its strong growth prospects.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Investments - 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 | $ 793.80 | $ 5.56 |
HypotheticalA | $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | |||
Actual | $ 1,000.00 | $ 792.50 | $ 6.62 |
HypotheticalA | $ 1,000.00 | $ 1,017.41 | $ 7.45 |
Class B | |||
Actual | $ 1,000.00 | $ 790.40 | $ 8.88 |
HypotheticalA | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | |||
Actual | $ 1,000.00 | $ 790.40 | $ 8.88 |
HypotheticalA | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 794.90 | $ 4.27 |
HypotheticalA | $ 1,000.00 | $ 1,020.03 | $ 4.81 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.25% |
Class T | 1.49% |
Class B | 2.00% |
Class C | 2.00% |
Institutional Class | .96% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Simon Property Group, Inc. | 7.6 | 5.0 |
General Growth Properties, Inc. | 6.4 | 6.0 |
ProLogis Trust | 5.9 | 4.6 |
Public Storage | 5.1 | 5.6 |
Vornado Realty Trust | 4.9 | 5.2 |
AvalonBay Communities, Inc. | 4.4 | 2.6 |
Host Hotels & Resorts, Inc. | 3.8 | 4.5 |
Alexandria Real Estate Equities, Inc. | 3.8 | 3.2 |
Equity Residential (SBI) | 3.6 | 7.2 |
Home Properties, Inc. | 3.5 | 2.1 |
49.0 | ||
Top Five REIT Sectors as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
REITs - Office Buildings | 18.7 | 23.0 |
REITs - Apartments | 17.1 | 17.9 |
REITs - Malls | 16.0 | 14.5 |
REITs - Industrial Buildings | 14.6 | 16.5 |
REITs - Shopping Centers | 11.6 | 11.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2007 * | As of January 31, 2007 ** | ||||||
 | Stocks 97.8% | | Stocks 98.5% | ||||
 | Short-Term | | Short-Term | ||||
* Foreign investments | 3.9% | ** Foreign investments | 1.6% | ||||
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.9% | |||
Diversified Commercial & Professional Services - 0.9% | |||
The Geo Group, Inc. (a) | 98,150 | $ 2,714,829 | |
HEALTH CARE PROVIDERS & SERVICES - 1.3% | |||
Health Care Facilities - 1.3% | |||
Brookdale Senior Living, Inc. (d) | 52,700 | 2,108,527 | |
Capital Senior Living Corp. (a) | 41,627 | 368,815 | |
Emeritus Corp. (a) | 19,600 | 480,200 | |
Sun Healthcare Group, Inc. (a) | 60,200 | 813,904 | |
TOTAL HEALTH CARE FACILITIES | 3,771,446 | ||
HOTELS, RESTAURANTS & LEISURE - 2.5% | |||
Hotels, Resorts & Cruise Lines - 2.5% | |||
Gaylord Entertainment Co. (a) | 31,200 | 1,559,376 | |
Hilton Hotels Corp. | 23,300 | 1,030,093 | |
Starwood Hotels & Resorts Worldwide, Inc. | 72,900 | 4,589,784 | |
TOTAL HOTELS, RESORTS & CRUISE LINES | 7,179,253 | ||
REAL ESTATE INVESTMENT TRUSTS - 89.5% | |||
REITs - Apartments - 17.1% | |||
Archstone-Smith Trust | 18,600 | 1,067,826 | |
AvalonBay Communities, Inc. | 118,000 | 12,740,460 | |
BRE Properties, Inc. Class A (d) | 175,200 | 8,852,856 | |
Equity Residential (SBI) | 262,400 | 10,446,144 | |
GMH Communities Trust | 155,579 | 1,306,864 | |
Home Properties, Inc. | 219,800 | 10,176,740 | |
Pennsylvania (REIT) (SBI) | 3,700 | 144,078 | |
Post Properties, Inc. | 37,300 | 1,642,692 | |
UDR, Inc. | 157,700 | 3,641,293 | |
TOTAL REITS - APARTMENTS | 50,018,953 | ||
REITs - Factory Outlets - 1.8% | |||
Tanger Factory Outlet Centers, Inc. | 160,900 | 5,378,887 | |
REITs - Hotels - 8.3% | |||
Hersha Hospitality Trust | 126,200 | 1,325,100 | |
Host Hotels & Resorts, Inc. | 531,694 | 11,229,377 | |
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - CONTINUED | |||
REITs - Hotels - continued | |||
LaSalle Hotel Properties (SBI) | 103,000 | $ 4,123,090 | |
Strategic Hotel & Resorts, Inc. | 361,100 | 7,684,208 | |
TOTAL REITS - HOTELS | 24,361,775 | ||
REITs - Industrial Buildings - 14.6% | |||
DCT Industrial Trust, Inc. (d) | 511,549 | 5,013,180 | |
Duke Realty LP | 174,210 | 5,694,925 | |
ProLogis Trust | 301,023 | 17,128,209 | |
Public Storage | 211,418 | 14,818,288 | |
TOTAL REITS - INDUSTRIAL BUILDINGS | 42,654,602 | ||
REITs - Malls - 16.0% | |||
CBL & Associates Properties, Inc. | 100,592 | 3,207,879 | |
General Growth Properties, Inc. (d) | 389,599 | 18,692,960 | |
Simon Property Group, Inc. | 258,600 | 22,376,656 | |
Taubman Centers, Inc. | 54,300 | 2,611,287 | |
TOTAL REITS - MALLS | 46,888,782 | ||
REITs - Management/Investment - 1.3% | |||
British Land Co. PLC | 34,400 | 868,610 | |
Equity Lifestyle Properties, Inc. | 44,500 | 2,018,520 | |
Unibail-Rodamco | 3,300 | 791,577 | |
TOTAL REITS - MANAGEMENT/INVESTMENT | 3,678,707 | ||
REITs - Mortgage - 0.1% | |||
Capital Lease Funding, Inc. | 21,000 | 194,670 | |
REITs - Office Buildings - 18.7% | |||
Alexandria Real Estate Equities, Inc. (d) | 129,200 | 11,127,996 | |
American Financial Realty Trust (SBI) | 264,100 | 2,316,157 | |
Boston Properties, Inc. (d) | 93,700 | 8,853,713 | |
Corporate Office Properties Trust (SBI) | 222,100 | 8,370,949 | |
Highwoods Properties, Inc. (SBI) | 188,400 | 6,128,652 | |
Kilroy Realty Corp. | 132,200 | 8,517,646 | |
SL Green Realty Corp. | 78,800 | 9,567,896 | |
TOTAL REITS - OFFICE BUILDINGS | 54,883,009 | ||
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - CONTINUED | |||
REITs - Shopping Centers - 11.6% | |||
Developers Diversified Realty Corp. | 152,600 | $ 7,324,800 | |
Equity One, Inc. | 32,000 | 738,560 | |
Inland Real Estate Corp. (d) | 383,900 | 5,804,568 | |
Kimco Realty Corp. | 155,490 | 5,804,442 | |
Vornado Realty Trust (d) | 133,650 | 14,304,560 | |
TOTAL REITS - SHOPPING CENTERS | 33,976,930 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 262,036,315 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.6% | |||
Real Estate Management & Development - 3.6% | |||
Brookfield Properties Corp. | 418,500 | 9,458,100 | |
Grubb & Ellis Co. (a) | 96,200 | 940,836 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 10,398,936 | ||
TOTAL COMMON STOCKS (Cost $267,765,610) | 286,100,779 | ||
Money Market Funds - 16.7% | |||
Fidelity Cash Central Fund, 5.38% (b) | 6,513,129 | 6,513,129 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 42,429,613 | 42,429,613 | |
TOTAL MONEY MARKET FUNDS (Cost $48,942,742) | 48,942,742 | ||
TOTAL INVESTMENT PORTFOLIO - 114.5% (Cost $316,708,352) | 335,043,521 | ||
NET OTHER ASSETS - (14.5)% | (42,364,481) | ||
NET ASSETS - 100% | $ 292,679,040 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 418,427 |
Fidelity Securities Lending Cash Central Fund | 65,708 |
Total | $ 484,135 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $41,993,217) - See accompanying schedule: Unaffiliated issuers (cost $267,765,610) | $ 286,100,779 | |
Fidelity Central Funds (cost $48,942,742) | 48,942,742 | |
Total Investments (cost $316,708,352) | $ 335,043,521 | |
Foreign currency held at value (cost $20) | 20 | |
Receivable for investments sold | 3,545,783 | |
Receivable for fund shares sold | 236,918 | |
Dividends receivable | 113,814 | |
Distributions receivable from Fidelity Central Funds | 49,091 | |
Prepaid expenses | 451 | |
Other receivables | 7 | |
Total assets | 338,989,605 | |
Liabilities | ||
Payable for investments purchased | $ 1,697,469 | |
Payable for fund shares redeemed | 1,748,265 | |
Accrued management fee | 159,481 | |
Distribution fees payable | 133,304 | |
Other affiliated payables | 99,116 | |
Other payables and accrued expenses | 43,317 | |
Collateral on securities loaned, at value | 42,429,613 | |
Total liabilities | 46,310,565 | |
Net Assets | $ 292,679,040 | |
Net Assets consist of: | ||
Paid in capital | $ 255,887,138 | |
Undistributed net investment income | 282,432 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 18,174,353 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 18,335,117 | |
Net Assets | $ 292,679,040 | |
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, 2007 | ||
Calculation of Maximum Offering Price | $ 18.67 | |
Maximum offering price per share (100/94.25 of $18.67) | $ 19.81 | |
Class T: | $ 18.64 | |
Maximum offering price per share (100/96.50 of $18.64) | $ 19.32 | |
Class B: | $ 18.51 | |
Class C: | $ 18.51 | |
Institutional Class: | $ 18.80 | |
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, 2007 | ||
Investment Income | ||
Dividends | $ 6,529,121 | |
Interest | 1,342 | |
Income from Fidelity Central Funds | 484,135 | |
Total income | 7,014,598 | |
Expenses | ||
Management fee | $ 1,918,136 | |
Transfer agent fees | 1,067,107 | |
Distribution fees | 1,744,909 | |
Accounting and security lending fees | 139,829 | |
Custodian fees and expenses | 18,033 | |
