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)
Scott C. Goebel, 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, 2008 |
Item 1. Reports to Stockholders
Fidelity Advisor
Focus Funds®
Class A, Class T, Class B and Class C
Biotechnology
Communications Equipment
Consumer Discretionary
Electronics
Energy
Financial Services
Health Care
Industrials
Technology
Utilities
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
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 LLC or an affiliated company.
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
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of
fund A |
Class A (incl. 5.75% sales charge) | 9.28% | 5.87% | -3.05% |
Class T (incl. 3.50% sales charge) | 11.59% | 6.10% | -3.00% |
Class B (incl. contingent deferred sales charge) B | 9.96% | 6.01% | -2.99% |
Class C (incl. contingent deferred sales charge) C | 13.96% | 6.33% | -3.04% |
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 A on December 27, 2000, when the fund started, and the current 5.75% 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.
Biotechnology
Advisor Biotechnology Fund
Management's Discussion of Fund Performance
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned 15.95%, 15.64%, 14.96% and 14.96%, respectively (excluding sales charges), trailing the 25.57% result of the MSCI® US Investable Market Biotechnology Index but handily topping the S&P 500. Versus the MSCI index, positions in a number of out-of-index biotechnology and pharmaceutical holdings in the small- and mid-cap segments hurt the fund's relative performance. In particular, the share price of Vanda Pharmaceuticals - which I sold during the period - lost most of its value during the period, as the company received word near the end of July 2008 that Iloperidone, its antipsychotic medication under review for treating schizophrenia, was not approved for that purpose by the Food and Drug Administration (FDA). Also holding back our results was BioMarin Pharmaceutical. Meanwhile, Akorn was sidetracked by delays in FDA approval of a generic form of Vancocin, an antibiotic. Among larger-caps, significantly underweighting one strong-
performing major index component, Gilead Sciences, held back our results, and Wyeth turned in a disappointing performance. Conversely, the fund's holdings in major index component Celgene provided the biggest boost. I was able to purchase the bulk of the position after the stock fell sharply in December 2007, after which it advanced nicely. Alexion Pharmaceuticals also bolstered our results, as did Auxilium Pharmaceuticals and OSI Pharmaceuticals. Auxilium, Vanda, Wyeth and Akorn were out-of-index holdings.
During the year, the fund's Institutional Class shares returned 16.35%, trailing the 25.57% result of the MSCI® US Investable Market Biotechnology Index but handily topping the S&P 500. Versus the MSCI index, positions in a number of out-of-index biotechnology and pharmaceutical holdings in the small- and mid-cap segments hurt the fund's relative performance. In particular, the share price of Vanda Pharmaceuticals - which I sold during the period - lost most of its value during the period, as the company received word near the end of July 2008 that Iloperidone, its antipsychotic medication under review for treating schizophrenia, was not approved for that purpose by the Food and Drug Administration (FDA). Also holding back our results was BioMarin Pharmaceutical. Meanwhile, Akorn was sidetracked by delays in FDA approval of a generic form of Vancocin, an antibiotic. Among larger-caps, significantly underweighting one strong-performing major index component, Gilead Sciences, held back our results, and Wyeth turned in a disappointing performance. Conversely, the fund's holdings in major index component Celgene provided the biggest boost. I was able to purchase the bulk of the position after the stock fell sharply in December 2007, after which it advanced nicely. Alexion Pharmaceuticals also bolstered our results, as did Auxilium Pharmaceuticals and OSI Pharmaceuticals. Auxilium, Vanda, Wyeth and Akorn were out-of-index holdings.
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.
Biotechnology
Advisor Biotechnology 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 1,135.20 | $ 7.11 |
HypotheticalA | $ 1,000.00 | $ 1,018.20 | $ 6.72 |
Class T | | | |
Actual | $ 1,000.00 | $ 1,133.30 | $ 8.75 |
HypotheticalA | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B | | | |
Actual | $ 1,000.00 | $ 1,131.00 | $ 11.07 |
HypotheticalA | $ 1,000.00 | $ 1,014.47 | $ 10.47 |
Class C | | | |
Actual | $ 1,000.00 | $ 1,129.20 | $ 11.01 |
HypotheticalA | $ 1,000.00 | $ 1,014.52 | $ 10.42 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 1,136.40 | $ 5.47 |
HypotheticalA | $ 1,000.00 | $ 1,019.74 | $ 5.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.34% |
Class T | 1.65% |
Class B | 2.09% |
Class C | 2.08% |
Institutional Class | 1.03% |
Annual Report
Advisor Biotechnology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Amgen, Inc. | 19.6 | 0.4 |
Genentech, Inc. | 10.3 | 10.9 |
Gilead Sciences, Inc. | 8.4 | 8.9 |
Alexion Pharmaceuticals, Inc. | 5.1 | 4.0 |
Biogen Idec, Inc. | 4.4 | 7.2 |
Cephalon, Inc. | 3.8 | 4.6 |
Acorda Therapeutics, Inc. | 3.3 | 0.2 |
Auxilium Pharmaceuticals, Inc. | 3.0 | 3.2 |
Celgene Corp. | 2.7 | 6.9 |
United Therapeutics Corp. | 2.7 | 3.4 |
| 63.3 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
 | Biotechnology | 81.7% | |
 | Pharmaceuticals | 13.7% | |
 | Health Care
Equipment & Supplies | 1.4% | |
 | Life Sciences
Tools & Services | 0.7% | |
 | All Others* | 2.5% | |
As of January 31, 2008 |
| Biotechnology | 80.8% | |
 | Pharmaceuticals | 14.2% | |
 | Health Care
Equipment & Supplies | 1.8% | |
 | Life Sciences
Tools & Services | 2.8% | |
| Health Care
Providers & Services | 0.2% | |
| All Others* | 0.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Biotechnology Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.5% |
| Shares | | Value |
BIOTECHNOLOGY - 81.7% |
Biotechnology - 81.7% |
Acadia Pharmaceuticals, Inc. (a) | 28,874 | | $ 86,045 |
Acorda Therapeutics, Inc. (a) | 58,304 | | 1,912,954 |
Affymax, Inc. (a) | 7,300 | | 144,321 |
Alexion Pharmaceuticals, Inc. (a) | 32,233 | | 3,021,844 |
Alkermes, Inc. (a) | 13,100 | | 206,325 |
Alnylam Pharmaceuticals, Inc. (a) | 7,000 | | 243,460 |
Amgen, Inc. (a) | 183,920 | | 11,518,905 |
Amylin Pharmaceuticals, Inc. (a) | 23,584 | | 744,075 |
Antigenics, Inc. (a) | 452,000 | | 890,440 |
Antigenics, Inc.: | | | |
warrants 1/9/10 (a)(e) | 452,000 | | 83,478 |
warrants 1/9/18 (a)(e) | 452,000 | | 533,805 |
Arena Pharmaceuticals, Inc. (a) | 7,600 | | 51,528 |
Biogen Idec, Inc. (a) | 36,802 | | 2,567,308 |
BioMarin Pharmaceutical, Inc. (a) | 43,189 | | 1,405,802 |
Celera Corp. (a) | 11,700 | | 159,705 |
Celgene Corp. (a) | 21,238 | | 1,603,257 |
Cephalon, Inc. (a) | 30,699 | | 2,245,939 |
Cepheid, Inc. (a) | 7,500 | | 128,400 |
Cougar Biotechnology, Inc. (a) | 12,700 | | 427,355 |
Cubist Pharmaceuticals, Inc. (a) | 8,215 | | 186,152 |
CV Therapeutics, Inc. (a) | 9,400 | | 88,078 |
Dendreon Corp. (a)(d) | 10,800 | | 63,936 |
Enzon Pharmaceuticals, Inc. (a) | 5,400 | | 44,172 |
Genentech, Inc. (a) | 63,511 | | 6,049,423 |
Genzyme Corp. (a) | 9,438 | | 723,423 |
Gilead Sciences, Inc. (a) | 91,498 | | 4,939,062 |
GTx, Inc. (a) | 2,670 | | 49,769 |
Halozyme Therapeutics, Inc. (a) | 5,010 | | 40,130 |
Human Genome Sciences, Inc. (a) | 17,377 | | 115,210 |
ImClone Systems, Inc. (a) | 10,800 | | 690,444 |
Incyte Corp. (a) | 14,895 | | 137,928 |
Isis Pharmaceuticals, Inc. (a) | 17,700 | | 303,201 |
Ligand Pharmaceuticals, Inc. Class B (a) | 26,500 | | 88,245 |
Martek Biosciences (a) | 3,500 | | 131,635 |
Momenta Pharmaceuticals, Inc. (a) | 4,000 | | 66,320 |
Myriad Genetics, Inc. (a) | 7,505 | | 499,083 |
Omrix Biopharmaceuticals, Inc. (a) | 1,900 | | 35,340 |
ONYX Pharmaceuticals, Inc. (a) | 18,094 | | 732,807 |
OREXIGEN Therapeutics, Inc. (a) | 9,226 | | 80,728 |
OSI Pharmaceuticals, Inc. (a) | 10,100 | | 531,563 |
PDL BioPharma, Inc. | 27,700 | | 309,409 |
Poniard Pharmaceuticals, Inc. (a) | 7,700 | | 29,645 |
Progenics Pharmaceuticals, Inc. (a) | 4,500 | | 74,250 |
Regeneron Pharmaceuticals, Inc. (a) | 8,891 | | 194,624 |
Rigel Pharmaceuticals, Inc. (a) | 7,635 | | 194,234 |
Sangamo Biosciences, Inc. (a) | 7,098 | | 77,723 |
Savient Pharmaceuticals, Inc. (a) | 10,505 | | 279,223 |
Theratechnologies, Inc. (a) | 5,700 | | 29,673 |
Theravance, Inc. (a) | 7,765 | | 124,085 |
|
| Shares | | Value |
United Therapeutics Corp. (a) | 13,839 | | $ 1,569,204 |
Vertex Pharmaceuticals, Inc. (a) | 45,304 | | 1,562,988 |
Zymogenetics, Inc. (a) | 11,295 | | 97,137 |
| | 48,113,790 |
HEALTH CARE EQUIPMENT & SUPPLIES - 1.4% |
Health Care Equipment - 1.4% |
Alsius Corp. (a) | 14,200 | | 32,376 |
Clinical Data, Inc. (a) | 4,547 | | 77,754 |
Quidel Corp. (a) | 34,400 | | 696,944 |
| | 807,074 |
LIFE SCIENCES TOOLS & SERVICES - 0.7% |
Life Sciences Tools & Services - 0.7% |
AMAG Pharmaceuticals, Inc. (a) | 3,415 | | 140,015 |
Exelixis, Inc. (a) | 34,300 | | 240,100 |
Medivation, Inc. (a) | 1,359 | | 27,180 |
| | 407,295 |
PHARMACEUTICALS - 13.7% |
Pharmaceuticals - 13.7% |
Akorn, Inc. (a) | 106,079 | | 544,185 |
Auxilium Pharmaceuticals, Inc. (a) | 47,658 | | 1,768,112 |
Biodel, Inc. (a) | 57,233 | | 963,231 |
Catalyst Pharmaceutical Partners, Inc. (a) | 21,241 | | 69,033 |
Elan Corp. PLC sponsored ADR (a) | 72,250 | | 1,448,613 |
Jazz Pharmaceuticals, Inc. (a) | 335 | | 2,258 |
Sepracor, Inc. (a) | 17,210 | | 300,831 |
Wyeth | 36,900 | | 1,495,188 |
XenoPort, Inc. (a) | 31,735 | | 1,454,098 |
| | 8,045,549 |
TOTAL COMMON STOCKS (Cost $46,219,476) | 57,373,708 |
Money Market Funds - 1.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 746,664 | | 746,664 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 52,200 | | 52,200 |
TOTAL MONEY MARKET FUNDS (Cost $798,864) | 798,864 |
TOTAL INVESTMENT PORTFOLIO - 98.8% (Cost $47,018,340) | 58,172,572 |
NET OTHER ASSETS - 1.2% | | 684,099 |
NET ASSETS - 100% | $ 58,856,671 |
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 $617,283 or 1.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Antigenics, Inc. warrants 1/9/10 | 1/9/08 | $ 3 |
Antigenics, Inc. warrants 1/9/18 | 1/9/08 | $ 563,722 |
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 | $ 11,289 |
Fidelity Securities Lending Cash Central Fund | 8,739 |
Total | $ 20,028 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $4,310,179 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Biotechnology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $51,504) - See accompanying schedule: Unaffiliated issuers (cost $46,219,476) | $ 57,373,708 | |
Fidelity Central Funds (cost $798,864) | 798,864 | |
Total Investments (cost $47,018,340) | | $ 58,172,572 |
Cash | | 1 |
Receivable for investments sold | | 1,758,028 |
Receivable for fund shares sold | | 693,925 |
Distributions receivable from Fidelity Central Funds | | 1,476 |
Prepaid expenses | | 65 |
Total assets | | 60,626,067 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,512,567 | |
Payable for fund shares redeemed | 101,479 | |
Accrued management fee | 25,888 | |
Distribution fees payable | 27,372 | |
Other affiliated payables | 13,849 | |
Other payables and accrued expenses | 36,041 | |
Collateral on securities loaned, at value | 52,200 | |
Total liabilities | | 1,769,396 |
| | |
Net Assets | | $ 58,856,671 |
Net Assets consist of: | | |
Paid in capital | | $ 52,735,618 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (5,033,179) |
Net unrealized appreciation (depreciation) on investments | | 11,154,232 |
Net Assets | | $ 58,856,671 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($18,249,412 ÷ 2,336,366 shares) | | $ 7.81 |
| | |
Maximum offering price per share (100/94.25 of $7.81) | | $ 8.29 |
Class T:
Net Asset Value and redemption price per share ($15,122,889 ÷ 1,977,167 shares) | | $ 7.65 |
| | |
Maximum offering price per share (100/96.50 of $7.65) | | $ 7.93 |
Class B:
Net Asset Value and offering price per share ($11,044,373 ÷ 1,504,428 shares)A | | $ 7.34 |
| | |
Class C:
Net Asset Value and offering price per share ($13,323,006 ÷ 1,814,396 shares)A | | $ 7.34 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($1,116,991 ÷ 139,694 shares) | | $ 8.00 |
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, 2008 |
Investment Income | | |
Special dividends | | 42,843 |
Interest | | 1,016 |
Income from Fidelity Central Funds (including $8,739 from security lending) | | 20,028 |
Total income | | 63,887 |
| | |
Expenses | | |
Management fee | $ 287,392 | |
Transfer agent fees | 164,004 | |
Distribution fees | 334,626 | |
Accounting and security lending fees | 21,818 | |
Custodian fees and expenses | 10,146 | |
Independent trustees' compensation | 216 | |
Registration fees | 47,193 | |
Audit | 42,785 | |
Legal | 260 | |
Miscellaneous | 13,578 | |
Total expenses before reductions | 922,018 | |
Expense reductions | (5,153) | 916,865 |
Net investment income (loss) | | (852,978) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (1,922,156) | |
Foreign currency transactions | 300 | |
Total net realized gain (loss) | | (1,921,856) |
Change in net unrealized appreciation (depreciation) on investment securities | | 10,243,107 |
Net gain (loss) | | 8,321,251 |
Net increase (decrease) in net assets resulting from operations | | $ 7,468,273 |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (852,978) | $ (966,220) |
Net realized gain (loss) | (1,921,856) | 8,930,811 |
Change in net unrealized appreciation (depreciation) | 10,243,107 | (4,482,074) |
Net increase (decrease) in net assets resulting from operations | 7,468,273 | 3,482,517 |
Distributions to shareholders from net realized gain | (3,898,928) | - |
Share transactions - net increase (decrease) | 3,736,181 | (8,274,098) |
Redemption fees | 1,940 | 1,128 |
Total increase (decrease) in net assets | 7,307,466 | (4,790,453) |
| | |
Net Assets | | |
Beginning of period | 51,549,205 | 56,339,658 |
End of period | $ 58,856,671 | $ 51,549,205 |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 | $ 5.94 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) F | (.09) | (.09) | (.08) G | (.09) |
Net realized and unrealized gain (loss) | 1.20 | .51 | .10 | .88 | .15 |
Total from investment operations | 1.11 | .42 | .01 | .80 | .06 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 |
Total Return A,B | 15.95% | 6.17% | .15% | 13.33% | 1.01% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.37% | 1.42% | 1.48% | 1.56% | 1.68% |
Expenses net of fee waivers, if any | 1.37% | 1.40% | 1.40% | 1.45% | 1.50% |
Expenses net of all reductions | 1.37% | 1.40% | 1.37% | 1.43% | 1.48% |
Net investment income (loss) | (1.24)% F | (1.25)% | (1.29)% | (1.36)% G | (1.38)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 18,249 | $ 13,081 | $ 12,539 | $ 11,022 | $ 10,197 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.33)%.