Independent trustees' compensation | 1,076 | |
Registration fees | 124,957 | |
Audit | 73,003 | |
Legal | 10,411 | |
Miscellaneous | 52,108 | |
Total expenses before reductions | 5,149,569 | |
Expense reductions | (25,416) | 5,124,153 |
Net investment income (loss) | 1,890,445 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 24,130,155 | |
Foreign currency transactions | 2,287 | |
Total net realized gain (loss) | 24,132,442 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (38,960,781) | |
Assets and liabilities in foreign currencies | (52) | |
Total change in net unrealized appreciation (depreciation) | (38,960,833) | |
Net gain (loss) | (14,828,391) | |
Net increase (decrease) in net assets resulting from operations | $ (12,937,946) | |
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 | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 1,890,445 | $ 2,590,321 |
Net realized gain (loss) | 24,132,442 | 18,564,557 |
Change in net unrealized appreciation (depreciation) | (38,960,833) | 13,773,537 |
Net increase (decrease) in net assets resulting | (12,937,946) | 34,928,415 |
Distributions to shareholders from net investment income | (1,881,167) | (2,073,129) |
Distributions to shareholders from net realized gain | (20,008,529) | (8,286,409) |
Total distributions | (21,889,696) | (10,359,538) |
Share transactions - net increase (decrease) | 80,064,090 | 43,551,731 |
Total increase (decrease) in net assets | 45,236,448 | 68,120,608 |
Net Assets | ||
Beginning of period | 247,442,592 | 179,321,984 |
End of period (including undistributed net investment income of $282,432 and undistributed net investment income of $521,902, respectively) | $ 292,679,040 | $ 247,442,592 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.34 | $ 18.23 | $ 13.22 | $ 11.33 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .18 | .29 | .31 | .27 | .21 |
Net realized and unrealized gain (loss) | (.17) | 2.85 | 5.52 | 2.03 | 1.28 |
Total from investment operations | .01 | 3.14 | 5.83 | 2.30 | 1.49 |
Distributions from net investment income | (.18) | (.23) | (.29) | (.30) | (.16) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.68) | (1.03) | (.82) | (.41) | (.16) |
Net asset value, end of period | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 | $ 11.33 |
Total Return B, C, D | (.65)% | 18.32% | 45.48% | 20.59% | 15.13% |
Ratios to Average Net Assets F, I | |||||
Expenses before reductions | 1.25% | 1.29% | 1.31% | 1.54% | 2.98% A |
Expenses net of fee waivers, if any | 1.25% | 1.25% | 1.28% | 1.54% | 1.75%A |
Expenses net of all reductions | 1.25% | 1.24% | 1.25% | 1.52% | 1.72%A |
Net investment income (loss) | .81% | 1.59% | 1.98% | 2.10% | 2.35%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 117,831 | $ 85,000 | $ 53,097 | $ 22,273 | $ 3,993 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.31 | $ 18.23 | $ 13.21 | $ 11.32 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .12 | .24 | .26 | .23 | .18 |
Net realized and unrealized gain (loss) | (.16) | 2.84 | 5.53 | 2.02 | 1.29 |
Total from investment operations | (.04) | 3.08 | 5.79 | 2.25 | 1.47 |
Distributions from net investment income | (.13) | (.20) | (.24) | (.25) | (.15) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.63) | (1.00) | (.77) | (.36) | (.15) |
Net asset value, end of period | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 | $ 11.32 |
Total Return B, C, D | (.89)% | 17.98% | 45.12% | 20.12% | 14.91% |
Ratios to Average Net Assets F, I | |||||
Expenses before reductions | 1.50% | 1.55% | 1.61% | 1.86% | 3.32%A |
Expenses net of fee waivers, if any | 1.50% | 1.50% | 1.57% | 1.85% | 2.00%A |
Expenses net of all reductions | 1.49% | 1.49% | 1.54% | 1.83% | 1.97%A |
Net investment income (loss) | .57% | 1.34% | 1.70% | 1.80% | 2.10%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 100,621 | $ 91,224 | $ 66,303 | $ 26,037 | $ 9,049 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.19 | $ 18.16 | $ 13.18 | $ 11.29 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .01 | .15 | .18 | .16 | .14 |
Net realized and unrealized gain (loss) | (.16) | 2.83 | 5.50 | 2.04 | 1.28 |
Total from investment operations | (.15) | 2.98 | 5.68 | 2.20 | 1.42 |
Distributions from net investment income | (.05) | (.15) | (.17) | (.20) | (.13) |
Distributions from net realized gain | (1.48) | (.80) | (.53) | (.11) | - |
Total distributions | (1.53) | (.95) | (.70) | (.31) | (.13) |
Net asset value, end of period | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 | $ 11.29 |
Total Return B, C, D | (1.45)% | 17.42% | 44.31% | 19.67% | 14.38% |
Ratios to Average Net AssetsF, I | |||||
Expenses before reductions | 2.02% | 2.05% | 2.10% | 2.33% | 3.82%A |
Expenses net of fee waivers, if any | 2.00% | 2.00% | 2.07% | 2.33% | 2.50%A |
Expenses net of all reductions | 2.00% | 1.98% | 2.03% | 2.31% | 2.47%A |
Net investment income (loss) | .07% | .84% | 1.20% | 1.31% | 1.60%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 25,114 | $ 27,397 | $ 26,349 | $ 12,910 | $ 5,061 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.21 | $ 18.17 | $ 13.18 | $ 11.29 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .01 | .15 | .19 | .17 | .14 |
Net realized and unrealized gain (loss) | (.16) | 2.84 | 5.50 | 2.03 | 1.28 |
Total from investment operations | (.15) | 2.99 | 5.69 | 2.20 | 1.42 |
Distributions from net investment income | (.05) | (.15) | (.17) | (.20) | (.13) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.55) | (.95) | (.70) | (.31) | (.13) |
Net asset value, end of period | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 | $ 11.29 |
Total Return B, C, D | (1.45)% | 17.46% | 44.38% | 19.67% | 14.38% |
Ratios to Average Net Assets F, I | |||||
Expenses before reductions | 2.01% | 2.05% | 2.09% | 2.29% | 3.76%A |
Expenses net of fee waivers, if any | 2.00% | 2.00% | 2.05% | 2.29% | 2.50%A |
Expenses net of all reductions | 2.00% | 1.98% | 2.02% | 2.27% | 2.47%A |
Net investment income (loss) | .06% | .84% | 1.22% | 1.35% | 1.60%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 36,854 | $ 36,669 | $ 29,410 | $ 13,671 | $ 5,059 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 G |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.47 | $ 18.33 | $ 13.28 | $ 11.35 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) D | .24 | .35 | .36 | .32 | .23 |
Net realized and unrealized gain (loss) | (.17) | 2.85 | 5.56 | 2.04 | 1.28 |
Total from investment operations | .07 | 3.20 | 5.92 | 2.36 | 1.51 |
Distributions from net investment income | (.24) | (.26) | (.34) | (.32) | (.16) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.74) | (1.06) | (.87) | (.43) | (.16) |
Net asset value, end of period | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 | $ 11.35 |
Total Return B, C | (.37)% | 18.61% | 46.05% | 21.11% | 15.33% |
Ratios to Average Net Assets E, H | |||||
Expenses before reductions | .98% | .94% | .91% | 1.12% | 2.68% A |
Expenses net of fee waivers, if any | .98% | .94% | .91% | 1.12% | 1.50%A |
Expenses net of all reductions | .97% | .92% | .88% | 1.10% | 1.47%A |
Net investment income (loss) | 1.09% | 1.90% | 2.35% | 2.53% | 2.60%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,259 | $ 7,152 | $ 4,162 | $ 2,478 | $ 1,225 |
Portfolio turnover rate F | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period September 12, 2002 (commencement of operations) to July 31, 2003.
H 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 fee 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, 2007
1. Organization.
Fidelity Advisor Real Estate Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Financial Statements - continued
3. 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 short-term capital gains, 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 | $ 43,416,038 | |
Unrealized depreciation | (26,403,919) | |
Net unrealized appreciation (depreciation) | 17,012,119 | |
Undistributed ordinary income | 282,432 | |
Undistributed long-term capital gain | 14,747,741 | |
Cost for federal income tax purposes | $ 318,031,402 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 6,191,707 | $ 5,799,680 |
Long-term Capital Gains | 15,697,989 | 4,559,858 |
Total | $ 21,889,696 | $ 10,359,538 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Annual Report
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $342,163,907 and $276,670,837, respectively.
6. 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 .26% 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 .56% of the Fund's average net assets.
Annual Report
Notes to Financial Statements - continued
6. 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 | .00% | .25% | $ 317,170 | $ 39,597 |
Class T | .25% | .25% | 600,346 | 7,270 |
Class B | .75% | .25% | 326,348 | 245,531 |
Class C | .75% | .25% | 501,045 | 123,812 |
$ 1,744,909 | $ 416,210 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 173,108 |
Class T | 32,468 |
Class B* | 52,462 |
Class C* | 12,974 |
$ 271,012 |
* 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.
Annual Report
6. 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 | $ 397,116 | .31 |
Class T | 368,236 | .31 |
Class B | 106,998 | .33 |
Class C | 159,744 | .32 |
Institutional Class | 35,013 | .29 |
$ 1,067,107 |
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.
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 $2,970 for the period.
7. 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, which amounted to $592 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $65,708.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class B | 2.00% | $ 6,449 |
Class C | 2.00% | 4,791 |
$ 11,240 |
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 $3,104 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses.
Annual Report
9. Expense Reductions - continued
During the period, these credits reduced the Fund's custody expenses by $3,421. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 2,910 | |
Institutional Class | 238 | |
$ 3,148 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
Annual Report
Notes to Financial Statements - continued
10. Other - continued
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2007 | 2006 | |
From net investment income | ||
Class A | $ 910,999 | $ 741,719 |
Class T | 671,347 | 796,426 |
Class B | 73,434 | 226,838 |
Class C | 121,385 | 250,448 |
Institutional Class | 104,002 | 57,698 |
Total | $ 1,881,167 | $ 2,073,129 |
From net realized gain | ||
Class A | $ 7,016,390 | $ 2,548,943 |
Class T | 7,245,930 | 3,068,411 |
Class B | 2,110,416 | 1,188,352 |
Class C | 3,021,230 | 1,299,203 |
Institutional Class | 614,563 | 181,500 |
Total | $ 20,008,529 | $ 8,286,409 |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2007 | 2006 | 2007 | 2006 | |
Class A | ||||
Shares sold | 4,162,272 | 2,262,157 | $ 91,668,160 | $ 41,503,690 |
Reinvestment of distributions | 360,748 | 181,664 | 7,512,896 | 3,138,257 |
Shares redeemed | (2,390,088) | (1,177,662) | (51,262,823) | (21,289,349) |
Net increase (decrease) | 2,132,932 | 1,266,159 | $ 47,918,233 | $ 23,352,598 |
Class T | ||||
Shares sold | 3,133,447 | 2,143,039 | $ 69,066,846 | $ 39,115,936 |
Reinvestment of distributions | 366,028 | 214,228 | 7,615,273 | 3,700,674 |
Shares redeemed | (2,592,591) | (1,504,010) | (55,812,105) | (27,210,343) |
Net increase (decrease) | 906,884 | 853,257 | $ 20,870,014 | $ 15,606,267 |
Class B | ||||
Shares sold | 522,263 | 398,999 | $ 11,374,401 | $ 7,246,734 |
Reinvestment of distributions | 95,389 | 73,796 | 1,975,227 | 1,270,470 |
Shares redeemed | (618,201) | (566,868) | (13,210,441) | (10,197,671) |
Net increase (decrease) | (549) | (94,073) | $ 139,187 | $ (1,680,467) |
Class C | ||||
Shares sold | 1,257,900 | 763,395 | $ 27,435,286 | $ 14,132,910 |
Reinvestment of distributions | 135,205 | 80,957 | 2,802,482 | 1,394,942 |
Shares redeemed | (1,217,050) | (647,908) | (25,938,064) | (11,656,661) |
Net increase (decrease) | 176,055 | 196,444 | $ 4,299,704 | $ 3,871,191 |
Institutional Class | ||||
Shares sold | 643,980 | 225,212 | $ 14,342,713 | $ 4,253,663 |
Reinvestment of distributions | 30,501 | 12,056 | 638,492 | 209,183 |
Shares redeemed | (371,732) | (115,041) | (8,144,253) | (2,060,704) |
Net increase (decrease) | 302,749 | 122,227 | $ 6,836,952 | $ 2,402,142 |
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 schedule of investments as of July 31, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended 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. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2007, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the four years in the period then ended 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 17, 2007
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 James C. Curvey, each of the Trustees oversees 353 funds advised by FMR or an affiliate. Mr. Curvey oversees 317 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. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. 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 may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (77) | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR Corp.; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of Fidelity International Limited (FIL). | |
James C. Curvey (72) | |
Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is Vice Chairman (2006-present) and Director of FMR Corp. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR Corp. (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). | |
* 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.
Independent Trustees:
Correspondence intended for each Independent 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 | |
Dennis J. Dirks (59) | |
Year of Election or Appointment: 2005 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). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). | |
Albert R. Gamper, Jr. (65) | |
Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. | |
George H. Heilmeier (71) | |
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), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). 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), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. | |
James H. Keyes (66) | |
Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). | |
Marie L. Knowles (60) | |
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-present). 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 (63) | |
Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). 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. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. | |
Cornelia M. Small (63) | |
Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) 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 (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
William S. Stavropoulos (68) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus 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), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. 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. | |
Kenneth L. Wolfe (68) | |
Year of Election or Appointment: 2005 Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993-2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003-present), Bausch & Lomb, Inc., and Revlon Inc. (2004-present). | |
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Mauriello may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer, Mr. Curvey, and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (63) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. | |
Joseph Mauriello (62) | |
Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002- 2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd., (global insurance and re-insurance company, 2006- present) and of Arcadia Resources Inc., (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). | |
Kimberley H. Monasterio (43) | |
Year of Election or Appointment: 2007 President and Treasurer of Advisor Real Estate. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). 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). | |
Dwight D. Churchill (53) | |
Year of Election or Appointment: 2005 Vice President of Advisor Real Estate. Mr. Churchill also serves as Vice President of certain Equity Funds (2005-present). Mr. Churchill is Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005- present). Previously, Mr. Churchill served as Senior Vice President of Fidelity Investments Money Management, Inc. (2005-2006), Head of Fidelity's Fixed-Income Division (2000-2005), Vice President of Fidelity's Money Market Funds (2000-2005), Vice President of Fidelity's Bond Funds, and Senior Vice President of FMR. | |
Boyce I. Greer (51) | |
Year of Election or Appointment: 2005 Vice President of Advisor Real Estate. Mr. Greer also serves as Vice President of certain Equity Funds (2005-present), certain Asset Allocation Funds (2005-present), Fixed-Income Funds (2006-present), and Money Market Funds (2006-present). Mr. Greer is also a Trustee of other investment companies advised by FMR (2003-present). He is an Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005-present), and Senior Vice President of Fidelity Investments Money Management, Inc. (2006-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002- 2005), and Executive Vice President (2000-2002) and Money Market Group Leader (1997-2002) of the Fidelity Investments Fixed Income Division. He also served as Vice President of Fidelity's Money Market Funds (1997-2002), Senior Vice President of FMR (1997-2002), and Vice President of FIMM (1998-2002). | |
Eric D. Roiter (58) | |
Year of Election or Appointment: 1998 Secretary of Advisor Real Estate. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). | |
Scott C. Goebel (39) | |
Year of Election or Appointment: 2007 Assistant Secretary of Advisor Real Estate. Mr. Goebel also serves as Assistant Secretary of other Fidelity funds (2007-present), Vice President and Secretary of FDC (2006-present), and is an employee of FMR. | |
R. Stephen Ganis (41) | |
Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Advisor Real Estate. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR Corp. (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). | |
Joseph B. Hollis (59) | |
Year of Election or Appointment: 2006 Chief Financial Officer of Advisor Real Estate. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005- | |
Kenneth A. Rathgeber (60) | |
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- | |
Bryan A. Mehrmann (46) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Real Estate. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). | |
Kenneth B. Robins (37) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Real Estate. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). 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). | |
Robert G. Byrnes (40) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Real Estate. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). | |
Peter L. Lydecker (53) | |
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. | |
Gary W. Ryan (48) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Real Estate. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). | |
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 | 09/17/2007 | 09/14/2007 | $0.049 | $1.03 |
Class T | 09/17/2007 | 09/14/2007 | $0.003 | $1.03 |
Class B | 09/17/2007 | 09/14/2007 | $0.000 | $1.03 |
Class C | 09/17/2007 | 09/14/2007 | $0.000 | $1.03 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2007 $20,232,356, or, if subsequently determined to be different, the net capital gain of such year.