G 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)%.
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. 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.
I Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 | $ 5.90 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.11) F | (.11) | (.11) | (.10) G | (.10) |
Net realized and unrealized gain (loss) | 1.18 | .51 | .10 | .87 | .15 |
Total from investment operations | 1.07 | .40 | (.01) | .77 | .05 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 |
Total Return A,B | 15.64% | 5.96% | (.15)% | 12.94% | .85% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.69% | 1.75% | 1.79% | 1.93% | 2.10% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.70% | 1.75% |
Expenses net of all reductions | 1.65% | 1.65% | 1.62% | 1.68% | 1.73% |
Net investment income (loss) | (1.53)% F | (1.49)% | (1.54)% | (1.61)% G | (1.63)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 15,123 | $ 13,008 | $ 13,808 | $ 14,177 | $ 13,367 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
G 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)%.
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. 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.
I 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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 | $ 5.82 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) F | (.14) | (.14) | (.13)G | (.13) |
Net realized and unrealized gain (loss) | 1.13 | .50 | .10 | .85 | .15 |
Total from investment operations | .99 | .36 | (.04) | .72 | .02 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 |
Total Return A,B | 14.96% | 5.52% | (.61)% | 12.33% | .34% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.12% | 2.17% | 2.23% | 2.33% | 2.46% |
Expenses net of fee waivers, if any | 2.12% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.12% | 2.15% | 2.12% | 2.18% | 2.22% |
Net investment income (loss) | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G | (2.12)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 11,044 | $ 12,656 | $ 14,938 | $ 16,921 | $ 16,819 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G 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)%.
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. 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.
I Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 | $ 5.82 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.13) F | (.14) | (.14) | (.13)G | (.13) |
Net realized and unrealized gain (loss) | 1.12 | .50 | .09 | .86 | .15 |
Total from investment operations | .99 | .36 | (.05) | .73 | .02 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capitalC,I | - | - | - | - | - |
Net asset value, end of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 |
Total Return A,B | 14.96% | 5.52% | (.76)% | 12.50% | .34% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.12% | 2.16% | 2.17% | 2.24% | 2.31% |
Expenses net of fee waivers, if any | 2.12% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.12% | 2.15% | 2.12% | 2.18% | 2.23% |
Net investment income (loss) | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G | (2.13)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,323 | $ 11,813 | $ 13,787 | $ 12,538 | $ 13,215 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G 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)%.
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. 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.
I 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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 | $ 5.97 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.07) E | (.07) | (.07) | (.06) F | (.06) |
Net realized and unrealized gain (loss) | 1.23 | .53 | .09 | .89 | .15 |
Total from investment operations | 1.16 | .46 | .02 | .83 | .09 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 |
Total Return A | 16.35% | 6.66% | .29% | 13.70% | 1.51% |
Ratios to Average Net Assets C,G | | | | | |
Expenses before reductions | 1.06% | 1.06% | 1.05% | 1.10% | 1.16% |
Expenses net of fee waivers, if any | 1.06% | 1.06% | 1.05% | 1.10% | 1.16% |
Expenses net of all reductions | 1.06% | 1.06% | 1.03% | 1.09% | 1.14% |
Net investment income (loss) | (.94)% E | (.91)% | (.94)% | (1.02)% F | (1.04)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,117 | $ 991 | $ 1,268 | $ 1,243 | $ 1,146 |
Portfolio turnover rate D | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
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 (1.02)%.
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
Notes to Financial Statements
For the period ended July 31, 2008
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.
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
Biotechnology
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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. As a result of a change in the estimate of the return of capital component of dividend income realized in the year ended July 31, 2007, dividend income has been reduced $26,000 with a corresponding increase to net unrealized appreciation (depreciation). The change in estimate has no impact on total net assets or total return of the Fund. 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 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 | $ 12,751,365 |
Unrealized depreciation | (2,320,139) |
Net unrealized appreciation (depreciation) | 10,431,226 |
Cost for federal income tax purposes | $ 47,741,346 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Long-term Capital Gains | $ 3,898,928 | $ - |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Annual Report
Notes to Financial Statements - continued
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 $68,262,335 and $70,783,788, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 34,272 | $ 685 |
Class T | .25% | .25% | 67,098 | 258 |
Class B | .75% | .25% | 116,219 | 87,830 |
Class C | .75% | .25% | 117,037 | 15,913 |
| | | $ 334,626 | $ 104,686 |
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
by FDC |
Class A | $ 11,012 |
Class T | 7,435 |
Class B* | 25,964 |
Class C* | 1,956 |
| $ 46,367 |
* 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.
Biotechnology
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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 41,176 | .30 |
Class T | 49,606 | .37 |
Class B | 35,123 | .30 |
Class C | 35,280 | .30 |
Institutional Class | 2,819 | .24 |
| $ 164,004 | |
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 $2,116 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 $122 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
Limitations | Reimbursement
from adviser |
Class T | 1.65% | $ 5,030 |
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 $123 for the period.
Annual Report
Notes to Financial Statements - continued
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $6,156, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 958,767 | $ - |
Class T | 975,566 | - |
Class B | 968,071 | - |
Class C | 911,566 | - |
Institutional Class | 84,958 | - |
Total | $ 3,898,928 | $ - |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 968,364 | 654,030 | $ 6,960,029 | $ 4,756,477 |
Reinvestment of distributions | 116,475 | - | 854,207 | - |
Shares redeemed | (556,578) | (687,789) | (3,954,261) | (5,067,147) |
Net increase (decrease) | 528,261 | (33,759) | $ 3,859,975 | $ (310,670) |
Class T | | | | |
Shares sold | 558,497 | 413,953 | $ 3,914,836 | $ 2,989,158 |
Reinvestment of distributions | 133,154 | - | 959,165 | - |
Shares redeemed | (543,030) | (643,045) | (3,782,531) | (4,647,999) |
Net increase (decrease) | 148,621 | (229,092) | $ 1,091,470 | $ (1,658,841) |
Class B | | | | |
Shares sold | 270,835 | 235,936 | $ 1,836,564 | $ 1,623,598 |
Reinvestment of distributions | 123,818 | - | 860,151 | - |
Shares redeemed | (730,418) | (686,826) | (4,825,895) | (4,815,046) |
Net increase (decrease) | (335,765) | (450,890) | $ (2,129,180) | $ (3,191,448) |
Class C | | | | |
Shares sold | 452,084 | 294,514 | $ 3,145,989 | $ 2,075,073 |
Reinvestment of distributions | 110,151 | - | 765,068 | - |
Shares redeemed | (465,047) | (691,341) | (3,112,018) | (4,822,276) |
Net increase (decrease) | 97,188 | (396,827) | $ 799,039 | $ (2,747,203) |
Biotechnology
12. Share Transactions - continued
Transactions for each class of shares were as follows - continued
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Institutional Class | | | | |
Shares sold | 190,433 | 40,455 | $ 1,427,209 | $ 308,779 |
Reinvestment of distributions | 6,538 | - | 48,898 | - |
Shares redeemed | (191,649) | (89,434) | (1,361,230) | (674,715) |
Net increase (decrease) | 5,322 | (48,979) | $ 114,877 | $ (365,936) |
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of
fundA |
Class A (incl. 5.75% sales charge) D | -21.24% | 6.06% | -3.76% |
Class T (incl. 3.50% sales charge) D | -19.51% | 6.30% | -3.69% |
Class B (incl. contingent deferred sales charge)B,D | -21.04% | 6.20% | -3.68% |
Class C (incl. contingent deferred sales charge)C,D | -17.87% | 6.49% | -3.73% |
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.
D Prior to October 1, 2006, Advisor Communications Equipment operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Communications Equipment Fund - Class A on December 27, 2000, when the fund started, and the current 5.75% 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
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -16.43%, -16.59%, -16.94% and -17.06%, respectively (excluding sales charges), trailing the S&P 500 and the -15.92% return of the MSCI® US Investable Market Communications Equipment Index. Versus the MSCI index, unfavorable stock selection in communications equipment and two groups not represented in the index - Internet software/services and semiconductors - had a negative impact on fund performance. From a capitalization perspective, the fund was hurt by my stock selection in the small-cap area and by overweighting mid-caps, which did relatively poorly. An underweighted position in major index component QUALCOMM was the fund's top detractor, as the stock registered a solid gain. Also holding back performance were an out-of-index stake in Canada's Sandvine, which makes network traffic-monitoring equipment; F5 Networks, a maker of software for application delivery networking; wireless network services provider Harris Stratex Networks; Powerwave Technologies, which makes equipment for wireless communications networks; and Starent Networks, a provider of infrastructure solutions for wireless telecom services carriers. Conversely, favorable stock picking outside of the benchmark in consumer electronics, computer hardware and home entertainment software benefited the fund. Additionally, given the fund's significant exposure to foreign stocks, the weak U.S. dollar helped. Canada's "smartphone" maker Research In Motion was an important contributor, buoyed by new products and expanding markets. Other contributors were Tele Atlas, a Dutch provider of digital map data that I sold, and Taiwan's HTC Corp., a leading contract manufacturer for makers of computers and cellular phones. Large underweightings in major index components Cisco Systems - the communications equipment giant - and cellular handset maker Motorola, the latter of which I sold completely by period end, also were timely. All the contributors I mentioned except for Motorola and Cisco were out-of-index positions.
During the year, the fund's Institutional Class shares returned -16.16%, trailing the S&P 500 and just slightly behind the -15.92% return of the MSCI® US Investable Market Communications Equipment Index. Versus the MSCI index, unfavorable stock selection in communications equipment and two groups not represented in the index - Internet software/services and semiconductors - had a negative impact on fund performance. From a capitalization perspective, the fund was hurt by my stock selection in the small-cap area and by overweighting mid-caps, which did relatively poorly. An underweighted position in major index component QUALCOMM was the fund's top detractor, as the stock registered a solid gain. Also holding back performance were an out-of-index stake in Canada's Sandvine, which makes network traffic-monitoring equipment; F5 Networks, a maker of software for application delivery networking; wireless network services provider Harris Stratex Networks; Powerwave Technologies, which makes equipment for wireless communications networks; and Starent Networks, a provider of infrastructure solutions for wireless telecom services carriers. Conversely, favorable stock picking outside of the benchmark in consumer electronics, computer hardware and home entertainment software benefited the fund. Additionally, given the fund's significant exposure to foreign stocks, the weak U.S. dollar helped. Canada's "smartphone" maker Research In Motion was an important contributor, buoyed by new products and expanding markets. Other contributors were Tele Atlas, a Dutch provider of digital map data that I sold, and Taiwan's HTC Corp., a leading contract manufacturer for makers of computers and cellular phones. Large underweightings in major index components Cisco Systems - the communications equipment giant - and cellular handset maker Motorola, the latter of which I sold completely by period end, also were timely. All the contributors I mentioned except for Motorola and Cisco were out-of-index positions.
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.