A total of 0.07% 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 2008 of amounts for use in preparing 2007 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on September 30, 2006. The results of votes taken among shareholders on the proposal 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 elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 2,206,930,035.62 | 96.925 |
Withheld | 70,013,151.28 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 2,206,929,647.55 | 96.925 |
Withheld | 70,013,539.35 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Robert M. Gates | ||
Affirmative | 2,205,212,761.55 | 96.850 |
Withheld | 71,730,425.35 | 3.150 |
TOTAL | 2,276,943,186.90 | 100.000 |
George H. Heilmeier | ||
Affirmative | 2,204,247,730.70 | 96.807 |
Withheld | 72,695,456.20 | 3.193 |
TOTAL | 2,276,943,186.90 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 2,203,739,123.67 | 96.785 |
Withheld | 73,204,063.23 | 3.215 |
TOTAL | 2,276,943,186.90 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 2,207,154,045.47 | 96.935 |
Withheld | 69,789,141.43 | 3.065 |
TOTAL | 2,276,943,186.90 | 100.000 |
James H. KeyesB | ||
Affirmative | 2,205,258,024.08 | 96.852 |
Withheld | 71,685,162.82 | 3.148 |
TOTAL | 2,276,943,186.90 | 100.000 |
# of | % of | |
Marie L. Knowles | ||
Affirmative | 2,205,892,060.16 | 96.880 |
Withheld | 71,051,126.74 | 3.120 |
TOTAL | 2,276,943,186.90 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 2,205,297,807.97 | 96.853 |
Withheld | 71,645,378.93 | 3.147 |
TOTAL | 2,276,943,186.90 | 100.000 |
William O. McCoy | ||
Affirmative | 2,204,396,505.93 | 96.814 |
Withheld | 72,546,680.97 | 3.186 |
TOTAL | 2,276,943,186.90 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 2,206,981,118.77 | 96.927 |
Withheld | 69,962,068.13 | 3.073 |
TOTAL | 2,276,943,186.90 | 100.000 |
Cornelia M. Small | ||
Affirmative | 2,206,379,820.44 | 96.901 |
Withheld | 70,563,366.46 | 3.099 |
TOTAL | 2,276,943,186.90 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 2,205,403,278.90 | 96.858 |
Withheld | 71,539,908.00 | 3.142 |
TOTAL | 2,276,943,186.90 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 2,205,707,840.10 | 96.871 |
Withheld | 71,235,346.80 | 3.129 |
TOTAL | 2,276,943,186.90 | 100.000 |
A Denotes trust-wide proposal and voting results. B Effective on or about January 1, 2007. | ||
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Real Estate Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2007 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for the fund. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the management fee and total expenses of the fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to the fund's agreements with foreign sub-advisers to clarify that each sub-adviser provides services as an independent contractor.
In determining whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the background of the fund's portfolio manager and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board also considered that Fidelity voluntarily pays for market data out of its own resources. The Board also considered the agreement reached between the Independent Trustees and Fidelity in December 2006 following an independent review of matters relating to receipt of travel, entertainment, gifts and gratuities in violation of Fidelity policies.
Annual Report
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in July 2006, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fee on Fidelity Advisor Floating Rate High Income Fund; (iii) contractually agreeing to reduce the management fees on Fidelity's California, Massachusetts, New Jersey, and New York AMT Tax-Free Money Market Funds, launching new Institutional Classes and Service Classes of these funds, and contractually agreeing to impose expense limitations on these funds; (iv) eliminating the exchange fee on the Fidelity Select Portfolios and reducing the pricing and bookkeeping fee rates for these funds; (v) reducing the maximum transfer agency fee rates on high income funds and certain equity funds; (vi) proposing amended management contracts that, if approved by shareholders, will add a performance adjustment component to the management fees paid by 18 Fidelity Advisor equity funds; (vii) contractually agreeing to reduce fees for Ultra-Short Central Fund and the money market Central Funds; (viii) waiving the Fidelity Advisor funds' contingent deferred sales charge on certain redemptions made through systematic withdrawal programs; and (ix) amending the management contracts for equity and fixed-income funds whose management contracts incorporate a "group fee" structure by adding four new fee "breakpoints" to the group fee rate schedules.
Investment Performance and Compliance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against a broad-based securities market index over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2006, the cumulative total returns of Institutional Class (Class I) and Class B of the fund and the cumulative total returns of a broad-based securities market index ("benchmark"). The returns of Institutional Class (Class I) and Class B show the performance of the highest and lowest performing classes, respectively (based on three-year performance).
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Advisor Real Estate Fund
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked, is also included in the chart and considered by the Board.
Advisor Real Estate Fund
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2006.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class ranked below its competitive median for 2006, and the total expenses of Class T ranked equal to its competitive median for 2006.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in the fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. In connection with the renewal of the fund's management contract, the Board approved amendments to the fund's management contract that added four new fee breakpoints to the group fee rate schedule for assets under FMR's management above $1,386 billion. The Board considered that the group fee rate declines under both the present and amended schedules, but that under the amended schedule, the group fee rate declines faster as assets under FMR's management exceed $1,386 billion. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on several topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) Fidelity's portfolio manager compensation structure, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (iii) Fidelity's fee structures; (iv) the funds' sub-advisory arrangements; and (v) accounts managed by Fidelity other than the Fidelity funds.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
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Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service 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-0907
1.789707.104
(Fidelity Investment logo)(registered trademark)
Fidelity ® Advisor
Real Estate
Fund - Institutional Class
Annual Report
July 31, 2007
(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 | ||
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://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.
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.
A 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. A 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 a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 2007 | Past 1 | Life of |
Institutional Class | -0.37% | 19.74% |
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 changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund
Major U.S. equity benchmarks approached or exceeded gains of 20% and several set record highs during the 12-month period ending July 31, 2007. In that time, the Dow Jones Industrial AverageSM rose 20.84%, the Standard & Poor's 500SM Index advanced 16.13% and the NASDAQ Composite® Index gained 22.67%. The small-cap Russell 2000® Index fared less well after falling nearly 7% in July, but still returned 12.12% for the year overall. The first half of the period featured six consecutive months of positive returns spurred by the more relaxed monetary policy of the Federal Reserve Board and falling energy prices, which softened inflationary pressures on the U.S. economy. Stocks slipped in February, however, as energy prices crept higher, the housing market slumped, subprime mortgage woes mounted and the Chinese stock market declined 9% in a single day. But equities soared again from March through May, as reflected by the Dow and the S&P 500®, which climbed nearly 12% and more than 9%, respectively. In June and July, though, stocks sank again on inflation concerns and a worsening subprime loan crisis.
Following several years of extremely strong results, real estate markets fell sharply late in the period. During the period, the fund's Institutional Class shares lost 0.37%, about even with the Dow Jones Wilshire Real Estate Securities IndexSM, which fell 0.55%, but well behind the S&P 500. Not owning the right real estate stocks in the apartment subsector hurt relative to the Dow Jones Wilshire index, with those losses curbed by very good security selection in the office subsector. The fund's biggest individual relative detractor was a significant underweighting in Archstone-Smith Trust, an apartment real estate investment trust (REIT) that agreed to be taken private. A small out-of-benchmark position in mortgage REIT HomeBanc struggled as the housing market slowed and as lenders tightened their credit standards. HomeBanc was sold from the portfolio before period end. Further lagging was Public Storage, an owner and operator of U.S. self-storage facilities. On the positive side, an out-of-benchmark position in Starwood Hotels & Resorts Worldwide helped, benefiting in part from its status as a potential LBO candidate and a very inexpensive relative valuation. Strategic Hotels & Resorts also rose off of a low valuation during the period. Further contributing was prison operator Geo Group, an attractively valued out-of-benchmark holding that benefited in part from its strong growth prospects.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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, 2007 to July 31, 2007).
Actual Expenses
The first line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table 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. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Annual Report
Investments - 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 | $ 793.80 | $ 5.56 |
HypotheticalA | $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | |||
Actual | $ 1,000.00 | $ 792.50 | $ 6.62 |
HypotheticalA | $ 1,000.00 | $ 1,017.41 | $ 7.45 |
Class B | |||
Actual | $ 1,000.00 | $ 790.40 | $ 8.88 |
HypotheticalA | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | |||
Actual | $ 1,000.00 | $ 790.40 | $ 8.88 |
HypotheticalA | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 794.90 | $ 4.27 |
HypotheticalA | $ 1,000.00 | $ 1,020.03 | $ 4.81 |
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 181/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.25% |
Class T | 1.49% |
Class B | 2.00% |
Class C | 2.00% |
Institutional Class | .96% |
Annual Report
Investment Changes
Top Ten Stocks as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
Simon Property Group, Inc. | 7.6 | 5.0 |
General Growth Properties, Inc. | 6.4 | 6.0 |
ProLogis Trust | 5.9 | 4.6 |
Public Storage | 5.1 | 5.6 |
Vornado Realty Trust | 4.9 | 5.2 |
AvalonBay Communities, Inc. | 4.4 | 2.6 |
Host Hotels & Resorts, Inc. | 3.8 | 4.5 |
Alexandria Real Estate Equities, Inc. | 3.8 | 3.2 |
Equity Residential (SBI) | 3.6 | 7.2 |
Home Properties, Inc. | 3.5 | 2.1 |
49.0 | ||
Top Five REIT Sectors as of July 31, 2007 | ||
% of fund's | % of fund's net assets | |
REITs - Office Buildings | 18.7 | 23.0 |
REITs - Apartments | 17.1 | 17.9 |
REITs - Malls | 16.0 | 14.5 |
REITs - Industrial Buildings | 14.6 | 16.5 |
REITs - Shopping Centers | 11.6 | 11.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2007 * | As of January 31, 2007 ** | ||||||
| Stocks 97.8% | | Stocks 98.5% | ||||
| Short-Term | | Short-Term | ||||
* Foreign investments | 3.9% | ** Foreign investments | 1.6% | ||||
Annual Report
Investments July 31, 2007
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.9% | |||
Diversified Commercial & Professional Services - 0.9% | |||
The Geo Group, Inc. (a) | 98,150 | $ 2,714,829 | |
HEALTH CARE PROVIDERS & SERVICES - 1.3% | |||
Health Care Facilities - 1.3% | |||
Brookdale Senior Living, Inc. (d) | 52,700 | 2,108,527 | |
Capital Senior Living Corp. (a) | 41,627 | 368,815 | |
Emeritus Corp. (a) | 19,600 | 480,200 | |
Sun Healthcare Group, Inc. (a) | 60,200 | 813,904 | |
TOTAL HEALTH CARE FACILITIES | 3,771,446 | ||
HOTELS, RESTAURANTS & LEISURE - 2.5% | |||
Hotels, Resorts & Cruise Lines - 2.5% | |||
Gaylord Entertainment Co. (a) | 31,200 | 1,559,376 | |
Hilton Hotels Corp. | 23,300 | 1,030,093 | |
Starwood Hotels & Resorts Worldwide, Inc. | 72,900 | 4,589,784 | |
TOTAL HOTELS, RESORTS & CRUISE LINES | 7,179,253 | ||
REAL ESTATE INVESTMENT TRUSTS - 89.5% | |||
REITs - Apartments - 17.1% | |||
Archstone-Smith Trust | 18,600 | 1,067,826 | |
AvalonBay Communities, Inc. | 118,000 | 12,740,460 | |
BRE Properties, Inc. Class A (d) | 175,200 | 8,852,856 | |
Equity Residential (SBI) | 262,400 | 10,446,144 | |
GMH Communities Trust | 155,579 | 1,306,864 | |
Home Properties, Inc. | 219,800 | 10,176,740 | |
Pennsylvania (REIT) (SBI) | 3,700 | 144,078 | |
Post Properties, Inc. | 37,300 | 1,642,692 | |
UDR, Inc. | 157,700 | 3,641,293 | |
TOTAL REITS - APARTMENTS | 50,018,953 | ||
REITs - Factory Outlets - 1.8% | |||
Tanger Factory Outlet Centers, Inc. | 160,900 | 5,378,887 | |
REITs - Hotels - 8.3% | |||
Hersha Hospitality Trust | 126,200 | 1,325,100 | |
Host Hotels & Resorts, Inc. | 531,694 | 11,229,377 | |
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - CONTINUED | |||
REITs - Hotels - continued | |||
LaSalle Hotel Properties (SBI) | 103,000 | $ 4,123,090 | |
Strategic Hotel & Resorts, Inc. | 361,100 | 7,684,208 | |
TOTAL REITS - HOTELS | 24,361,775 | ||
REITs - Industrial Buildings - 14.6% | |||
DCT Industrial Trust, Inc. (d) | 511,549 | 5,013,180 | |
Duke Realty LP | 174,210 | 5,694,925 | |
ProLogis Trust | 301,023 | 17,128,209 | |
Public Storage | 211,418 | 14,818,288 | |
TOTAL REITS - INDUSTRIAL BUILDINGS | 42,654,602 | ||
REITs - Malls - 16.0% | |||
CBL & Associates Properties, Inc. | 100,592 | 3,207,879 | |
General Growth Properties, Inc. (d) | 389,599 | 18,692,960 | |
Simon Property Group, Inc. | 258,600 | 22,376,656 | |
Taubman Centers, Inc. | 54,300 | 2,611,287 | |
TOTAL REITS - MALLS | 46,888,782 | ||
REITs - Management/Investment - 1.3% | |||
British Land Co. PLC | 34,400 | 868,610 | |
Equity Lifestyle Properties, Inc. | 44,500 | 2,018,520 | |
Unibail-Rodamco | 3,300 | 791,577 | |
TOTAL REITS - MANAGEMENT/INVESTMENT | 3,678,707 | ||
REITs - Mortgage - 0.1% | |||
Capital Lease Funding, Inc. | 21,000 | 194,670 | |
REITs - Office Buildings - 18.7% | |||
Alexandria Real Estate Equities, Inc. (d) | 129,200 | 11,127,996 | |
American Financial Realty Trust (SBI) | 264,100 | 2,316,157 | |
Boston Properties, Inc. (d) | 93,700 | 8,853,713 | |
Corporate Office Properties Trust (SBI) | 222,100 | 8,370,949 | |
Highwoods Properties, Inc. (SBI) | 188,400 | 6,128,652 | |
Kilroy Realty Corp. | 132,200 | 8,517,646 | |
SL Green Realty Corp. | 78,800 | 9,567,896 | |
TOTAL REITS - OFFICE BUILDINGS | 54,883,009 | ||
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - CONTINUED | |||
REITs - Shopping Centers - 11.6% | |||
Developers Diversified Realty Corp. | 152,600 | $ 7,324,800 | |
Equity One, Inc. | 32,000 | 738,560 | |
Inland Real Estate Corp. (d) | 383,900 | 5,804,568 | |
Kimco Realty Corp. | 155,490 | 5,804,442 | |
Vornado Realty Trust (d) | 133,650 | 14,304,560 | |
TOTAL REITS - SHOPPING CENTERS | 33,976,930 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 262,036,315 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.6% | |||
Real Estate Management & Development - 3.6% | |||
Brookfield Properties Corp. | 418,500 | 9,458,100 | |
Grubb & Ellis Co. (a) | 96,200 | 940,836 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 10,398,936 | ||
TOTAL COMMON STOCKS (Cost $267,765,610) | 286,100,779 | ||
Money Market Funds - 16.7% | |||
Fidelity Cash Central Fund, 5.38% (b) | 6,513,129 | 6,513,129 | |
Fidelity Securities Lending Cash Central Fund, 5.39% (b)(c) | 42,429,613 | 42,429,613 | |
TOTAL MONEY MARKET FUNDS (Cost $48,942,742) | 48,942,742 | ||
TOTAL INVESTMENT PORTFOLIO - 114.5% (Cost $316,708,352) | 335,043,521 | ||
NET OTHER ASSETS - (14.5)% | (42,364,481) | ||
NET ASSETS - 100% | $ 292,679,040 | ||
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 418,427 |
Fidelity Securities Lending Cash Central Fund | 65,708 |
Total | $ 484,135 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
July 31, 2007 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $41,993,217) - See accompanying schedule: Unaffiliated issuers (cost $267,765,610) | $ 286,100,779 | |
Fidelity Central Funds (cost $48,942,742) | 48,942,742 | |
Total Investments (cost $316,708,352) | $ 335,043,521 | |
Foreign currency held at value (cost $20) | 20 | |
Receivable for investments sold | 3,545,783 | |
Receivable for fund shares sold | 236,918 | |
Dividends receivable | 113,814 | |
Distributions receivable from Fidelity Central Funds | 49,091 | |
Prepaid expenses | 451 | |
Other receivables | 7 | |
Total assets | 338,989,605 | |
Liabilities | ||
Payable for investments purchased | $ 1,697,469 | |
Payable for fund shares redeemed | 1,748,265 | |
Accrued management fee | 159,481 | |
Distribution fees payable | 133,304 | |
Other affiliated payables | 99,116 | |
Other payables and accrued expenses | 43,317 | |
Collateral on securities loaned, at value | 42,429,613 | |
Total liabilities | 46,310,565 | |
Net Assets | $ 292,679,040 | |
Net Assets consist of: | ||
Paid in capital | $ 255,887,138 | |
Undistributed net investment income | 282,432 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 18,174,353 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 18,335,117 | |
Net Assets | $ 292,679,040 | |
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, 2007 | ||
Calculation of Maximum Offering Price | $ 18.67 | |
Maximum offering price per share (100/94.25 of $18.67) | $ 19.81 | |
Class T: | $ 18.64 | |
Maximum offering price per share (100/96.50 of $18.64) | $ 19.32 | |
Class B: | $ 18.51 | |
Class C: | $ 18.51 | |
Institutional Class: | $ 18.80 | |
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, 2007 | ||
Investment Income | ||
Dividends | $ 6,529,121 | |
Interest | 1,342 | |
Income from Fidelity Central Funds | 484,135 | |
Total income | 7,014,598 | |
Expenses | ||
Management fee | $ 1,918,136 | |
Transfer agent fees | 1,067,107 | |
Distribution fees | 1,744,909 | |
Accounting and security lending fees | 139,829 | |
Custodian fees and expenses | 18,033 | |
Independent trustees' compensation | 1,076 | |
Registration fees | 124,957 | |
Audit | 73,003 | |
Legal | 10,411 | |
Miscellaneous | 52,108 | |
Total expenses before reductions | 5,149,569 | |
Expense reductions | (25,416) | 5,124,153 |
Net investment income (loss) | 1,890,445 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 24,130,155 | |
Foreign currency transactions | 2,287 | |
Total net realized gain (loss) | 24,132,442 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (38,960,781) | |
Assets and liabilities in foreign currencies | (52) | |
Total change in net unrealized appreciation (depreciation) | (38,960,833) | |
Net gain (loss) | (14,828,391) | |
Net increase (decrease) in net assets resulting from operations | $ (12,937,946) | |
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 | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 1,890,445 | $ 2,590,321 |
Net realized gain (loss) | 24,132,442 | 18,564,557 |
Change in net unrealized appreciation (depreciation) | (38,960,833) | 13,773,537 |
Net increase (decrease) in net assets resulting | (12,937,946) | 34,928,415 |
Distributions to shareholders from net investment income | (1,881,167) | (2,073,129) |