Communications Equipment
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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 979.90 | $ 6.89 |
Hypothetical A | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class T | | | |
Actual | $ 1,000.00 | $ 979.60 | $ 8.12 |
Hypothetical A | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B | | | |
Actual | $ 1,000.00 | $ 977.50 | $ 10.57 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C | | | |
Actual | $ 1,000.00 | $ 976.20 | $ 10.56 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 982.80 | $ 5.67 |
Hypothetical A | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
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 (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
QUALCOMM, Inc. | 16.4 | 6.6 |
Cisco Systems, Inc. | 10.1 | 15.4 |
Research In Motion Ltd. | 8.6 | 10.1 |
Comverse Technology, Inc. | 6.7 | 6.9 |
Starent Networks Corp. | 5.2 | 1.8 |
HTC Corp. | 4.6 | 4.7 |
CommScope, Inc. | 4.4 | 0.0 |
Powerwave Technologies, Inc. | 4.0 | 3.5 |
ADC Telecommunications, Inc. | 3.0 | 2.4 |
Apple, Inc. | 2.9 | 0.0 |
| 65.9 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Communications Equipment | 71.6% | |
 | Computers & Peripherals | 7.7% | |
| Semiconductors & Semiconductor Equipment | 4.0% | |
| Software | 3.6% | |
| Commercial Services & Supplies | 2.2% | |
| All Others* | 10.9% | |
|
As of January 31, 2008 |
| Communications Equipment | 72.9% | |
| Computers & Peripherals | 5.1% | |
| Semiconductors & Semiconductor Equipment | 5.9% | |
| Software | 6.1% | |
| Household Durables | 2.4% | |
| All Others* | 7.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Communications Equipment Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 89.5% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 2.2% |
Diversified Commercial & Professional Services - 2.2% |
China Security & Surveillance Technology, Inc. (a) | 11,200 | | $ 157,920 |
COMMUNICATIONS EQUIPMENT - 71.4% |
Communications Equipment - 71.4% |
Acme Packet, Inc. (a) | 100 | | 486 |
ADC Telecommunications, Inc. (a) | 22,600 | | 213,796 |
Adtran, Inc. | 1,483 | | 33,160 |
ADVA AG Optical Networking (a) | 7,013 | | 17,669 |
Alcatel-Lucent SA sponsored ADR | 12,400 | | 74,524 |
Arris Group, Inc. (a) | 6,444 | | 61,669 |
Aruba Networks, Inc. (a) | 100 | | 583 |
AudioCodes Ltd. (a) | 20,500 | | 89,995 |
Avanex Corp. (a) | 11,600 | | 7,540 |
Ceragon Networks Ltd. (a) | 100 | | 787 |
Cisco Systems, Inc. (a) | 32,869 | | 722,789 |
Cogo Group, Inc. (a) | 13,001 | | 60,065 |
CommScope, Inc. (a) | 7,100 | | 316,589 |
Comverse Technology, Inc. (a) | 31,906 | | 477,952 |
Corning, Inc. | 6,400 | | 128,064 |
F5 Networks, Inc. (a) | 3,300 | | 96,195 |
Finisar Corp. (a) | 2,800 | | 3,752 |
Foxconn International Holdings Ltd. (a) | 2,000 | | 1,915 |
Harris Stratex Networks, Inc. Class A (a) | 15,495 | | 113,888 |
Infinera Corp. (a) | 1,300 | | 14,638 |
Opnext, Inc. (a) | 500 | | 2,770 |
Powerwave Technologies, Inc. (a) | 69,500 | | 284,950 |
QUALCOMM, Inc. | 21,100 | | 1,167,674 |
Research In Motion Ltd. (a) | 5,020 | | 616,556 |
Riverbed Technology, Inc. (a) | 1,100 | | 17,457 |
Sandvine Corp. (a) | 18,400 | | 17,073 |
Sandvine Corp. (U.K.) (a) | 56,400 | | 50,029 |
Sonus Networks, Inc. (a) | 19,504 | | 70,800 |
Starent Networks Corp. (a) | 28,476 | | 373,036 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 6,200 | | 64,976 |
| | 5,101,377 |
COMPUTERS & PERIPHERALS - 7.7% |
Computer Hardware - 7.6% |
Apple, Inc. (a) | 1,300 | | 206,635 |
Compal Electronics, Inc. | 5,698 | | 5,425 |
HTC Corp. | 21,100 | | 331,137 |
NEC Corp. | 90 | | 493 |
| | 543,690 |
Computer Storage & Peripherals - 0.1% |
SanDisk Corp. (a) | 610 | | 8,601 |
TOTAL COMPUTERS & PERIPHERALS | | 552,291 |
|
| Shares | | Value |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.3% |
Electronic Manufacturing Services - 0.3% |
Trimble Navigation Ltd. (a) | 600 | | $ 19,920 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.0% |
Semiconductor Equipment - 0.3% |
EMCORE Corp. (a) | 4,600 | | 22,632 |
Semiconductors - 3.7% |
Actel Corp. (a) | 451 | | 6,201 |
Applied Micro Circuits Corp. (a) | 2,758 | | 21,402 |
Conexant Systems, Inc. (a) | 1,280 | | 6,106 |
Cree, Inc. (a) | 1,100 | | 21,340 |
Exar Corp. (a) | 143 | | 1,101 |
Hittite Microwave Corp. (a) | 600 | | 19,152 |
Infineon Technologies AG sponsored ADR (a) | 4,300 | | 32,336 |
Microsemi Corp. (a) | 449 | | 11,656 |
Mindspeed Technologies, Inc. (a) | 2,501 | | 9,429 |
MIPS Technologies, Inc. (a) | 1,398 | | 5,312 |
ON Semiconductor Corp. (a) | 6,785 | | 63,711 |
Pericom Semiconductor Corp. (a) | 1,700 | | 24,242 |
Pixelplus Co. Ltd. ADR (a) | 900 | | 468 |
PLX Technology, Inc. (a) | 1,400 | | 7,700 |
PMC-Sierra, Inc. (a) | 3,100 | | 22,444 |
Silicon Storage Technology, Inc. (a) | 1,200 | | 3,828 |
Transmeta Corp. (a) | 290 | | 4,228 |
| | 260,656 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 283,288 |
SOFTWARE - 3.6% |
Application Software - 2.5% |
Smith Micro Software, Inc. (a) | 6,700 | | 48,240 |
Synchronoss Technologies, Inc. (a) | 500 | | 5,860 |
Taleo Corp. Class A (a) | 100 | | 1,874 |
Ulticom, Inc. (a) | 17,598 | | 123,186 |
| | 179,160 |
Home Entertainment Software - 1.1% |
Ubisoft Entertainment SA (a) | 800 | | 78,735 |
Systems Software - 0.0% |
Allot Communications Ltd. (a) | 300 | | 795 |
TOTAL SOFTWARE | | 258,690 |
WIRELESS TELECOMMUNICATION SERVICES - 0.3% |
Wireless Telecommunication Services - 0.3% |
SBA Communications Corp. Class A (a) | 500 | | 18,945 |
TOTAL COMMON STOCKS (Cost $7,517,850) | 6,392,431 |
Convertible Bonds - 0.2% |
| Principal Amount | | Value |
COMMUNICATIONS EQUIPMENT - 0.2% |
Communications Equipment - 0.2% |
Ciena Corp. 0.25% 5/1/13
(Cost $20,000) | | $ 20,000 | | $ 15,550 |
Money Market Funds - 10.4% |
| Shares | | |
Fidelity Cash Central Fund, 2.35% (b)
(Cost $743,047) | 743,047 | | 743,047 |
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $8,280,897) | | 7,151,028 |
NET OTHER ASSETS - (0.1)% | | (9,248) |
NET ASSETS - 100% | $ 7,141,780 |
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. |
Affiliated Central Fund |
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 | $ 10,921 |
| |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.8% |
Canada | 9.5% |
Taiwan | 4.7% |
France | 2.1% |
Israel | 1.3% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $207,917 all of which will expire on July 31, 2016. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Communications Equipment Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $7,537,850) | $ 6,407,981 | |
Fidelity Central Funds (cost $743,047) | 743,047 | |
Total Investments (cost $8,280,897) | | $ 7,151,028 |
Cash | | 13,692 |
Receivable for investments sold | | 375,032 |
Receivable for fund shares sold | | 6,110 |
Dividends receivable | | 15,416 |
Interest receivable | | 12 |
Distributions receivable from Fidelity Central Funds | | 454 |
Prepaid expenses | | 13 |
Receivable from investment adviser for expense reductions | | 3,471 |
Other receivables | | 261 |
Total assets | | 7,565,489 |
| | |
Liabilities | | |
Payable for investments purchased | $ 317,230 | |
Payable for fund shares redeemed | 60,880 | |
Accrued management fee | 3,347 | |
Distribution fees payable | 3,350 | |
Other affiliated payables | 2,276 | |
Other payables and accrued expenses | 36,626 | |
Total liabilities | | 423,709 |
| | |
Net Assets | | $ 7,141,780 |
Net Assets consist of: | | |
Paid in capital | | $ 8,557,480 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (285,716) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (1,129,984) |
Net Assets | | $ 7,141,780 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($2,458,680 ÷ 314,253 shares) | | $ 7.82 |
| | |
Maximum offering price per share (100/94.25 of $7.82) | | $ 8.30 |
Class T:
Net Asset Value and redemption price per share ($2,137,660 ÷ 278,404 shares) | | $ 7.68 |
| | |
Maximum offering price per share (100/96.50 of $7.68) | | $ 7.96 |
Class B:
Net Asset Value and offering price per share ($1,218,855 ÷ 164,975 shares)A | | $ 7.39 |
| | |
Class C:
Net Asset Value and offering price per share ($1,097,352 ÷ 148,606 shares)A | | $ 7.38 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($229,233 ÷ 28,731 shares) | | $ 7.98 |
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, 2008 |
Investment Income | | |
Dividends | | $ 30,594 |
Interest | | 737 |
Income from Fidelity Central Funds | | 10,921 |
Total income | | 42,252 |
| | |
Expenses | | |
Management fee | $ 48,797 | |
Transfer agent fees | 30,799 | |
Distribution fees | 51,793 | |
Accounting fees and expenses | 3,409 | |
Custodian fees and expenses | 3,042 | |
Independent trustees' compensation | 38 | |
Registration fees | 46,305 | |
Audit | 44,317 | |
Legal | 55 | |
Miscellaneous | 2,972 | |
Total expenses before reductions | 231,527 | |
Expense reductions | (79,040) | 152,487 |
Net investment income (loss) | | (110,235) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 48,934 | |
Foreign currency transactions | (3,086) | |
Total net realized gain (loss) | | 45,848 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,477,687) | |
Assets and liabilities in foreign currencies | (115) | |
Total change in net unrealized appreciation (depreciation) | | (1,477,802) |
Net gain (loss) | | (1,431,954) |
Net increase (decrease) in net assets resulting from operations | | $ (1,542,189) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (110,235) | $ (146,568) |
Net realized gain (loss) | 45,848 | 337,365 |
Change in net unrealized appreciation (depreciation) | (1,477,802) | 2,613,997 |
Net increase (decrease) in net assets resulting from operations | (1,542,189) | 2,804,794 |
Distributions to shareholders from net realized gain | (150,546) | - |
Share transactions - net increase (decrease) | (1,556,420) | (3,045,289) |
Redemption fees | 979 | 192 |
Total increase (decrease) in net assets | (3,248,176) | (240,303) |
| | |
Net Assets | | |
Beginning of period | 10,389,956 | 10,630,259 |
End of period | $ 7,141,780 | $ 10,389,956 |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 | $ 5.57 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.08) | (.09) | (.09) | (.07) | (.09) |
Net realized and unrealized gain (loss) | (1.45) | 2.29 | (.32) | 1.24 | 1.01 |
Total from investment operations | (1.53) | 2.20 | (.41) | 1.17 | .92 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 |
Total Return A,B | (16.43)% | 30.18% | (5.32)% | 17.92% | 17.24% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.25% | 2.24% | 2.13% | 2.32% | 2.38% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.45% | 1.50% |
Expenses net of all reductions | 1.39% | 1.40% | 1.32% | 1.28% | 1.35% |
Net investment income (loss) | (.91)% | (1.00)% | (1.05)% | (.92)% | (1.18)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,459 | $ 2,825 | $ 3,145 | $ 2,406 | $ 3,480 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 | $ 5.54 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.10) | (.11) | (.11) | (.08) | (.10) |
Net realized and unrealized gain (loss) | (1.42) | 2.26 | (.31) | 1.21 | 1.00 |
Total from investment operations | (1.52) | 2.15 | (.42) | 1.13 | .90 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 |
Total Return A,B | (16.59)% | 29.90% | (5.52)% | 17.44% | 16.97% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.62% | 2.57% | 2.51% | 2.78% | 3.06% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.71% | 1.75% |
Expenses net of all reductions | 1.65% | 1.64% | 1.57% | 1.54% | 1.60% |
Net investment income (loss) | (1.16)% | (1.25)% | (1.30)% | (1.18)% | (1.43)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,138 | $ 3,271 | $ 2,932 | $ 3,034 | $ 3,250 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) | (.14) | (.14) | (.12) | (.13) |
Net realized and unrealized gain (loss) | (1.36) | 2.18 | (.31) | 1.20 | .98 |
Total from investment operations | (1.50) | 2.04 | (.45) | 1.08 | .85 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Total Return A,B | (16.94)% | 29.18% | (6.05)% | 16.98% | 16.27% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.03% | 3.00% | 2.94% | 3.14% | 3.48% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.20% | 2.25% |
Expenses net of all reductions | 2.15% | 2.15% | 2.07% | 2.04% | 2.11% |
Net investment income (loss) | (1.67)% | (1.75)% | (1.80)% | (1.68)% | (1.93)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,219 | $ 2,225 | $ 2,406 | $ 2,864 | $ 2,998 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) | (.14) | (.15) | (.12) | (.14) |
Net realized and unrealized gain (loss) | (1.37) | 2.18 | (.30) | 1.20 | .99 |
Total from investment operations | (1.51) | 2.04 | (.45) | 1.08 | .85 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Total Return A,B | (17.06)% | 29.18% | (6.05)% | 16.98% | 16.27% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.02% | 2.98% | 2.86% | 3.07% | 3.19% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.15% | 2.15% | 2.07% | 2.02% | 2.10% |
Net investment income (loss) | (1.67)% | (1.75)% | (1.81)% | (1.66)% | (1.93)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,097 | $ 1,745 | $ 1,768 | $ 1,846 | $ 3,180 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 | $ 5.61 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.06) | (.07) | (.07) | (.05) | (.07) |
Net realized and unrealized gain (loss) | (1.47) | 2.33 | (.33) | 1.24 | 1.02 |
Total from investment operations | (1.53) | 2.26 | (.40) | 1.19 | .95 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | .04 |
Net asset value, end of period | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 |
Total Return A | (16.16)% | 30.58% | (5.13)% | 18.03% | 17.65% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 1.94% | 1.87% | 1.70% | 1.85% | 1.55% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.18% | 1.25% |
Expenses net of all reductions | 1.14% | 1.15% | 1.07% | 1.01% | 1.11% |
Net investment income (loss) | (.66)% | (.75)% | (.80)% | (.65)% | (.93)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 229 | $ 324 | $ 379 | $ 319 | $ 607 |
Portfolio turnover rate D | 63% | 58% | 174% | 250% | 306% |
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, 2008
1. Organization.
Fidelity Advisor Communications Equipment 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
Communications Equipment
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 | $ 709,491 | |
Unrealized depreciation | (1,910,775) | |
Net unrealized appreciation (depreciation) | (1,201,284) | |
Capital loss carryforward | (207,917) | |
Cost for federal income tax purposes | $ 8,352,312 | |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Long-term Capital Gains | $ 150,546 | $ - |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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.