Distributions to shareholders from net realized gain | (20,008,529) | (8,286,409) |
Total distributions | (21,889,696) | (10,359,538) |
Share transactions - net increase (decrease) | 80,064,090 | 43,551,731 |
Total increase (decrease) in net assets | 45,236,448 | 68,120,608 |
Net Assets | ||
Beginning of period | 247,442,592 | 179,321,984 |
End of period (including undistributed net investment income of $282,432 and undistributed net investment income of $521,902, respectively) | $ 292,679,040 | $ 247,442,592 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.34 | $ 18.23 | $ 13.22 | $ 11.33 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .18 | .29 | .31 | .27 | .21 |
Net realized and unrealized gain (loss) | (.17) | 2.85 | 5.52 | 2.03 | 1.28 |
Total from investment operations | .01 | 3.14 | 5.83 | 2.30 | 1.49 |
Distributions from net investment income | (.18) | (.23) | (.29) | (.30) | (.16) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.68) | (1.03) | (.82) | (.41) | (.16) |
Net asset value, end of period | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 | $ 11.33 |
Total Return B, C, D | (.65)% | 18.32% | 45.48% | 20.59% | 15.13% |
Ratios to Average Net Assets F, I | |||||
Expenses before reductions | 1.25% | 1.29% | 1.31% | 1.54% | 2.98% A |
Expenses net of fee waivers, if any | 1.25% | 1.25% | 1.28% | 1.54% | 1.75%A |
Expenses net of all reductions | 1.25% | 1.24% | 1.25% | 1.52% | 1.72%A |
Net investment income (loss) | .81% | 1.59% | 1.98% | 2.10% | 2.35%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 117,831 | $ 85,000 | $ 53,097 | $ 22,273 | $ 3,993 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.31 | $ 18.23 | $ 13.21 | $ 11.32 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .12 | .24 | .26 | .23 | .18 |
Net realized and unrealized gain (loss) | (.16) | 2.84 | 5.53 | 2.02 | 1.29 |
Total from investment operations | (.04) | 3.08 | 5.79 | 2.25 | 1.47 |
Distributions from net investment income | (.13) | (.20) | (.24) | (.25) | (.15) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.63) | (1.00) | (.77) | (.36) | (.15) |
Net asset value, end of period | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 | $ 11.32 |
Total Return B, C, D | (.89)% | 17.98% | 45.12% | 20.12% | 14.91% |
Ratios to Average Net Assets F, I | |||||
Expenses before reductions | 1.50% | 1.55% | 1.61% | 1.86% | 3.32%A |
Expenses net of fee waivers, if any | 1.50% | 1.50% | 1.57% | 1.85% | 2.00%A |
Expenses net of all reductions | 1.49% | 1.49% | 1.54% | 1.83% | 1.97%A |
Net investment income (loss) | .57% | 1.34% | 1.70% | 1.80% | 2.10%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 100,621 | $ 91,224 | $ 66,303 | $ 26,037 | $ 9,049 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.19 | $ 18.16 | $ 13.18 | $ 11.29 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .01 | .15 | .18 | .16 | .14 |
Net realized and unrealized gain (loss) | (.16) | 2.83 | 5.50 | 2.04 | 1.28 |
Total from investment operations | (.15) | 2.98 | 5.68 | 2.20 | 1.42 |
Distributions from net investment income | (.05) | (.15) | (.17) | (.20) | (.13) |
Distributions from net realized gain | (1.48) | (.80) | (.53) | (.11) | - |
Total distributions | (1.53) | (.95) | (.70) | (.31) | (.13) |
Net asset value, end of period | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 | $ 11.29 |
Total Return B, C, D | (1.45)% | 17.42% | 44.31% | 19.67% | 14.38% |
Ratios to Average Net AssetsF, I | |||||
Expenses before reductions | 2.02% | 2.05% | 2.10% | 2.33% | 3.82%A |
Expenses net of fee waivers, if any | 2.00% | 2.00% | 2.07% | 2.33% | 2.50%A |
Expenses net of all reductions | 2.00% | 1.98% | 2.03% | 2.31% | 2.47%A |
Net investment income (loss) | .07% | .84% | 1.20% | 1.31% | 1.60%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 25,114 | $ 27,397 | $ 26,349 | $ 12,910 | $ 5,061 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 H |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.21 | $ 18.17 | $ 13.18 | $ 11.29 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) E | .01 | .15 | .19 | .17 | .14 |
Net realized and unrealized gain (loss) | (.16) | 2.84 | 5.50 | 2.03 | 1.28 |
Total from investment operations | (.15) | 2.99 | 5.69 | 2.20 | 1.42 |
Distributions from net investment income | (.05) | (.15) | (.17) | (.20) | (.13) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.55) | (.95) | (.70) | (.31) | (.13) |
Net asset value, end of period | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 | $ 11.29 |
Total Return B, C, D | (1.45)% | 17.46% | 44.38% | 19.67% | 14.38% |
Ratios to Average Net Assets F, I | |||||
Expenses before reductions | 2.01% | 2.05% | 2.09% | 2.29% | 3.76%A |
Expenses net of fee waivers, if any | 2.00% | 2.00% | 2.05% | 2.29% | 2.50%A |
Expenses net of all reductions | 2.00% | 1.98% | 2.02% | 2.27% | 2.47%A |
Net investment income (loss) | .06% | .84% | 1.22% | 1.35% | 1.60%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 36,854 | $ 36,669 | $ 29,410 | $ 13,671 | $ 5,059 |
Portfolio turnover rate G | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period September 12, 2002 (commencement of operations) to July 31, 2003.
I 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 fee 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, | 2007 | 2006 | 2005 | 2004 | 2003 G |
Selected Per-Share Data | |||||
Net asset value, beginning of period | $ 20.47 | $ 18.33 | $ 13.28 | $ 11.35 | $ 10.00 |
Income from Investment Operations | |||||
Net investment income (loss) D | .24 | .35 | .36 | .32 | .23 |
Net realized and unrealized gain (loss) | (.17) | 2.85 | 5.56 | 2.04 | 1.28 |
Total from investment operations | .07 | 3.20 | 5.92 | 2.36 | 1.51 |
Distributions from net investment income | (.24) | (.26) | (.34) | (.32) | (.16) |
Distributions from net realized gain | (1.50) | (.80) | (.53) | (.11) | - |
Total distributions | (1.74) | (1.06) | (.87) | (.43) | (.16) |
Net asset value, end of period | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 | $ 11.35 |
Total Return B, C | (.37)% | 18.61% | 46.05% | 21.11% | 15.33% |
Ratios to Average Net Assets E, H | |||||
Expenses before reductions | .98% | .94% | .91% | 1.12% | 2.68% A |
Expenses net of fee waivers, if any | .98% | .94% | .91% | 1.12% | 1.50%A |
Expenses net of all reductions | .97% | .92% | .88% | 1.10% | 1.47%A |
Net investment income (loss) | 1.09% | 1.90% | 2.35% | 2.53% | 2.60%A |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $ 12,259 | $ 7,152 | $ 4,162 | $ 2,478 | $ 1,225 |
Portfolio turnover rate F | 84% | 65% | 62% | 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 Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period September 12, 2002 (commencement of operations) to July 31, 2003.
H 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 fee 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, 2007
1. Organization.
Fidelity Advisor Real Estate Fund (the Fund) is a non-diversified 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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete list of holdings for each Fidelity Central Fund is available upon request or at the SEC's website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
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:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency - continued
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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. 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 return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Financial Statements - continued
3. 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 short-term capital gains, 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 | $ 43,416,038 | |
Unrealized depreciation | (26,403,919) | |
Net unrealized appreciation (depreciation) | 17,012,119 | |
Undistributed ordinary income | 282,432 | |
Undistributed long-term capital gain | 14,747,741 | |
Cost for federal income tax purposes | $ 318,031,402 |
The tax character of distributions paid was as follows:
July 31, 2007 | July 31, 2006 | |
Ordinary Income | $ 6,191,707 | $ 5,799,680 |
Long-term Capital Gains | 15,697,989 | 4,559,858 |
Total | $ 21,889,696 | $ 10,359,538 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Annual Report
4. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $342,163,907 and $276,670,837, respectively.
6. 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 .26% 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 .56% of the Fund's average net assets.
Annual Report
Notes to Financial Statements - continued
6. 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 | .00% | .25% | $ 317,170 | $ 39,597 |
Class T | .25% | .25% | 600,346 | 7,270 |
Class B | .75% | .25% | 326,348 | 245,531 |
Class C | .75% | .25% | 501,045 | 123,812 |
$ 1,744,909 | $ 416,210 |
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, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 173,108 |
Class T | 32,468 |
Class B* | 52,462 |
Class C* | 12,974 |
$ 271,012 |
* 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.
Annual Report
6. 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 | $ 397,116 | .31 |
Class T | 368,236 | .31 |
Class B | 106,998 | .33 |
Class C | 159,744 | .32 |
Institutional Class | 35,013 | .29 |
$ 1,067,107 |
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.
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 $2,970 for the period.
7. 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, which amounted to $592 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $65,708.
9. Expense Reductions.
FMR voluntarily 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, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
Expense | Reimbursement | |
Class B | 2.00% | $ 6,449 |
Class C | 2.00% | 4,791 |
$ 11,240 |
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 $3,104 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses.