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Repurchase Agreements - continued
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 $5,352,438 and $7,704,087, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 6,528 | $ 142 |
Class T | .25% | .25% | 13,302 | 18 |
Class B | .75% | .25% | 17,577 | 13,188 |
Class C | .75% | .25% | 14,386 | 1,592 |
| | | $ 51,793 | $ 14,940 |
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
by FDC |
Class A | $ 1,402 |
Class T | 1,763 |
Class B* | 2,291 |
Class C* | 600 |
| $ 6,056 |
* 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
Communications Equipment
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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 8,427 | .32 |
Class T | 11,274 | .42 |
Class B | 5,695 | .32 |
Class C | 4,653 | .32 |
Institutional Class | 750 | .25 |
| $ 30,799 | |
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 $247 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 $22 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
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 22,308 |
Class T | 1.65% | 25,918 |
Class B | 2.15% | 15,397 |
Class C | 2.15% | 12,534 |
Institutional Class | 1.15% | 2,344 |
| | $ 78,501 |
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 $539 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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
Annual Report
Notes to Financial Statements - continued
9. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $4,027 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 39,064 | $ - |
Class T | 47,716 | - |
Class B | 32,890 | - |
Class C | 26,349 | - |
Institutional Class | 4,527 | - |
Total | $ 150,546 | $ - |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 160,354 | 81,005 | $ 1,394,318 | $ 690,457 |
Reinvestment of distributions | 4,001 | - | 38,211 | - |
Shares redeemed | (147,761) | (214,792) | (1,297,098) | (1,810,328) |
Net increase (decrease) | 16,594 | (133,787) | $ 135,431 | $ (1,119,871) |
Class T | | | | |
Shares sold | 64,977 | 82,403 | $ 556,295 | $ 704,729 |
Reinvestment of distributions | 5,010 | - | 47,041 | - |
Shares redeemed | (141,880) | (139,753) | (1,263,739) | (1,173,589) |
Net increase (decrease) | (71,893) | (57,350) | $ (660,403) | $ (468,860) |
Class B | | | | |
Shares sold | 20,643 | 24,084 | $ 176,765 | $ 199,321 |
Reinvestment of distributions | 3,437 | - | 31,211 | - |
Shares redeemed | (105,422) | (121,877) | (851,909) | (1,002,926) |
Net increase (decrease) | (81,342) | (97,793) | $ (643,933) | $ (803,605) |
Class C | | | | |
Shares sold | 39,088 | 60,107 | $ 340,813 | $ 487,807 |
Reinvestment of distributions | 2,609 | - | 23,659 | - |
Shares redeemed | (86,305) | (119,863) | (711,202) | (990,194) |
Net increase (decrease) | (44,608) | (59,756) | $ (346,730) | $ (502,387) |
Institutional Class | | | | |
Shares sold | 5,041 | 1,716 | $ 45,930 | $ 15,290 |
Reinvestment of distributions | 356 | - | 3,461 | - |
Shares redeemed | (10,196) | (19,380) | (90,176) | (165,856) |
Net increase (decrease) | (4,799) | (17,664) | $ (40,785) | $ (150,566) |
Communications Equipment
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge)C | -25.77% | 0.70% | 0.48% |
Class T (incl. 3.50% sales charge)C | -24.16% | 0.95% | 0.48% |
Class B (incl. contingent deferred sales charge) A, C | -25.36% | 0.85% | 0.56% |
Class C (incl. contingent deferred sales charge) B, C | -22.48% | 1.17% | 0.34% |
A 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' 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.
C Prior to October 1, 2006, Advisor Consumer Discretionary operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Discretionary Fund - Class A on July 31, 1998, and the current 5.75% 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.
Consumer Discretionary
Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned -21.24%, -21.41%, -21.80% and -21.77%, respectively (excluding sales charges), far shy of the S&P 500 but better than the -23.44% return of the MSCI® US Investable Market Consumer Discretionary Index. The past year was especially tough for stocks driven by discretionary consumer spending. I elected to take a "barbell" approach, owning stocks with relatively stable earnings - which might outperform in a down market - and also more-cyclical stocks that could benefit if the market rebounds from a trough in the credit cycle. Specialty stores was the fund's largest industry overweighting and largest contributor to relative performance as a result of good stock selection. Stock picking in apparel retailing also helped results, as did security selection and an underweighting in automobile manufacturers. Our out-of-index position in discounter Costco Wholesale rose in value as the company took market share from competitors. Discount office supply chain Staples aided results as well. McDonald's upgraded its menu and gained market share in the fast-food arena. I sold out of index component General Motors before its stock was crushed by a consumer stampede away from its trucks and SUVs. On the negative side, stock selection and, to a lesser extent, a relative underweighting in Internet retailers hurt performance compared with the index, as did an overweighting in casinos and gaming. Online jewelry retailer Blue Nile declined as consumers held back on expensive purchases. Shares in R.H. Donnelley, a publisher of print and online phone directories, plummeted after the company reported significant sales declines, and I sold the position. I avoided index component and sports apparel firm Nike for much of the period and missed an upturn in its share price.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned -21.09%, far shy of the S&P 500 but better than the -23.44% return of the MSCI® US Investable Market Consumer Discretionary Index. The past year was especially tough for stocks driven by discretionary consumer spending. I elected to take a "barbell" approach, owning stocks with relatively stable earnings - which might outperform in a down market - - and also more-cyclical stocks that could benefit if the market rebounds from a trough in the credit cycle. Specialty stores was the fund's largest industry overweighting and largest contributor to relative performance as a result of good stock selection. Stock picking in apparel retailing also helped results, as did security selection and an underweighting in automobile manufacturers. Our out-of-index position in discounter Costco Wholesale rose in value as the company took market share from competitors. Discount office supply chain Staples aided results as well. McDonald's upgraded its menu and gained market share in the fast-food arena. I sold out of index component General Motors before its stock was crushed by a consumer stampede away from its trucks and SUVs. On the negative side, stock selection and, to a lesser extent, a relative underweighting in Internet retailers hurt performance compared with the index, as did an overweighting in casinos and gaming. Online jewelry retailer Blue Nile declined as consumers held back on expensive purchases. Shares in R.H. Donnelley, a publisher of print and online phone directories, plummeted after the company reported significant sales declines, and I sold the position. I avoided index component and sports apparel firm Nike for much of the period and missed an upturn in its share price.
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.
Consumer Discretionary
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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 875.00 | $ 6.71 |
HypotheticalA | $ 1,000.00 | $ 1,017.70 | $ 7.22 |
Class T | | | |
Actual | $ 1,000.00 | $ 873.70 | $ 7.87 |
HypotheticalA | $ 1,000.00 | $ 1,016.46 | $ 8.47 |
Class B | | | |
Actual | $ 1,000.00 | $ 871.90 | $ 10.24 |
HypotheticalA | $ 1,000.00 | $ 1,013.92 | $ 11.02 |
Class C | | | |
Actual | $ 1,000.00 | $ 872.20 | $ 10.24 |
HypotheticalA | $ 1,000.00 | $ 1,013.92 | $ 11.02 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 875.70 | $ 5.60 |
HypotheticalA | $ 1,000.00 | $ 1,018.90 | $ 6.02 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.44% |
Class T | 1.69% |
Class B | 2.20% |
Class C | 2.20% |
Institutional Class | 1.20% |
Annual Report
Advisor Consumer Discretionary Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
McDonald's Corp. | 6.4 | 5.1 |
Time Warner, Inc. | 5.9 | 5.7 |
Target Corp. | 5.8 | 6.3 |
Comcast Corp. Class A | 4.6 | 3.3 |
Lowe's Companies, Inc. | 3.9 | 3.9 |
Home Depot, Inc. | 3.8 | 4.4 |
The Walt Disney Co. | 3.7 | 2.6 |
Staples, Inc. | 3.0 | 3.2 |
Johnson Controls, Inc. | 2.7 | 2.8 |
PetSmart, Inc. | 2.4 | 2.0 |
| 42.2 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Media | 29.5% | |
| Specialty Retail | 24.6% | |
| Hotels, Restaurants
& Leisure | 14.5% | |
| Multiline Retail | 6.7% | |
| Textiles, Apparel
& Luxury Goods | 6.0% | |
| All Others* | 18.7% | |
As of January 31, 2008 |
| Media | 27.3% | |
| Specialty Retail | 24.8% | |
| Hotels, Restaurants
& Leisure | 14.0% | |
| Multiline Retail | 8.3% | |
| Food &
Staples Retailing | 4.7% | |
| All Others* | 20.9% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Consumer Discretionary Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 100.0% |
| Shares | | Value |
AUTO COMPONENTS - 3.4% |
Auto Parts & Equipment - 3.4% |
Gentex Corp. | 13,800 | | $ 213,348 |
Johnson Controls, Inc. | 26,400 | | 796,224 |
| | 1,009,572 |
AUTOMOBILES - 0.4% |
Automobile Manufacturers - 0.4% |
Toyota Motor Corp. sponsored ADR | 1,500 | | 129,075 |
DISTRIBUTORS - 1.2% |
Distributors - 1.2% |
Li & Fung Ltd. | 106,000 | | 362,092 |
DIVERSIFIED CONSUMER SERVICES - 3.0% |
Education Services - 3.0% |
Apollo Group, Inc. Class A (non-vtg.) (a) | 9,800 | | 610,442 |
Princeton Review, Inc. (a)(d) | 9,729 | | 74,913 |
Strayer Education, Inc. | 1,000 | | 222,700 |
| | 908,055 |
FOOD & STAPLES RETAILING - 3.2% |
Drug Retail - 1.5% |
CVS Caremark Corp. | 12,000 | | 438,000 |
Food Retail - 0.8% |
Susser Holdings Corp. (a) | 19,405 | | 239,458 |
Hypermarkets & Super Centers - 0.9% |
Costco Wholesale Corp. (d) | 4,600 | | 288,328 |
TOTAL FOOD & STAPLES RETAILING | | 965,786 |
HOTELS, RESTAURANTS & LEISURE - 14.5% |
Casinos & Gaming - 3.8% |
International Game Technology | 24,100 | | 523,211 |
Las Vegas Sands Corp. (a)(d) | 9,930 | | 452,014 |
Wynn Resorts Ltd. | 1,700 | | 165,716 |
| | 1,140,941 |
Hotels, Resorts & Cruise Lines - 1.5% |
Carnival Corp. unit | 10,400 | | 384,176 |
Royal Caribbean Cruises Ltd. | 3,100 | | 78,988 |
| | 463,164 |
Leisure Facilities - 0.4% |
Life Time Fitness, Inc. (a)(d) | 3,500 | | 104,265 |
Restaurants - 8.8% |
Burger King Holdings, Inc. | 3,700 | | 99,271 |
Darden Restaurants, Inc. | 5,600 | | 182,392 |
McDonald's Corp. | 31,900 | | 1,907,301 |
Sonic Corp. (a)(d) | 20,200 | | 304,818 |
Starbucks Corp. (a) | 9,200 | | 135,148 |
| | 2,628,930 |
TOTAL HOTELS, RESTAURANTS & LEISURE | | 4,337,300 |
|
| Shares | | Value |
HOUSEHOLD DURABLES - 1.6% |
Homebuilding - 0.8% |
Centex Corp. | 3,500 | | $ 51,380 |
Lennar Corp. Class A (d) | 3,000 | | 36,300 |
Pulte Homes, Inc. | 12,400 | | 151,404 |
| | 239,084 |
Household Appliances - 0.8% |
Whirlpool Corp. (d) | 3,200 | | 242,240 |
TOTAL HOUSEHOLD DURABLES | | 481,324 |
INTERNET & CATALOG RETAIL - 3.8% |
Catalog Retail - 1.0% |
Liberty Media Corp. - Interactive
Series A (a) | 21,300 | | 298,839 |
Internet Retail - 2.8% |
Amazon.com, Inc. (a) | 9,200 | | 702,328 |
Blue Nile, Inc. (a)(d) | 3,200 | | 123,264 |
| | 825,592 |
TOTAL INTERNET & CATALOG RETAIL | | 1,124,431 |
INTERNET SOFTWARE & SERVICES - 1.4% |
Internet Software & Services - 1.4% |
Art Technology Group, Inc. (a) | 10,200 | | 37,434 |
eBay, Inc. (a) | 5,800 | | 145,986 |
Google, Inc. Class A (sub. vtg.) (a) | 500 | | 236,875 |
| | 420,295 |
LEISURE EQUIPMENT & PRODUCTS - 0.7% |
Leisure Products - 0.7% |
Hasbro, Inc. | 5,100 | | 197,472 |
MEDIA - 29.5% |
Advertising - 2.9% |
Lamar Advertising Co. Class A (a)(d) | 5,700 | | 216,486 |
Omnicom Group, Inc. | 15,600 | | 665,964 |
| | 882,450 |
Broadcasting & Cable TV - 10.1% |
Comcast Corp. Class A | 66,650 | | 1,374,323 |
Grupo Televisa SA de CV (CPO) sponsored ADR | 20,000 | | 449,800 |
Liberty Media Corp. - Entertainment Class A (a) | 15,000 | | 369,300 |
The DIRECTV Group, Inc. (a) | 22,400 | | 605,248 |
Time Warner Cable, Inc. (a) | 5,100 | | 144,993 |
Virgin Media, Inc. | 6,700 | | 75,174 |
| | 3,018,838 |
Movies & Entertainment - 14.3% |
Cinemark Holdings, Inc. | 6,000 | | 87,960 |
Live Nation, Inc. (a)(d) | 13,233 | | 167,000 |
News Corp.: | | | |
Class A | 39,084 | | 552,257 |
Common Stocks - continued |
| Shares | | Value |
MEDIA - CONTINUED |
Movies & Entertainment - continued |
News Corp.: - continued | | | |
Class B | 4,200 | | $ 61,362 |
Regal Entertainment Group Class A (d) | 32,400 | | 539,460 |
The Walt Disney Co. | 36,300 | | 1,101,705 |
Time Warner, Inc. | 123,500 | | 1,768,520 |
| | 4,278,264 |
Publishing - 2.2% |
McGraw-Hill Companies, Inc. | 15,900 | | 646,653 |
TOTAL MEDIA | | 8,826,205 |
MULTILINE RETAIL - 6.7% |
Department Stores - 0.9% |
Nordstrom, Inc. (d) | 9,200 | | 264,408 |
General Merchandise Stores - 5.8% |
Lojas Americanas SA (PN) | 150 | | 1,132 |
Target Corp. (d) | 38,400 | | 1,736,832 |
| | 1,737,964 |
TOTAL MULTILINE RETAIL | | 2,002,372 |
SPECIALTY RETAIL - 24.6% |
Apparel Retail - 6.1% |
Abercrombie & Fitch Co. Class A (d) | 4,900 | | 270,578 |
Citi Trends, Inc. (a)(d) | 8,599 | | 198,895 |
Ross Stores, Inc. | 7,900 | | 299,884 |
The Buckle, Inc. | 2,100 | | 108,087 |
TJX Companies, Inc. (d) | 14,848 | | 500,526 |
Tween Brands, Inc. (a) | 10,400 | | 143,208 |
Urban Outfitters, Inc. (a)(d) | 5,800 | | 191,458 |
Zumiez, Inc. (a) | 7,800 | | 115,128 |
| | 1,827,764 |
Automotive Retail - 1.9% |
Advance Auto Parts, Inc. | 6,500 | | 267,085 |
AutoZone, Inc. (a) | 2,200 | | 286,638 |
| | 553,723 |
Home Improvement Retail - 8.8% |
Home Depot, Inc. (d) | 48,467 | | 1,154,969 |
Lowe's Companies, Inc. | 57,000 | | 1,158,240 |
Sherwin-Williams Co. (d) | 6,000 | | 319,500 |
| | 2,632,709 |
Homefurnishing Retail - 1.1% |
Williams-Sonoma, Inc. (d) | 18,700 | | 326,128 |
Specialty Stores - 6.7% |
Jo-Ann Stores, Inc. (a)(d) | 8,200 | | 180,154 |
|
| Shares | | Value |
PetSmart, Inc. | 31,600 | | $ 717,636 |
Staples, Inc. | 40,238 | | 905,355 |
Tiffany & Co., Inc. (d) | 5,200 | | 196,508 |
| | 1,999,653 |
TOTAL SPECIALTY RETAIL | | 7,339,977 |
TEXTILES, APPAREL & LUXURY GOODS - 6.0% |
Apparel, Accessories & Luxury Goods - 3.9% |
Coach, Inc. (a)(d) | 18,700 | | 477,037 |
G-III Apparel Group Ltd. (a) | 10,500 | | 168,315 |
Hanesbrands, Inc. (a) | 8,500 | | 182,240 |
Polo Ralph Lauren Corp. Class A | 2,200 | | 130,174 |
VF Corp. | 3,100 | | 221,898 |
| | 1,179,664 |
Footwear - 2.1% |
Iconix Brand Group, Inc. (a)(d) | 39,400 | | 472,800 |
NIKE, Inc. Class B | 2,600 | | 152,568 |
| | 625,368 |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | | 1,805,032 |
TOTAL COMMON STOCKS (Cost $34,219,950) | 29,908,988 |
Money Market Funds - 28.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 115,591 | | 115,591 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 8,339,100 | | 8,339,100 |
TOTAL MONEY MARKET FUNDS (Cost $8,454,691) | 8,454,691 |
TOTAL INVESTMENT PORTFOLIO - 128.3% (Cost $42,674,641) | 38,363,679 |
NET OTHER ASSETS - (28.3)% | | (8,451,663) |
NET ASSETS - 100% | $ 29,912,016 |
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 | $ 8,928 |
Fidelity Securities Lending Cash Central Fund | 43,806 |
Total | $ 52,734 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $2,972,883 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Advisor Consumer Discretionary Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $8,068,774) - See accompanying schedule: Unaffiliated issuers (cost $34,219,950) | $ 29,908,988 | |
Fidelity Central Funds (cost $8,454,691) | 8,454,691 | |
Total Investments (cost $42,674,641) | | $ 38,363,679 |
Foreign currency held at value (cost $5) | | 5 |
Receivable for investments sold | | 188,086 |
Receivable for fund shares sold | | 13,931 |
Dividends receivable | | 11,262 |
Distributions receivable from Fidelity Central Funds | | 6,015 |
Prepaid expenses | | 59 |
Other receivables | | 8,935 |
Total assets | | 38,591,972 |
| | |
Liabilities | | |
Payable for investments purchased | $ 195,791 | |
Payable for fund shares redeemed | 71,125 | |
Accrued management fee | 13,803 | |
Distribution fees payable | 13,386 | |
Other affiliated payables | 9,298 | |
Other payables and accrued expenses | 37,453 | |
Collateral on securities loaned, at value | 8,339,100 | |
Total liabilities | | 8,679,956 |
| | |
Net Assets | | $ 29,912,016 |
Net Assets consist of: | | |
Paid in capital | | $ 37,344,116 |
Accumulated net investment loss | | (4) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (3,121,134) |
Net unrealized appreciation (depreciation) on investments | | (4,310,962) |
Net Assets | | $ 29,912,016 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($11,899,352 ÷ 1,042,475 shares) | | $ 11.41 |
| | |
Maximum offering price per share (100/94.25 of $11.41) | | $ 12.11 |
Class T:
Net Asset Value and redemption price per share ($9,095,005 ÷ 821,276 shares) | | $ 11.07 |
| | |
Maximum offering price per share (100/96.50 of $11.07) | | $ 11.47 |
Class B:
Net Asset Value and offering price per share ($5,089,764 ÷ 491,751 shares)A | | $ 10.35 |
| | |
Class C:
Net Asset Value and offering price per share ($3,429,826 ÷ 330,882 shares)A | | $ 10.37 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($398,069 ÷ 33,609 shares) | | $ 11.84 |
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.
Consumer Discretionary
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Dividends | | $ 589,943 |
Interest | | 1,838 |
Income from Fidelity Central Funds (including $43,806 from security lending) | | 52,734 |
Total income | | 644,515 |
| | |
Expenses | | |
Management fee | $ 232,515 | |
Transfer agent fees | 127,100 | |
Distribution fees | 233,180 | |
Accounting and security lending fees | 17,538 | |
Custodian fees and expenses | 8,384 | |
Independent trustees' compensation | 186 | |
Registration fees | 39,640 | |
Audit | 43,252 | |
Legal | 233 | |
Miscellaneous | 10,005 | |
Total expenses before reductions | 712,033 | |
Expense reductions | (2,702) | 709,331 |
Net investment income (loss) | | (64,816) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (2,748,837) | |
Foreign currency transactions | (240) | |
Total net realized gain (loss) | | (2,749,077) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,918,273) | |
Assets and liabilities in foreign currencies | (54) | |
Total change in net unrealized appreciation (depreciation) | | (6,918,327) |
Net gain (loss) | | (9,667,404) |
Net increase (decrease) in net assets resulting from operations | | $ (9,732,220) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (64,816) | $ (126,710) |
Net realized gain (loss) | (2,749,077) | 8,083,666 |
Change in net unrealized appreciation (depreciation) | (6,918,327) | (1,699,408) |
Net increase (decrease) in net assets resulting from operations | (9,732,220) | 6,257,548 |
Distributions to shareholders from net investment income | - | (93,265) |
Distributions to shareholders from net realized gain | (4,774,547) | (7,904,219) |
Total distributions | (4,774,547) | (7,997,484) |
Share transactions - net increase (decrease) | (10,594,844) | 3,157,156 |
Redemption fees | 847 | 895 |
Total increase (decrease) in net assets | (25,100,764) | 1,418,115 |
| | |
Net Assets | | |
Beginning of period | 55,012,780 | 53,594,665 |
End of period (including accumulated net investment loss of $4 and accumulated net investment loss of $12, respectively) | $ 29,912,016 | $ 55,012,780 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 | $ 13.71 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | .02 F | (.04) | (.07) | (.07) |
Net realized and unrealized gain (loss) | (3.09) | 1.83 | (.07) | 2.71 | .87 |
Total from investment operations | (3.07) | 1.85 | (.11) | 2.64 | .80 |
Distributions from net investment income | - | (.05) | - | - | - |
Distributions from net realized gain | (1.41) | (2.30) | (.12) | (.53) | - |
Total distributions | (1.41) | (2.35) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 |
Total Return A, B | (21.24)% | 11.67% | (.69)% | 18.85% | 5.84% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 1.40% | 1.42% | 1.42% | 1.47% | 1.55% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.44% | 1.50% |
Expenses net of all reductions | 1.40% | 1.39% | 1.39% | 1.42% | 1.45% |
Net investment income (loss) | .15% | .11% F | (.23)% | (.45)% | (.50)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 11,899 | $ 19,708 | $ 16,935 | $ 17,887 | $ 11,856 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%.
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 | $ 13.51 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.01) | (.02) F | (.07) | (.11) | (.11) |
Net realized and unrealized gain (loss) | (3.00) | 1.79 | (.07) | 2.66 | .87 |
Total from investment operations | (3.01) | 1.77 | (.14) | 2.55 | .76 |
Distributions from net investment income | - | (.03) | - | - | - |
Distributions from net realized gain | (1.39) | (2.30) | (.12) | (.53) | - |
Total distributions | (1.39) | (2.33) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 |
Total Return A, B | (21.41)% | 11.43% | (.89)% | 18.52% | 5.63% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 1.64% | 1.69% | 1.69% | 1.75% | 1.81% |
Expenses net of fee waivers, if any | 1.64% | 1.65% | 1.65% | 1.69% | 1.75% |
Expenses net of all reductions | 1.62% | 1.61% | 1.62% | 1.67% | 1.70% |
Net investment income (loss) | (.08)% | (.10)% F | (.46)% | (.70)% | (.74)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 9,095 | $ 14,787 | $ 14,267 | $ 16,782 | $ 15,555 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%.
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.
Consumer Discretionary
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 | $ 13.08 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) | (.10) F | (.15) | (.17) | (.18) |
Net realized and unrealized gain (loss) | (2.81) | 1.70 | (.07) | 2.55 | .85 |
Total from investment operations | (2.88) | 1.60 | (.22) | 2.38 | .67 |
Distributions from net realized gain | (1.33) | (2.30) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 |
Total Return A, B | (21.80)% | 10.82% | (1.45)% | 17.97% | 5.12% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 2.14% | 2.20% | 2.19% | 2.24% | 2.29% |
Expenses net of fee waivers, if any | 2.14% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.14% | 2.15% | 2.14% | 2.16% | 2.20% |
Net investment income (loss) | (.60)% | (.64)% F | (.98)% | (1.20)% | (1.25)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,090 | $ 11,081 | $ 14,088 | $ 18,862 | $ 17,302 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 | $ 13.10 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) | (.10) F | (.15) | (.17) | (.18) |
Net realized and unrealized gain (loss) | (2.81) | 1.71 | (.07) | 2.55 | .85 |
Total from investment operations | (2.88) | 1.61 | (.22) | 2.38 | .67 |
Distributions from net realized gain | (1.34) | (2.30) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 |
Total Return A, B | (21.77)% | 10.88% | (1.45)% | 17.94% | 5.11% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 2.15% | 2.16% | 2.12% | 2.17% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.12% | 2.17% | 2.24% |
Expenses net of all reductions | 2.14% | 2.15% | 2.12% | 2.14% | 2.19% |
Net investment income (loss) | (.60)% | (.64)% F | (.95)% | (1.18)% | (1.24)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,430 | $ 8,051 | $ 7,160 | $ 8,505 | $ 6,992 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
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 - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 | $ 13.95 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .06 | .06 E | - | (.03) | (.04) |
Net realized and unrealized gain (loss) | (3.22) | 1.89 | (.07) | 2.76 | .90 |
Total from investment operations | (3.16) | 1.95 | (.07) | 2.73 | .86 |
Distributions from net investment income | - | (.06) | - | - | - |
Distributions from net realized gain | (1.41) | (2.30) | (.12) | (.53) | - |
Total distributions | (1.41) | (2.36) | (.12) | (.53) | - |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 |
Total Return A | (21.09)% | 12.04% | (.44)% | 19.08% | 6.16% |
Ratios to Average Net Assets C, F | | | | | |
Expenses before reductions | 1.14% | 1.15% | 1.18% | 1.26% | 1.34% |
Expenses net of fee waivers, if any | 1.14% | 1.15% | 1.15% | 1.20% | 1.25% |
Expenses net of all reductions | 1.14% | 1.14% | 1.14% | 1.17% | 1.20% |
Net investment income (loss) | .40% | .36% E | .02% | (.21)% | (.25)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 398 | $ 1,385 | $ 1,144 | $ 1,371 | $ 907 |
Portfolio turnover rate D | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.07)%.
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.
Consumer Discretionary
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Consumer Discretionary 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales 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 | $ 1,853,756 | |
Unrealized depreciation | (6,312,968) | |
Net unrealized appreciation (depreciation) | (4,459,212) | |
Cost for federal income tax purposes | $ 42,822,891 | |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 2,279,900 | $ 1,304,072 |
Long-term Capital Gains | 2,494,647 | 6,693,412 |
Total | $ 4,774,547 | $ 7,997,484 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Consumer Discretionary
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 $26,666,416 and $41,932,580, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 38,904 | $ 943 |
Class T | .25% | .25% | 59,414 | 90 |
Class B | .75% | .25% | 78,830 | 59,299 |
Class C | .75% | .25% | 56,032 | 7,087 |
| | | $ 233,180 | $ 67,419 |
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
by FDC |
Class A | $ 4,957 |
Class T | 2,602 |
Class B* | 16,498 |
Class C* | 513 |
| $ 24,570 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 47,605 | .31 |
Class T | 35,861 | .30 |
Class B | 24,030 | .30 |
Class C | 17,126 | .31 |
Institutional Class | 2,478 | .30 |
| $ 127,100 | |
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 $2,104 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.
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 $217 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
expense reduction |
| |
Class T | $ 2,485 |
Consumer Discretionary
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $12,226 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
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 | $ 1,697,903 | $ 2,496,425 |
Class T | 1,304,169 | 2,054,841 |
Class B | 954,937 | 2,079,901 |
Class C | 712,594 | 1,100,868 |
Institutional Class | 104,944 | 172,184 |
Total | $ 4,774,547 | $ 7,904,219 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 231,645 | 540,609 | $ 3,074,782 | $ 8,973,622 |
Reinvestment of distributions | 104,669 | 141,640 | 1,531,841 | 2,265,680 |
Shares redeemed | (533,803) | (475,746) | (7,132,154) | (7,950,826) |
Net increase (decrease) | (197,489) | 206,503 | $ (2,525,531) | $ 3,288,476 |
Class T | | | | |
Shares sold | 113,866 | 188,336 | $ 1,488,704 | $ 3,060,088 |
Reinvestment of distributions | 84,915 | 122,934 | 1,207,897 | 1,916,483 |
Shares redeemed | (333,215) | (245,736) | (4,304,558) | (4,018,366) |
Net increase (decrease) | (134,434) | 65,534 | $ (1,607,957) | $ 958,205 |
Class B | | | | |
Shares sold | 34,749 | 83,325 | $ 420,244 | $ 1,279,468 |
Reinvestment of distributions | 65,209 | 122,770 | 871,754 | 1,810,224 |
Shares redeemed | (369,099) | (368,667) | (4,475,959) | (5,659,191) |
Net increase (decrease) | (269,141) | (162,572) | $ (3,183,961) | $ (2,569,499) |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions - continued
Transactions for each class of shares were as follows - continued
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class C | | | | |
Shares sold | 46,115 | 183,143 | $ 563,853 | $ 2,817,553 |
Reinvestment of distributions | 37,909 | 59,948 | 507,333 | 885,827 |
Shares redeemed | (304,893) | (159,811) | (3,642,610) | (2,453,389) |
Net increase (decrease) | (220,869) | 83,280 | $ (2,571,424) | $ 1,249,991 |
Institutional Class | | | | |
Shares sold | 41,241 | 116,522 | $ 586,738 | $ 1,988,792 |
Reinvestment of distributions | 5,683 | 8,916 | 86,193 | 146,867 |
Shares redeemed | (97,732) | (109,046) | (1,378,902) | (1,905,676) |
Net increase (decrease) | (50,808) | 16,392 | $ (705,971) | $ 229,983 |
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of
fundA |
Class A (incl. 5.75% sales charge) | -29.75% | -0.58% | -5.71% |
Class T (incl. 3.50% sales charge) | -28.32% | -0.38% | -5.63% |
Class B (incl. contingent deferred
sales charge) B | -29.79% | -0.56% | -5.60% |
Class C (incl. contingent deferred
sales charge) C | -26.86% | -0.16% | -5.67% |
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 A on December 27, 2000, when the fund started, and the current 5.75% 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 Electronics Fund
Managements' Discussion of Fund Performance
Comments from Christopher Lee and Paul Jackson, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -25.47%, -25.72%, -26.09% and -26.12%, respectively (excluding sales charges), falling short of the -20.89% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500. Versus the MSCI index, unfavorable stock picking in the semiconductor group was a significant head wind, along with poor stock selection in the life sciences tools and services segment and an underweighting in chip equipment. At the stock level, we were hurt by a large underweighting in major index component Intel. The shares of the personal computer chip maker sustained a small loss but still finished substantially ahead of the MSCI index. Chip maker Marvell Technology Group also detracted, as did MEMC Electronic Materials and Maxim Integrated Products, a producer of analog chips. Arrowhead Research, a development-stage nanotechnology company and an out-of-index holding, held back performance as well. Conversely, our picks in electrical components and equipment and in computer hardware added value. The top contributor was QUALCOMM, a maker of wireless infrastructure equipment. The settlement of a legal dispute with a key customer and a relatively strong market for high-end cellular phones boosted the stock. Other contributors included First Solar and Synaptics, which supplies chips for the touchscreens used in a variety of consumer electronics products. Underweighting DRAM memory producer Micron Technology - which we sold off entirely - helped as well. All the contributors I mentioned except for Micron were out-of-index holdings.