Annual Report
9. Expense Reductions - continued
During the period, these credits reduced the Fund's custody expenses by $3,421. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 2,910 | |
Institutional Class | 238 | |
$ 3,148 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, FIIOC, the Fund's transfer agent, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders and reimbursed the Fund for all related audit and legal expenses.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
Annual Report
Notes to Financial Statements - continued
10. Other - continued
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | ||
2007 | 2006 | |
From net investment income | ||
Class A | $ 910,999 | $ 741,719 |
Class T | 671,347 | 796,426 |
Class B | 73,434 | 226,838 |
Class C | 121,385 | 250,448 |
Institutional Class | 104,002 | 57,698 |
Total | $ 1,881,167 | $ 2,073,129 |
From net realized gain | ||
Class A | $ 7,016,390 | $ 2,548,943 |
Class T | 7,245,930 | 3,068,411 |
Class B | 2,110,416 | 1,188,352 |
Class C | 3,021,230 | 1,299,203 |
Institutional Class | 614,563 | 181,500 |
Total | $ 20,008,529 | $ 8,286,409 |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Years ended July 31, | Years ended July 31, | |||
2007 | 2006 | 2007 | 2006 | |
Class A | ||||
Shares sold | 4,162,272 | 2,262,157 | $ 91,668,160 | $ 41,503,690 |
Reinvestment of distributions | 360,748 | 181,664 | 7,512,896 | 3,138,257 |
Shares redeemed | (2,390,088) | (1,177,662) | (51,262,823) | (21,289,349) |
Net increase (decrease) | 2,132,932 | 1,266,159 | $ 47,918,233 | $ 23,352,598 |
Class T | ||||
Shares sold | 3,133,447 | 2,143,039 | $ 69,066,846 | $ 39,115,936 |
Reinvestment of distributions | 366,028 | 214,228 | 7,615,273 | 3,700,674 |
Shares redeemed | (2,592,591) | (1,504,010) | (55,812,105) | (27,210,343) |
Net increase (decrease) | 906,884 | 853,257 | $ 20,870,014 | $ 15,606,267 |
Class B | ||||
Shares sold | 522,263 | 398,999 | $ 11,374,401 | $ 7,246,734 |
Reinvestment of distributions | 95,389 | 73,796 | 1,975,227 | 1,270,470 |
Shares redeemed | (618,201) | (566,868) | (13,210,441) | (10,197,671) |
Net increase (decrease) | (549) | (94,073) | $ 139,187 | $ (1,680,467) |
Class C | ||||
Shares sold | 1,257,900 | 763,395 | $ 27,435,286 | $ 14,132,910 |
Reinvestment of distributions | 135,205 | 80,957 | 2,802,482 | 1,394,942 |
Shares redeemed | (1,217,050) | (647,908) | (25,938,064) | (11,656,661) |
Net increase (decrease) | 176,055 | 196,444 | $ 4,299,704 | $ 3,871,191 |
Institutional Class | ||||
Shares sold | 643,980 | 225,212 | $ 14,342,713 | $ 4,253,663 |
Reinvestment of distributions | 30,501 | 12,056 | 638,492 | 209,183 |
Shares redeemed | (371,732) | (115,041) | (8,144,253) | (2,060,704) |
Net increase (decrease) | 302,749 | 122,227 | $ 6,836,952 | $ 2,402,142 |
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 schedule of investments as of July 31, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended 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. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2007, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the four years in the period then ended 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 17, 2007
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 James C. Curvey, each of the Trustees oversees 353 funds advised by FMR or an affiliate. Mr. Curvey oversees 317 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. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. 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 may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (77) | |
Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR Corp.; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of Fidelity International Limited (FIL). | |
James C. Curvey (72) | |
Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is Vice Chairman (2006-present) and Director of FMR Corp. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR Corp. (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). | |
* 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.
Independent Trustees:
Correspondence intended for each Independent 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 | |
Dennis J. Dirks (59) | |
Year of Election or Appointment: 2005 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). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). | |
Albert R. Gamper, Jr. (65) | |
Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. | |
George H. Heilmeier (71) | |
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), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). 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), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. | |
James H. Keyes (66) | |
Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). | |
Marie L. Knowles (60) | |
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-present). 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 (63) | |
Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). 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. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. | |
Cornelia M. Small (63) | |
Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) 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 (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. | |
William S. Stavropoulos (68) | |
Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus 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), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. 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. | |
Kenneth L. Wolfe (68) | |
Year of Election or Appointment: 2005 Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993-2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003-present), Bausch & Lomb, Inc., and Revlon Inc. (2004-present). | |
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Mauriello may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer, Mr. Curvey, and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (63) | |
Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Advisor Series VII. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. | |
Joseph Mauriello (62) | |
Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Advisor Series VII. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002- 2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd., (global insurance and re-insurance company, 2006- present) and of Arcadia Resources Inc., (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). | |
Kimberley H. Monasterio (43) | |
Year of Election or Appointment: 2007 President and Treasurer of Advisor Real Estate. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). 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). | |
Dwight D. Churchill (53) | |
Year of Election or Appointment: 2005 Vice President of Advisor Real Estate. Mr. Churchill also serves as Vice President of certain Equity Funds (2005-present). Mr. Churchill is Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005- present). Previously, Mr. Churchill served as Senior Vice President of Fidelity Investments Money Management, Inc. (2005-2006), Head of Fidelity's Fixed-Income Division (2000-2005), Vice President of Fidelity's Money Market Funds (2000-2005), Vice President of Fidelity's Bond Funds, and Senior Vice President of FMR. | |
Boyce I. Greer (51) | |
Year of Election or Appointment: 2005 Vice President of Advisor Real Estate. Mr. Greer also serves as Vice President of certain Equity Funds (2005-present), certain Asset Allocation Funds (2005-present), Fixed-Income Funds (2006-present), and Money Market Funds (2006-present). Mr. Greer is also a Trustee of other investment companies advised by FMR (2003-present). He is an Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005-present), and Senior Vice President of Fidelity Investments Money Management, Inc. (2006-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002- 2005), and Executive Vice President (2000-2002) and Money Market Group Leader (1997-2002) of the Fidelity Investments Fixed Income Division. He also served as Vice President of Fidelity's Money Market Funds (1997-2002), Senior Vice President of FMR (1997-2002), and Vice President of FIMM (1998-2002). | |
Eric D. Roiter (58) | |
Year of Election or Appointment: 1998 Secretary of Advisor Real Estate. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). | |
Scott C. Goebel (39) | |
Year of Election or Appointment: 2007 Assistant Secretary of Advisor Real Estate. Mr. Goebel also serves as Assistant Secretary of other Fidelity funds (2007-present), Vice President and Secretary of FDC (2006-present), and is an employee of FMR. | |
R. Stephen Ganis (41) | |
Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Advisor Real Estate. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR Corp. (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). | |
Joseph B. Hollis (59) | |
Year of Election or Appointment: 2006 Chief Financial Officer of Advisor Real Estate. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005- | |
Kenneth A. Rathgeber (60) | |
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- | |
Bryan A. Mehrmann (46) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Real Estate. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). | |
Kenneth B. Robins (37) | |
Year of Election or Appointment: 2005 Deputy Treasurer of Advisor Real Estate. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). 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). | |
Robert G. Byrnes (40) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Real Estate. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). | |
Peter L. Lydecker (53) | |
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. | |
Gary W. Ryan (48) | |
Year of Election or Appointment: 2005 Assistant Treasurer of Advisor Real Estate. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). | |
Annual Report
Distributions
The Board of Trustees of Advisor Real Estate Fund voted to pay to shareholder 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 | 09/17/2007 | 09/14/2007 | $0.098 | $1.03 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2007 $20,232,356, or, if subsequently determined to be different, the net capital gain of such year.
A total of 0.07% 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 2008 of amounts for use in preparing 2007 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on September 30, 2006. The results of votes taken among shareholders on the proposal 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 elect a Board of Trustees. A | ||
# of | % of | |
Dennis J. Dirks | ||
Affirmative | 2,206,930,035.62 | 96.925 |
Withheld | 70,013,151.28 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Albert R. Gamper, Jr. | ||
Affirmative | 2,206,929,647.55 | 96.925 |
Withheld | 70,013,539.35 | 3.075 |
TOTAL | 2,276,943,186.90 | 100.000 |
Robert M. Gates | ||
Affirmative | 2,205,212,761.55 | 96.850 |
Withheld | 71,730,425.35 | 3.150 |
TOTAL | 2,276,943,186.90 | 100.000 |
George H. Heilmeier | ||
Affirmative | 2,204,247,730.70 | 96.807 |
Withheld | 72,695,456.20 | 3.193 |
TOTAL | 2,276,943,186.90 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 2,203,739,123.67 | 96.785 |
Withheld | 73,204,063.23 | 3.215 |
TOTAL | 2,276,943,186.90 | 100.000 |
Stephen P. Jonas | ||
Affirmative | 2,207,154,045.47 | 96.935 |
Withheld | 69,789,141.43 | 3.065 |
TOTAL | 2,276,943,186.90 | 100.000 |
James H. KeyesB | ||
Affirmative | 2,205,258,024.08 | 96.852 |
Withheld | 71,685,162.82 | 3.148 |
TOTAL | 2,276,943,186.90 | 100.000 |
# of | % of | |
Marie L. Knowles | ||
Affirmative | 2,205,892,060.16 | 96.880 |
Withheld | 71,051,126.74 | 3.120 |
TOTAL | 2,276,943,186.90 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 2,205,297,807.97 | 96.853 |
Withheld | 71,645,378.93 | 3.147 |
TOTAL | 2,276,943,186.90 | 100.000 |
William O. McCoy | ||
Affirmative | 2,204,396,505.93 | 96.814 |
Withheld | 72,546,680.97 | 3.186 |
TOTAL | 2,276,943,186.90 | 100.000 |
Robert L. Reynolds | ||
Affirmative | 2,206,981,118.77 | 96.927 |
Withheld | 69,962,068.13 | 3.073 |
TOTAL | 2,276,943,186.90 | 100.000 |
Cornelia M. Small | ||
Affirmative | 2,206,379,820.44 | 96.901 |
Withheld | 70,563,366.46 | 3.099 |
TOTAL | 2,276,943,186.90 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 2,205,403,278.90 | 96.858 |
Withheld | 71,539,908.00 | 3.142 |
TOTAL | 2,276,943,186.90 | 100.000 |
Kenneth L. Wolfe | ||
Affirmative | 2,205,707,840.10 | 96.871 |
Withheld | 71,235,346.80 | 3.129 |
TOTAL | 2,276,943,186.90 | 100.000 |
A Denotes trust-wide proposal and voting results. B Effective on or about January 1, 2007. | ||
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Real Estate Fund
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Equity Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2007 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for the fund. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the management fee and total expenses of the fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to the fund's agreements with foreign sub-advisers to clarify that each sub-adviser provides services as an independent contractor.