During the year, the fund's Institutional Class shares returned -25.38%, falling short of the -20.89% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500. Versus the MSCI index, unfavorable stock picking in the semiconductor group was a significant head wind, along with poor stock selection in the life sciences tools and services segment and an underweighting in chip equipment. At the stock level, we were hurt by a large underweighting in major index component Intel. The shares of the personal computer chip maker sustained a small loss but still finished substantially ahead of the MSCI index. Chip maker Marvell Technology Group also detracted, as did MEMC Electronic Materials and Maxim Integrated Products, a producer of analog chips. Arrowhead Research, a development-stage nanotechnology company and an out-of-index holding, held back performance as well. Conversely, our picks in electrical components and equipment and in computer hardware added value. The top contributor was QUALCOMM, a maker of wireless infrastructure equipment. The settlement of a legal dispute with a key customer and a relatively strong market for high-end cellular phones boosted the stock. Other contributors included First Solar and Synaptics, which supplies chips for the touchscreens used in a variety of consumer electronics products. Underweighting DRAM memory producer Micron Technology - which we sold off entirely - helped as well. All the contributors I mentioned except for Micron were out-of-index holdings.
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
Advisor Electronics Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 943.10 | $ 6.76 |
HypotheticalA | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class T | | | |
Actual | $ 1,000.00 | $ 940.80 | $ 7.96 |
HypotheticalA | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B | | | |
Actual | $ 1,000.00 | $ 940.10 | $ 10.37 |
HypotheticalA | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C | | | |
Actual | $ 1,000.00 | $ 938.60 | $ 10.36 |
HypotheticalA | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 944.20 | $ 5.56 |
HypotheticalA | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Annual Report
Advisor Electronics Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Intel Corp. | 23.7 | 19.9 |
Applied Materials, Inc. | 9.2 | 7.6 |
Texas Instruments, Inc. | 7.8 | 6.0 |
Broadcom Corp. Class A | 3.7 | 4.4 |
Xilinx, Inc. | 3.2 | 3.2 |
QUALCOMM, Inc. | 3.0 | 1.1 |
Altera Corp. | 2.4 | 2.1 |
Varian Semiconductor Equipment Associates, Inc. | 2.3 | 2.2 |
Lam Research Corp. | 2.3 | 1.6 |
NVIDIA Corp. | 2.2 | 1.5 |
| 59.8 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Semiconductors & Semiconductor Equipment | 76.0% | |
| Communications Equipment | 6.0% | |
| Electrical Equipment | 4.9% | |
| Computers & Peripherals | 4.3% | |
| Electronic
Equipment & Instruments | 2.3% | |
| All Others* | 6.5% | |
As of January 31, 2008 |
| Semiconductors & Semiconductor Equipment | 77.8% | |
| Communications Equipment | 5.1% | |
| Computers & Peripherals | 4.0% | |
| Electrical Equipment | 3.6% | |
| Electronic
Equipment & Instruments | 3.0% | |
| All Others* | 6.5% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Electronics Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 98.2% |
| Shares | | Value |
CAPITAL MARKETS - 0.3% |
Asset Management & Custody Banks - 0.3% |
Harris & Harris Group, Inc. (a) | 6,852 | | $ 46,388 |
CHEMICALS - 1.2% |
Specialty Chemicals - 1.2% |
Nanophase Technologies Corp. (a) | 11,800 | | 23,010 |
Wacker Chemie AG | 700 | | 144,187 |
| | 167,197 |
COMMERCIAL SERVICES & SUPPLIES - 0.7% |
Diversified Commercial & Professional Services - 0.7% |
Arrowhead Research Corp. (a) | 13,716 | | 28,941 |
Arrowhead Research Corp. warrants 5/21/17 (a) | 64,879 | | 79,409 |
| | 108,350 |
COMMUNICATIONS EQUIPMENT - 6.0% |
Communications Equipment - 6.0% |
Alcatel-Lucent SA sponsored ADR | 2,700 | | 16,227 |
China Techfaith Wireless Communication Technology Ltd. sponsored ADR (a) | 12,003 | | 43,691 |
Cisco Systems, Inc. (a) | 10,000 | | 219,900 |
Nokia Corp. sponsored ADR | 1,000 | | 27,320 |
QUALCOMM, Inc. | 7,800 | | 431,652 |
Research In Motion Ltd. (a) | 800 | | 98,256 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 1,500 | | 15,720 |
| | 852,766 |
COMPUTERS & PERIPHERALS - 4.3% |
Computer Hardware - 2.7% |
Apple, Inc. (a) | 900 | | 143,055 |
HTC Corp. | 15,080 | | 236,661 |
| | 379,716 |
Computer Storage & Peripherals - 1.6% |
SanDisk Corp. (a) | 7,100 | | 100,110 |
Synaptics, Inc. (a) | 2,800 | | 135,016 |
| | 235,126 |
TOTAL COMPUTERS & PERIPHERALS | | 614,842 |
ELECTRICAL EQUIPMENT - 4.9% |
Electrical Components & Equipment - 4.9% |
First Solar, Inc. (a) | 600 | | 171,066 |
JA Solar Holdings Co. Ltd. ADR (a) | 4,300 | | 65,231 |
Neo-Neon Holdings Ltd. | 58,700 | | 25,582 |
Q-Cells AG (a) | 900 | | 87,194 |
Renewable Energy Corp. AS (a) | 3,000 | | 86,879 |
SolarWorld AG | 2,800 | | 130,505 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 3,900 | | 130,494 |
| | 696,951 |
|
| Shares | | Value |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.3% |
Electronic Equipment & Instruments - 0.9% |
Everlight Electronics Co. Ltd. | 28,559 | | $ 75,583 |
Ibiden Co. Ltd. | 200 | | 5,969 |
Motech Industries, Inc. | 8,217 | | 46,723 |
| | 128,275 |
Electronic Manufacturing Services - 0.3% |
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 9,200 | | 44,460 |
Technology Distributors - 1.1% |
Avnet, Inc. (a) | 5,700 | | 155,382 |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | | 328,117 |
MEDIA - 0.1% |
Broadcasting & Cable TV - 0.1% |
JumpTV, Inc. | 14,600 | | 14,117 |
METALS & MINING - 0.5% |
Diversified Metals & Mining - 0.5% |
Timminco Ltd. (a) | 2,800 | | 66,182 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 76.0% |
Semiconductor Equipment - 19.6% |
Applied Materials, Inc. | 76,200 | | 1,319,784 |
ASML Holding NV (NY Shares) | 7,100 | | 161,809 |
Cymer, Inc. (a) | 3,400 | | 90,066 |
FormFactor, Inc. (a) | 9,250 | | 160,950 |
Global Unichip Corp. | 7,383 | | 51,168 |
KLA-Tencor Corp. | 500 | | 18,795 |
Lam Research Corp. (a) | 9,900 | | 325,611 |
MEMC Electronic Materials, Inc. (a) | 4,900 | | 226,429 |
Rubicon Technology, Inc. | 2,900 | | 37,700 |
Tessera Technologies, Inc. (a) | 4,300 | | 74,906 |
Topco Scientific Co. Ltd. | 5,840 | | 8,322 |
Varian Semiconductor Equipment Associates, Inc. (a) | 11,300 | | 330,186 |
| | 2,805,726 |
Semiconductors - 56.4% |
Advanced Analogic Technologies, Inc. (a) | 25,500 | | 105,315 |
Advanced Micro Devices, Inc. (a) | 6,900 | | 29,049 |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 22,081 | | 96,936 |
Altera Corp. | 15,500 | | 340,225 |
ARM Holdings PLC sponsored ADR | 24,500 | | 138,915 |
Atheros Communications, Inc. (a) | 4,800 | | 148,800 |
Broadcom Corp. Class A (a) | 22,100 | | 536,809 |
Cavium Networks, Inc. (a) | 1,700 | | 27,285 |
Ceva, Inc. (a) | 1,200 | | 9,756 |
Elan Microelectronics Corp. | 29,000 | | 35,686 |
Epistar Corp. | 14,153 | | 29,211 |
Himax Technologies, Inc. sponsored ADR | 13,700 | | 52,060 |
Hittite Microwave Corp. (a) | 3,000 | | 95,760 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - continued |
Infineon Technologies AG sponsored ADR (a) | 7,000 | | $ 52,640 |
Intel Corp. | 152,990 | | 3,394,847 |
Intersil Corp. Class A | 1,000 | | 24,130 |
Linear Technology Corp. | 900 | | 27,945 |
Marvell Technology Group Ltd. (a) | 5,650 | | 83,564 |
Maxim Integrated Products, Inc. | 7,100 | | 139,444 |
Microchip Technology, Inc. | 700 | | 22,351 |
NVIDIA Corp. (a) | 27,400 | | 313,456 |
PMC-Sierra, Inc. (a) | 12,700 | | 91,948 |
Qimonda AG sponsored ADR (a) | 2,700 | | 4,860 |
Richtek Technology Corp. | 14,550 | | 124,203 |
Samsung Electronics Co. Ltd. | 330 | | 182,539 |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 14,443 | | 95,757 |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 23,618 | | 224,371 |
Texas Instruments, Inc. | 45,900 | | 1,119,042 |
Xilinx, Inc. | 18,400 | | 456,872 |
Zoran Corp. (a) | 8,500 | | 70,295 |
| | 8,074,071 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 10,879,797 |
SOFTWARE - 1.9% |
Home Entertainment Software - 1.9% |
Nintendo Co. Ltd. | 600 | | 277,200 |
TOTAL COMMON STOCKS (Cost $17,632,043) | 14,051,907 |
Money Market Funds - 1.6% |
| Shares | | Value |
Fidelity Cash Central Fund, 2.35% (b)
(Cost $237,835) | 237,835 | | $ 237,835 |
Cash Equivalents - 0.3% |
| Maturity Amount | | |
Investments in repurchase agreements in a joint trading account at 2.07%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Government Obligations) #
(Cost $41,000) | $ 41,002 | 41,000 |
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $17,910,878) | 14,330,742 |
NET OTHER ASSETS - (0.1)% | (20,897) |
NET ASSETS - 100% | $ 14,309,845 |
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. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$41,000 due 8/01/08 at 2.07% |
BNP Paribas Securities Corp. | $ 14,183 |
Banc of America Securities LLC | 2,222 |
Barclays Capital, Inc. | 24,595 |
| $ 41,000 |
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 | $ 7,316 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 79.0% |
Taiwan | 7.6% |
Germany | 2.9% |
Japan | 2.0% |
Cayman Islands | 1.9% |
Korea (South) | 1.3% |
Canada | 1.3% |
Netherlands | 1.1% |
United Kingdom | 1.0% |
Others (individually less than 1%) | 1.9% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $7,629,844 of which $4,774,109, $2,265,871, $279,201 and $310,663 will expire on July 31, 2011, 2012, 2013 and 2016, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $4,004,653 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Electronics
Advisor Electronics Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including repurchase agreements of $41,000) - See accompanying schedule: Unaffiliated issuers (cost $17,673,043) | $ 14,092,907 | |
Fidelity Central Funds (cost $237,835) | 237,835 | |
Total Investments (cost $17,910,878) | | $ 14,330,742 |
Foreign currency held at value (cost $6) | | 6 |
Receivable for investments sold | | 105,894 |
Receivable for fund shares sold | | 1,201 |
Dividends receivable | | 36,811 |
Distributions receivable from Fidelity Central Funds | | 339 |
Prepaid expenses | | 34 |
Receivable from investment adviser for expense reductions | | 882 |
Other receivables | | 698 |
Total assets | | 14,476,607 |
| | |
Liabilities | | |
Payable to custodian bank | $ 6,211 | |
Payable for investments purchased | 60,781 | |
Payable for fund shares redeemed | 46,867 | |
Accrued management fee | 6,845 | |
Distribution fees payable | 7,448 | |
Other affiliated payables | 4,634 | |
Other payables and accrued expenses | 33,976 | |
Total liabilities | | 166,762 |
| | |
Net Assets | | $ 14,309,845 |
Net Assets consist of: | | |
Paid in capital | | $ 29,828,530 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (11,938,437) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (3,580,248) |
Net Assets | | $ 14,309,845 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($3,970,469 ÷ 584,806 shares) | | $ 6.79 |
| | |
Maximum offering price per share (100/94.25 of $6.79) | | $ 7.20 |
Class T:
Net Asset Value and redemption price per share ($4,634,656 ÷ 694,453 shares) | | $ 6.67 |
| | |
Maximum offering price per share (100/96.50 of $6.67) | | $ 6.91 |
Class B:
Net Asset Value and offering price per share ($2,027,308 ÷ 315,307 shares)A | | $ 6.43 |
| | |
Class C:
Net Asset Value and offering price per share ($3,324,618 ÷ 517,659 shares)A | | $ 6.42 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($352,794 ÷ 50,816 shares) | | $ 6.94 |
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, 2008 |
Investment Income | | |
Dividends | | $ 295,354 |
Interest | | 1,486 |
Income from Fidelity Central Funds | | 7,316 |
Total income | | 304,156 |
| | |
Expenses | | |
Management fee | $ 123,214 | |
Transfer agent fees | 71,486 | |
Distribution fees | 141,553 | |
Accounting fees and expenses | 8,606 | |
Custodian fees and expenses | 29,850 | |
Independent trustees' compensation | 98 | |
Registration fees | 46,707 | |
Audit | 42,865 | |
Legal | 171 | |
Miscellaneous | 6,378 | |
Total expenses before reductions | 470,928 | |
Expense reductions | (76,237) | 394,691 |
Net investment income (loss) | | (90,535) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (4,341,801) | |
Foreign currency transactions | (5,774) | |
Total net realized gain (loss) | | (4,347,575) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,232,191) | |
Assets and liabilities in foreign currencies | (118) | |
Total change in net unrealized appreciation (depreciation) | | (2,232,309) |
Net gain (loss) | | (6,579,884) |
Net increase (decrease) in net assets resulting from operations | | $ (6,670,419) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (90,535) | $ (226,545) |
Net realized gain (loss) | (4,347,575) | 4,562,227 |
Change in net unrealized appreciation (depreciation) | (2,232,309) | 2,119,265 |
Net increase (decrease) in net assets resulting from operations | (6,670,419) | 6,454,947 |
Share transactions - net increase (decrease) | (8,363,960) | (7,957,827) |
Redemption fees | 266 | 878 |
Total increase (decrease) in net assets | (15,034,113) | (1,502,002) |
| | |
Net Assets | | |
Beginning of period | 29,343,958 | 30,845,960 |
End of period | $ 14,309,845 | $ 29,343,958 |
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 | $ 6.59 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - G | (.03) | (.04) | (.07) | (.09) |
Net realized and unrealized gain (loss) | (2.32) | 1.76 | (.62) | 1.53 | .08 |
Total from investment operations | (2.32) | 1.73 | (.66) | 1.46 | (.01) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 |
Total Return A,B | (25.47)% | 23.44% | (8.21)% | 22.19% | (.15)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.72% | 1.60% | 1.50% | 1.59% | 1.55% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.45% | 1.50% |
Expenses net of all reductions | 1.39% | 1.38% | 1.36% | 1.38% | 1.48% |
Net investment income (loss) | (.02)% | (.35)% | (.52)% | (.96)% | (1.15)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,970 | $ 7,551 | $ 7,916 | $ 11,397 | $ 8,374 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 | $ 6.56 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.02) | (.05) | (.06) | (.08) | (.11) |
Net realized and unrealized gain (loss) | (2.29) | 1.74 | (.61) | 1.51 | .08 |
Total from investment operations | (2.31) | 1.69 | (.67) | 1.43 | (.03) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 |
Total Return A,B | (25.72)% | 23.18% | (8.42)% | 21.90% | (.46)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.02% | 1.89% | 1.82% | 1.89% | 1.83% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.69% | 1.75% |
Expenses net of all reductions | 1.64% | 1.64% | 1.61% | 1.61% | 1.72% |
Net investment income (loss) | (.27)% | (.60)% | (.77)% | (1.20)% | (1.39)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 4,635 | $ 8,103 | $ 9,048 | $ 12,085 | $ 15,445 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 | $ 6.48 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.06) | (.09) | (.10) | (.12) | (.14) |
Net realized and unrealized gain (loss) | (2.21) | 1.69 | (.58) | 1.48 | .08 |
Total from investment operations | (2.27) | 1.60 | (.68) | 1.36 | (.06) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 |
Total Return A,B | (26.09)% | 22.54% | (8.74)% | 21.18% | (.93)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.48% | 2.36% | 2.29% | 2.41% | 2.41% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.21% | 2.25% |
Expenses net of all reductions | 2.14% | 2.13% | 2.11% | 2.13% | 2.23% |
Net investment income (loss) | (.77)% | (1.10)% | (1.27)% | (1.72)% | (1.90)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,027 | $ 4,572 | $ 6,123 | $ 8,963 | $ 8,498 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 | $ 6.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.06) | (.09) | (.10) | (.11) | (.14) |
Net realized and unrealized gain (loss) | (2.21) | 1.69 | (.58) | 1.47 | .08 |
Total from investment operations | (2.27) | 1.60 | (.68) | 1.36 | (.06) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 |
Total Return A,B | (26.12)% | 22.57% | (8.75)% | 21.22% | (.93)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.47% | 2.34% | 2.26% | 2.31% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.18% | 2.24% |
Expenses net of all reductions | 2.14% | 2.13% | 2.11% | 2.11% | 2.21% |
Net investment income (loss) | (.77)% | (1.10)% | (1.27)% | (1.69)% | (1.88)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,325 | $ 8,389 | $ 7,009 | $ 11,058 | $ 12,322 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 | $ 6.64 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .02 | (.01) | (.02) | (.05) | (.06) |
Net realized and unrealized gain (loss) | (2.38) | 1.80 | (.62) | 1.55 | .07 |
Total from investment operations | (2.36) | 1.79 | (.64) | 1.50 | .01 |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 |
Total Return A | (25.38)% | 23.83% | (7.85)% | 22.56% | .15% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 1.47% | 1.26% | 1.11% | 1.16% | 1.12% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.11% | 1.16% | 1.12% |
Expenses net of all reductions | 1.14% | 1.13% | 1.07% | 1.08% | 1.09% |
Net investment income (loss) | .23% | (.10)% | (.23)% | (.67)% | (.76)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 353 | $ 730 | $ 750 | $ 899 | $ 687 |
Portfolio turnover rate D | 93% | 97% | 95% | 128% | 84% |
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, 2008
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. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
Electronics
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), 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 | $ 421,273 |
Unrealized depreciation | (4,305,348) |
Net unrealized appreciation (depreciation) | (3,884,075) |
Capital loss carryforward | (7,629,844) |
| |
Cost for federal income tax purposes | $ 18,214,817 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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.
Annual Report
Notes to Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $20,577,679 and $29,275,643, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 13,914 | $ 403 |
Class T | .25% | .25% | 32,168 | 336 |
Class B | .75% | .25% | 33,894 | 25,485 |
Class C | .75% | .25% | 61,577 | 8,343 |
| | | $ 141,553 | $ 34,567 |
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
by FDC |
Class A | $ 1,126 |
Class T | 1,629 |
Class B* | 5,971 |
Class C* | 258 |
| $ 8,984 |
* 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.
Electronics
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 17,260 | .31 |
Class T | 22,807 | .35 |
Class B | 10,570 | .31 |
Class C | 19,118 | .31 |
Institutional Class | 1,731 | .30 |
| $ 71,486 | |
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 $1,178 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. 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
Limitations | Reimbursement
from adviser |
| | |
Class A | 1.40% | $ 17,913 |
Class T | 1.65% | 23,708 |
Class B | 2.15% | 10,993 |
Class C | 2.15% | 19,400 |
Institutional Class | 1.15% | 1,830 |
| | $ 73,844 |
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 $2,393 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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress.
Annual Report
Notes to Financial Statements - continued
9. Other - continued
Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $6,751, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 161,701 | 172,908 | $ 1,242,418 | $ 1,452,847 |
Shares redeemed | (405,321) | (416,578) | (3,221,767) | (3,518,739) |
Net increase (decrease) | (243,620) | (243,670) | $ (1,979,349) | $ (2,065,892) |
Class T | | | | |
Shares sold | 93,832 | 96,013 | $ 747,770 | $ 811,586 |
Shares redeemed | (301,416) | (434,383) | (2,324,905) | (3,616,000) |
Net increase (decrease) | (207,584) | (338,370) | $ (1,577,135) | $ (2,804,414) |
Class B | | | | |
Shares sold | 35,607 | 33,257 | $ 276,103 | $ 271,410 |
Shares redeemed | (246,055) | (370,189) | (1,804,727) | (3,005,497) |
Net increase (decrease) | (210,448) | (336,932) | $ (1,528,624) | $ (2,734,087) |
Class C | | | | |
Shares sold | 107,517 | 354,933 | $ 865,728 | $ 2,907,179 |
Shares redeemed | (555,338) | (378,058) | (3,939,431) | (3,063,507) |
Net increase (decrease) | (447,821) | (23,125) | $ (3,073,703) | $ (156,328) |
Institutional Class | | | | |
Shares sold | 9,123 | 23,807 | $ 82,426 | $ 203,253 |
Shares redeemed | (36,772) | (45,136) | (287,575) | (400,359) |
Net increase (decrease) | (27,649) | (21,329) | $ (205,149) | $ (197,106) |
Electronics
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) | -35.60% | -1.34% | 1.00% |
Class T (incl. 3.50% sales charge) | -34.24% | -1.11% | 1.01% |
Class B (incl. contingent deferred sales charge) A | -35.36% | -1.19% | 1.07% |
Class C (incl. contingent deferred sales charge) B | -32.80% | -0.87% | 0.89% |
A 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' 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 A on July 31, 1998, and the current 5.75% 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 Richard Manuel, Portfolio Manager of Fidelity® Advisor Financial Services Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the year, the fund's Class A, Class T, Class B and Class C shares returned -31.67%, -31.85%, -32.21% and -32.18%, respectively (excluding sales charges). These results lagged the S&P 500 and the -29.14% return of the MSCI® US Investable Market Financials Index. Unfavorable industry weightings and stock selection, especially in thrifts and mortgage finance, hurt performance relative to the MSCI index. Freddie Mac and Fannie Mae, government-sponsored mortgage lenders, sank as mounting credit losses pressured their capital ratios. Countrywide Financial, a mortgage originator, suffered from liquidity and bankruptcy concerns related to its subprime exposure. It then declined along with Bank of America, another fund holding that acquired Countrywide before period end. Elsewhere, American International Group (AIG), a multi-line insurer, plunged as mortgage-related investment losses forced it to raise additional capital. Modest gains came from an overweighting in reinsurance, a small cash position and good stock selection among regional banks and diversified banks. Standouts included State Street, an asset management and custody bank benefiting from strong business growth. An underweighting in Merrill Lynch, a troubled investment bank and broker, further aided performance.
For the year, the fund's Institutional Class shares returned -31.47%. This result lagged the S&P 500 and the -29.14% return of the MSCI® US Investable Market Financials Index. Unfavorable industry weightings and stock selection, especially in thrifts and mortgage finance, hurt performance relative to the MSCI index. Freddie Mac and Fannie Mae, government-sponsored mortgage lenders, sank as mounting credit losses pressured their capital ratios. Countrywide Financial, a mortgage originator, suffered from liquidity and bankruptcy concerns related to its subprime exposure. It then declined along with Bank of America, another fund holding that acquired Countrywide before period end. Elsewhere, American International Group (AIG), a multi-line insurer, plunged as mortgage-related investment losses forced it to raise additional capital. Modest gains came from an overweighting in reinsurance, a small cash position and good stock selection among regional banks and diversified banks. Standouts included State Street, an asset management and custody bank benefiting from strong business growth. An underweighting in Merrill Lynch, a troubled investment bank and broker, further aided performance.
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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 754.40 | $ 5.37 |
Hypothetical A | $ 1,000.00 | $ 1,018.75 | $ 6.17 |
Class T | | | |
Actual | $ 1,000.00 | $ 753.00 | $ 6.49 |
Hypothetical A | $ 1,000.00 | $ 1,017.45 | $ 7.47 |
Class B | | | |
Actual | $ 1,000.00 | $ 751.00 | $ 8.71 |
Hypothetical A | $ 1,000.00 | $ 1,014.92 | $ 10.02 |
Class C | | | |
Actual | $ 1,000.00 | $ 751.30 | $ 8.67 |
Hypothetical A | $ 1,000.00 | $ 1,014.97 | $ 9.97 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 755.50 | $ 4.06 |
Hypothetical A | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.23% |
Class T | 1.49% |
Class B | 2.00% |
Class C | 1.99% |
Institutional Class | .93% |
Annual Report
Advisor Financial Services Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Bank of America Corp. | 7.8 | 5.6 |
JPMorgan Chase & Co. | 5.8 | 6.9 |
Wells Fargo & Co. | 5.2 | 4.8 |
American International Group, Inc. | 4.0 | 6.5 |
ACE Ltd. | 3.0 | 2.9 |
Citigroup, Inc. | 2.6 | 5.2 |
PNC Financial Services Group, Inc. | 2.4 | 1.8 |
Bank of New York Mellon Corp. | 2.4 | 2.0 |
State Street Corp. | 2.2 | 2.1 |
Everest Re Group Ltd. | 2.1 | 2.3 |
| 37.5 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Insurance | 24.4% | |
| Diversified Financial Services | 19.7% | |
| Capital Markets | 18.4% | |
| Commercial Banks | 15.7% | |
| Real Estate Investment Trusts | 6.1% | |
| All Others* | 15.7% | |
|
As of January 31, 2008 |
| Insurance | 27.0% | |
| Diversified Financial Services | 20.7% | |
| Capital Markets | 18.8% | |
| Commercial Banks | 12.8% | |
| Real Estate Investment Trusts | 5.6% | |
| All Others* | 15.1% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 91.1% |
| Shares | | Value |
CAPITAL MARKETS - 18.1% |
Asset Management & Custody Banks - 10.4% |
Bank of New York Mellon Corp. | 139,700 | | $ 4,959,350 |
EFG International | 46,050 | | 1,440,635 |
Fortress Investment Group LLC (d) | 43,500 | | 515,910 |
Franklin Resources, Inc. | 32,300 | | 3,249,703 |
GLG Partners, Inc. (d) | 55,400 | | 511,342 |
Janus Capital Group, Inc. | 67,800 | | 2,057,052 |
Julius Baer Holding AG | 17,384 | | 1,102,311 |
KKR Private Equity Investors, LP | 21,200 | | 291,500 |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 34,300 | | 471,625 |
Legg Mason, Inc. | 6,000 | | 242,100 |
State Street Corp. | 63,482 | | 4,547,850 |
T. Rowe Price Group, Inc. | 23,100 | | 1,382,535 |
The Blackstone Group LP | 40,700 | | 755,799 |
| | 21,527,712 |
Investment Banking & Brokerage - 7.7% |
Charles Schwab Corp. | 134,200 | | 3,071,838 |
Goldman Sachs Group, Inc. | 23,700 | | 4,361,748 |
Lazard Ltd. Class A | 19,500 | | 795,795 |
Lehman Brothers Holdings, Inc. | 57,200 | | 991,848 |
Merrill Lynch & Co., Inc. | 121,000 | | 3,224,650 |
Morgan Stanley | 92,100 | | 3,636,108 |
| | 16,081,987 |
TOTAL CAPITAL MARKETS | | 37,609,699 |
COMMERCIAL BANKS - 15.0% |
Diversified Banks - 9.6% |
Banco Latin Americano de Exporaciones SA (BLADEX) Series E | 6,800 | | 124,712 |
ICICI Bank Ltd. sponsored ADR (d) | 10,900 | | 322,749 |
U.S. Bancorp, Delaware (d) | 141,100 | | 4,319,071 |
Wachovia Corp. (d) | 255,398 | | 4,410,723 |
Wells Fargo & Co. (d) | 354,500 | | 10,730,715 |
| | 19,907,970 |
Regional Banks - 5.4% |
Associated Banc-Corp. (d) | 91,900 | | 1,533,811 |
Boston Private Financial Holdings, Inc. | 37,000 | | 289,710 |
Cathay General Bancorp | 72,988 | | 1,163,429 |
Center Financial Corp., California | 12,000 | | 132,000 |
Huntington Bancshares, Inc. (d) | 80,100 | | 562,302 |
KeyCorp (d) | 125,300 | | 1,321,915 |
M&T Bank Corp. (d) | 14,200 | | 999,396 |
National City Corp. | 17,900 | | 84,667 |
PNC Financial Services Group, Inc. | 70,600 | | 5,033,074 |
Wintrust Financial Corp. | 4,200 | | 86,730 |
| | 11,207,034 |
TOTAL COMMERCIAL BANKS | | 31,115,004 |
|
| Shares | | Value |
CONSUMER FINANCE - 4.1% |
Consumer Finance - 4.1% |
American Express Co. | 41,400 | | $ 1,536,768 |
Capital One Financial Corp. (d) | 62,630 | | 2,621,692 |
Discover Financial Services | 103,500 | | 1,516,275 |
Dollar Financial Corp. (a) | 40,562 | | 784,469 |
SLM Corp. (a) | 117,400 | | 2,011,062 |
| | 8,470,266 |
DIVERSIFIED FINANCIAL SERVICES - 19.7% |
Other Diversifed Financial Services - 16.2% |
Bank of America Corp. | 491,040 | | 16,155,216 |
Citigroup, Inc. (d) | 294,262 | | 5,499,757 |
JPMorgan Chase & Co. | 295,894 | | 12,022,173 |
| | 33,677,146 |
Specialized Finance - 3.5% |
CIT Group, Inc. | 101,800 | | 863,264 |
CME Group, Inc. (d) | 8,325 | | 2,998,082 |
Deutsche Boerse AG | 14,700 | | 1,673,477 |
JSE Ltd. | 30,200 | | 192,446 |
KKR Financial Holdings LLC | 92,500 | | 949,975 |
MarketAxess Holdings, Inc. (a) | 55,900 | | 541,112 |
| | 7,218,356 |
TOTAL DIVERSIFIED FINANCIAL SERVICES | | 40,895,502 |
INSURANCE - 23.3% |
Insurance Brokers - 0.6% |
National Financial Partners Corp. (d) | 28,600 | | 596,310 |
Willis Group Holdings Ltd. | 19,140 | | 598,508 |
| | 1,194,818 |
Life & Health Insurance - 5.9% |
AFLAC, Inc. | 42,600 | | 2,368,986 |
MetLife, Inc. (d) | 81,500 | | 4,137,755 |
Principal Financial Group, Inc. | 53,000 | | 2,253,030 |
Prudential Financial, Inc. (d) | 50,500 | | 3,482,985 |
| | 12,242,756 |
Multi-Line Insurance - 5.9% |
American International Group, Inc. | 319,260 | | 8,316,723 |
Assurant, Inc. | 21,800 | | 1,310,616 |
Hartford Financial Services Group, Inc. | 41,300 | | 2,618,007 |
| | 12,245,346 |
Property & Casualty Insurance - 5.8% |
ACE Ltd. | 123,000 | | 6,236,100 |
Argo Group International Holdings, Ltd. (a) | 33,011 | | 1,123,694 |
Aspen Insurance Holdings Ltd. | 200 | | 5,078 |
Axis Capital Holdings Ltd. | 20,800 | | 658,944 |
Berkshire Hathaway, Inc. Class A (a) | 16 | | 1,831,200 |
LandAmerica Financial Group, Inc. (d) | 14,400 | | 165,456 |
MBIA, Inc. (d) | 37,800 | | 224,154 |
Common Stocks - continued |
| Shares | | Value |
INSURANCE - CONTINUED |
Property & Casualty Insurance - continued |
The Travelers Companies, Inc. | 29,800 | | $ 1,314,776 |
United America Indemnity Ltd.