In determining whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the background of the fund's portfolio manager and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board also considered that Fidelity voluntarily pays for market data out of its own resources. The Board also considered the agreement reached between the Independent Trustees and Fidelity in December 2006 following an independent review of matters relating to receipt of travel, entertainment, gifts and gratuities in violation of Fidelity policies.
Annual Report
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in July 2006, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fee on Fidelity Advisor Floating Rate High Income Fund; (iii) contractually agreeing to reduce the management fees on Fidelity's California, Massachusetts, New Jersey, and New York AMT Tax-Free Money Market Funds, launching new Institutional Classes and Service Classes of these funds, and contractually agreeing to impose expense limitations on these funds; (iv) eliminating the exchange fee on the Fidelity Select Portfolios and reducing the pricing and bookkeeping fee rates for these funds; (v) reducing the maximum transfer agency fee rates on high income funds and certain equity funds; (vi) proposing amended management contracts that, if approved by shareholders, will add a performance adjustment component to the management fees paid by 18 Fidelity Advisor equity funds; (vii) contractually agreeing to reduce fees for Ultra-Short Central Fund and the money market Central Funds; (viii) waiving the Fidelity Advisor funds' contingent deferred sales charge on certain redemptions made through systematic withdrawal programs; and (ix) amending the management contracts for equity and fixed-income funds whose management contracts incorporate a "group fee" structure by adding four new fee "breakpoints" to the group fee rate schedules.
Investment Performance and Compliance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against a broad-based securities market index over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. Because the fund had been in existence less than five calendar years, the following charts considered by the Board show, over the one- and three-year periods ended December 31, 2006, the cumulative total returns of Institutional Class (Class I) and Class B of the fund and the cumulative total returns of a broad-based securities market index ("benchmark"). The returns of Institutional Class (Class I) and Class B show the performance of the highest and lowest performing classes, respectively (based on three-year performance).
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Advisor Real Estate Fund
The Board stated that the relative investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
The Board considered two proprietary management fee comparisons for the 12-month (or shorter) periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked, is also included in the chart and considered by the Board.
Advisor Real Estate Fund
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2006.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class ranked below its competitive median for 2006, and the total expenses of Class T ranked equal to its competitive median for 2006.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in the fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. In connection with the renewal of the fund's management contract, the Board approved amendments to the fund's management contract that added four new fee breakpoints to the group fee rate schedule for assets under FMR's management above $1,386 billion. The Board considered that the group fee rate declines under both the present and amended schedules, but that under the amended schedule, the group fee rate declines faster as assets under FMR's management exceed $1,386 billion. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on several topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) Fidelity's portfolio manager compensation structure, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (iii) Fidelity's fee structures; (iv) the funds' sub-advisory arrangements; and (v) accounts managed by Fidelity other than the Fidelity funds.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
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 Research & Analysis Company
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service 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
AREI-UANN-0907
1.789708.104
Item 2. Code of Ethics
As of the end of the period, July 31, 2007, 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 is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Ms. Knowles is 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, 2007 and July 31, 2006, 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 Communications Equipment Fund, Fidelity Advisor Consumer Discretionary Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Real Estate Fund, Fidelity Advisor Technology Fund and Fidelity Advisor Utilities Fund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2007A | 2006A |
Fidelity Advisor Biotechnology Fund | $38,000 | $31,000 |
Fidelity Advisor Communications Equipment Fund | $38,000 | $31,000 |
Fidelity Advisor Consumer Discretionary Fund | $36,000 | $31,000 |
Fidelity Advisor Electronics Fund | $38,000 | $31,000 |
Fidelity Advisor Energy Fund | $40,000 | $34,000 |
Fidelity Advisor Financial Services Fund | $39,000 | $33,000 |
Fidelity Advisor Health Care Fund | $40,000 | $34,000 |
Fidelity Advisor Industrials Fund | $37,000 | $31,000 |
Fidelity Advisor Real Estate Fund | $62,000 | $52,000 |
Fidelity Advisor Technology Fund | $40,000 | $34,000 |
Fidelity Advisor Utilities Fund | $37,000 | $31,000 |
All funds in the Fidelity Group of Funds audited by Deloitte Entities | $7,100,000 | $5,900,000 |
A | Aggregate amounts may reflect rounding. |
(b) Audit-Related Fees.
In each of the fiscal years ended July 31, 2007 and July 31, 2006 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 | 2007A | 2006A |
Fidelity Advisor Biotechnology Fund | $0 | $0 |
Fidelity Advisor Communications Equipment Fund | $0 | $0 |
Fidelity Advisor Consumer Discretionary Fund | $0 | $0 |
Fidelity Advisor Electronics Fund | $0 | $0 |
Fidelity Advisor Energy Fund | $0 | $0 |
Fidelity Advisor Financial Services Fund | $0 | $0 |
Fidelity Advisor Health Care Fund | $0 | $0 |
Fidelity Advisor Industrials Fund | $0 | $0 |
Fidelity Advisor Real Estate Fund | $0 | $0 |
Fidelity Advisor Technology Fund | $0 | $0 |
Fidelity Advisor Utilities Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2007 and July 31, 2006, 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 | 2007A | 2006A |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
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, 2007 and July 31, 2006, 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 | 2007A | 2006A |
Fidelity Advisor Biotechnology Fund | $4,200 | $4,000 |
Fidelity Advisor Communications Equipment Fund | $4,200 | $4,000 |
Fidelity Advisor Consumer Discretionary Fund | $5,200 | $4,000 |
Fidelity Advisor Electronics Fund | $4,200 | $4,000 |
Fidelity Advisor Energy Fund | $5,200 | $4,000 |
Fidelity Advisor Financial Services Fund | $5,200 | $4,000 |
Fidelity Advisor Health Care Fund | $5,200 | $4,000 |
Fidelity Advisor Industrials Fund | $5,200 | $4,000 |
Fidelity Advisor Real Estate Fund | $5,200 | $4,200 |
Fidelity Advisor Technology Fund | $5,200 | $4,000 |
Fidelity Advisor Utilities Fund | $5,200 | $4,000 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2007 and July 31, 2006, 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 | 2007A | 2006A |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
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, 2007 and July 31, 2006, 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 | 2007A | 2006A |
Fidelity Advisor Biotechnology Fund | $0 | $0 |
Fidelity Advisor Communications Equipment Fund | $0 | $0 |
Fidelity Advisor Consumer Discretionary Fund | $0 | $0 |
Fidelity Advisor Electronics Fund | $0 | $0 |
Fidelity Advisor Energy Fund | $0 | $0 |
Fidelity Advisor Financial Services Fund | $0 | $0 |
Fidelity Advisor Health Care Fund | $0 | $0 |
Fidelity Advisor Industrials Fund | $0 | $0 |
Fidelity Advisor Real Estate Fund | $0 | $0 |
Fidelity Advisor Technology Fund | $0 | $0 |
Fidelity Advisor Utilities Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2007 and July 31, 2006, 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 | 2007A | 2006A |
Deloitte Entities | $180,000 | $255,000 |
A | Aggregate amounts may reflect rounding. |
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 that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2007 and July 31, 2006 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2007 and July 31, 2006 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 that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2007 and July 31, 2006 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2007 and July 31, 2006 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 that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2007 and July 31, 2006 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended July 31, 2007 and July 31, 2006 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
(f) Not applicable.
(g) For the fiscal years ended July 31, 2007 and July 31, 2006, the aggregate fees billed by Deloitte Entities of $610,000A and $670,000A 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.
2007A | 2006A | |
Covered Services | $235,000 | $300,000 |
Non-Covered Services | $375,000 | $370,000 |
A | Aggregate amounts may reflect rounding. |
(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. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. 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 11. 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. 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/Kimberley Monasterio |
Kimberley Monasterio | |
President and Treasurer | |
Date: | September 27, 2007 |
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/Kimberley Monasterio |
Kimberley Monasterio | |
President and Treasurer | |
Date: | September 27, 2007 |
By: | /s/Joseph B. Hollis |
Joseph B. Hollis | |
Chief Financial Officer | |
Date: | September 27, 2007 |