Class A (a) | 37,900 | | 493,837 |
| | 12,053,239 |
Reinsurance - 5.1% |
Everest Re Group Ltd. | 54,200 | | 4,433,560 |
IPC Holdings Ltd. | 31,666 | | 1,016,479 |
Max Capital Group Ltd. | 55,676 | | 1,306,716 |
Montpelier Re Holdings Ltd. | 17,900 | | 281,030 |
Platinum Underwriters Holdings Ltd. | 56,300 | | 2,032,430 |
RenaissanceRe Holdings Ltd. | 30,400 | | 1,546,448 |
| | 10,616,663 |
TOTAL INSURANCE | | 48,352,822 |
IT SERVICES - 0.5% |
Data Processing & Outsourced Services - 0.5% |
Visa, Inc. | 15,100 | | 1,103,206 |
REAL ESTATE INVESTMENT TRUSTS - 6.1% |
Mortgage REITs - 1.3% |
Annaly Capital Management, Inc. | 144,500 | | 2,177,615 |
Chimera Investment Corp. | 62,000 | | 476,780 |
| | 2,654,395 |
Residential REITs - 1.5% |
Equity Lifestyle Properties, Inc. | 35,500 | | 1,704,355 |
UDR, Inc. | 57,700 | | 1,473,658 |
| | 3,178,013 |
Retail REITs - 3.3% |
CBL & Associates Properties, Inc. | 22,392 | | 434,853 |
Developers Diversified Realty Corp. | 68,900 | | 2,202,044 |
General Growth Properties, Inc. | 94,700 | | 2,595,727 |
Simon Property Group, Inc. | 17,800 | | 1,648,814 |
| | 6,881,438 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 12,713,846 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.3% |
Real Estate Management & Development - 1.3% |
Meruelo Maddux Properties, Inc. (a) | 90,300 | | 174,279 |
Mitsubishi Estate Co. Ltd. | 108,000 | | 2,600,980 |
| | 2,775,259 |
THRIFTS & MORTGAGE FINANCE - 3.0% |
Thrifts & Mortgage Finance - 3.0% |
Fannie Mae | 157,985 | | 1,816,828 |
Freddie Mac | 81,900 | | 669,123 |
Hudson City Bancorp, Inc. | 134,375 | | 2,453,688 |
IndyMac Bancorp, Inc. (d) | 33,000 | | 4,455 |
|
| Shares | | Value |
Radian Group, Inc. | 46,000 | | $ 80,040 |
Washington Mutual, Inc. (d) | 211,571 | | 1,127,673 |
| | 6,151,807 |
TOTAL COMMON STOCKS (Cost $200,227,796) | 189,187,411 |
Convertible Preferred Stocks - 2.2% |
| | | |
CAPITAL MARKETS - 0.3% |
Investment Banking & Brokerage - 0.3% |
Lehman Brothers Holdings, Inc. Series P, 7.25% | 830 | | 539,500 |
COMMERCIAL BANKS - 0.7% |
Regional Banks - 0.7% |
Huntington Bancshares, Inc. 8.50% | 900 | | 701,946 |
National City Corp. | 7 | | 662,200 |
| | 1,364,146 |
DIVERSIFIED FINANCIAL SERVICES - 0.0% |
Specialized Finance - 0.0% |
CIT Group, Inc. Series C, 8.75% | 2,000 | | 93,840 |
INSURANCE - 1.1% |
Multi-Line Insurance - 1.1% |
American International Group, Inc.
Series A, 8.50% | 39,200 | | 2,243,926 |
THRIFTS & MORTGAGE FINANCE - 0.1% |
Thrifts & Mortgage Finance - 0.1% |
Fannie Mae 8.75% | 10,500 | | 254,625 |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $5,995,000) | 4,496,037 |
Money Market Funds - 24.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 14,462,240 | | 14,462,240 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 35,912,105 | | 35,912,105 |
TOTAL MONEY MARKET FUNDS (Cost $50,374,345) | 50,374,345 |
TOTAL INVESTMENT PORTFOLIO - 117.6% (Cost $256,597,141) | | 244,057,793 |
NET OTHER ASSETS - (17.6)% | | (36,478,362) |
NET ASSETS - 100% | $ 207,579,431 |
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 $471,625 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 | $ 264,151 |
Fidelity Securities Lending Cash Central Fund | 208,998 |
Total | $ 473,149 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.3% |
Bermuda | 6.7% |
Switzerland | 4.2% |
Japan | 1.2% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $26,184,414 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $34,496,028) - See accompanying schedule: Unaffiliated issuers (cost $206,222,796) | $ 193,683,448 | |
Fidelity Central Funds (cost $50,374,345) | 50,374,345 | |
Total Investments (cost $256,597,141) | | $ 244,057,793 |
Receivable for investments sold | | 1,449,316 |
Receivable for fund shares sold | | 1,436,075 |
Dividends receivable | | 226,508 |
Distributions receivable from Fidelity Central Funds | | 31,146 |
Prepaid expenses | | 1,073 |
Other receivables | | 1 |
Total assets | | 247,201,912 |
| | |
Liabilities | | |
Payable for investments purchased | $ 3,085,818 | |
Payable for fund shares redeemed | 350,460 | |
Accrued management fee | 89,358 | |
Distribution fees payable | 83,369 | |
Other affiliated payables | 60,658 | |
Other payables and accrued expenses | 40,713 | |
Collateral on securities loaned, at value | 35,912,105 | |
Total liabilities | | 39,622,481 |
| | |
Net Assets | | $ 207,579,431 |
Net Assets consist of: | | |
Paid in capital | | $ 247,874,023 |
Undistributed net investment income | | 2,125,111 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (29,880,678) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (12,539,025) |
Net Assets | | $ 207,579,431 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($90,037,012 ÷ 6,833,655 shares) | | $ 13.18 |
| | |
Maximum offering price per share (100/94.25 of $13.18) | | $ 13.98 |
Class T:
Net Asset Value and redemption price per share ($53,525,842 ÷ 4,073,551 shares) | | $ 13.14 |
| | |
Maximum offering price per share (100/96.50 of $13.14) | | $ 13.62 |
Class B:
Net Asset Value and offering price per share ($20,420,273 ÷ 1,588,888 shares)A | | $ 12.85 |
| | |
Class C:
Net Asset Value and offering price per share ($37,776,918 ÷ 2,956,481 shares)A | | $ 12.78 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($5,819,386 ÷ 435,086 shares) | | $ 13.38 |
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.
Financial Services
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Dividends | | $ 7,484,663 |
Interest | | 14,126 |
Income from Fidelity Central Funds | | 473,149 |
Total income | | 7,971,938 |
| | |
Expenses | | |
Management fee | $ 1,495,035 | |
Transfer agent fees | 805,967 | |
Distribution fees | 1,465,062 | |
Accounting and security lending fees | 109,708 | |
Custodian fees and expenses | 12,212 | |
Independent trustees' compensation | 1,186 | |
Registration fees | 51,656 | |
Audit | 56,685 | |
Legal | 1,609 | |
Interest | 3,760 | |
Miscellaneous | 50,611 | |
Total expenses before reductions | 4,053,491 | |
Expense reductions | (2,391) | 4,051,100 |
Net investment income (loss) | | 3,920,838 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (25,369,015) | |
Investment not meeting investment restrictions | (938) | |
Foreign currency transactions | (4,265) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 1,287 | |
Total net realized gain (loss) | | (25,372,931) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (75,625,062) | |
Assets and liabilities in foreign currencies | 3,848 | |
Total change in net unrealized appreciation (depreciation) | | (75,621,214) |
Net gain (loss) | | (100,994,145) |
Net increase (decrease) in net assets resulting from operations | | $ (97,073,307) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 3,920,838 | $ 2,504,527 |
Net realized gain (loss) | (25,372,931) | 49,174,884 |
Change in net unrealized appreciation (depreciation) | (75,621,214) | (30,974,733) |
Net increase (decrease) in net assets resulting from operations | (97,073,307) | 20,704,678 |
Distributions to shareholders from net investment income | (2,830,191) | (1,993,507) |
Distributions to shareholders from net realized gain | (22,361,262) | (54,831,267) |
Total distributions | (25,191,453) | (56,824,774) |
Share transactions - net increase (decrease) | (845,081) | (19,915,758) |
Redemption fees | 10,552 | 2,369 |
Total increase (decrease) in net assets | (123,099,289) | (56,033,485) |
| | |
Net Assets | | |
Beginning of period | 330,678,720 | 386,712,205 |
End of period (including undistributed net investment income of $2,125,111 and undistributed net investment income of $1,282,613, respectively) | $ 207,579,431 | $ 330,678,720 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 | $ 19.98 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .30 | .23 | .20 | .19 | .14 |
Net realized and unrealized gain (loss) | (6.41) | .92 | 2.02 | 2.48 | 2.20 |
Total from investment operations | (6.11) | 1.15 | 2.22 | 2.67 | 2.34 |
Distributions from net investment income | (.27) | (.22) | (.26) | (.07) | (.15) |
Distributions from net realized gain | (1.46) | (3.25) | (1.63) | (1.76) | - |
Total distributions | (1.73) | (3.47) H | (1.89) | (1.83) | (.15) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 |
Total Return A, B | (31.67)% | 4.54% | 10.32% | 12.60% | 11.76% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.21% | 1.23% | 1.25% | 1.26% | 1.27% |
Expenses net of fee waivers, if any | 1.21% | 1.23% | 1.25% | 1.26% | 1.27% |
Expenses net of all reductions | 1.21% | 1.22% | 1.23% | 1.23% | 1.25% |
Net investment income (loss) | 1.75% | 1.01% | .87% | .88% | .63% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 90,037 | $ 106,722 | $ 85,356 | $ 68,012 | $ 58,222 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 | $ 19.90 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .26 | .18 | .15 | .14 | .09 |
Net realized and unrealized gain (loss) | (6.41) | .91 | 2.02 | 2.47 | 2.19 |
Total from investment operations | (6.15) | 1.09 | 2.17 | 2.61 | 2.28 |
Distributions from net investment income | (.19) | (.16) | (.15) | (.05) | (.11) |
Distributions from net realized gain | (1.46) | (3.25) | (1.63) | (1.76) | - |
Total distributions | (1.65) | (3.41) H | (1.78) | (1.81) | (.11) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 |
Total Return A, B | (31.85)% | 4.25% | 10.11% | 12.37% | 11.49% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.47% | 1.46% | 1.47% | 1.48% | 1.50% |
Expenses net of fee waivers, if any | 1.47% | 1.46% | 1.47% | 1.48% | 1.50% |
Expenses net of all reductions | 1.47% | 1.46% | 1.46% | 1.46% | 1.48% |
Net investment income (loss) | 1.50% | .77% | .65% | .66% | .41% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 53,526 | $ 95,426 | $ 113,344 | $ 128,388 | $ 144,887 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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.
Financial Services
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 | $ 19.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .18 | .06 | .03 | .03 | (.02) |
Net realized and unrealized gain (loss) | (6.29) | .89 | 1.97 | 2.41 | 2.16 |
Total from investment operations | (6.11) | .95 | 2.00 | 2.44 | 2.14 |
Distributions from net investment income | (.04) | (.02) | (.01) | - | (.02) |
Distributions from net realized gain | (1.44) | (3.25) | (1.57) | (1.76) | - |
Total distributions | (1.48) | (3.26) H | (1.58) | (1.76) | (.02) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 |
Total Return A, B | (32.21)% | 3.71% | 9.52% | 11.78% | 10.96% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 1.98% | 1.99% | 2.00% | 2.02% |
Expenses net of fee waivers, if any | 1.96% | 1.98% | 1.99% | 2.00% | 2.02% |
Expenses net of all reductions | 1.96% | 1.98% | 1.98% | 1.98% | 2.00% |
Net investment income (loss) | 1.01% | .25% | .13% | .14% | (.11)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 20,420 | $ 64,837 | $ 113,652 | $ 145,046 | $ 179,873 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 | $ 19.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .17 | .06 | .04 | .04 | (.01) |
Net realized and unrealized gain (loss) | (6.24) | .90 | 1.98 | 2.42 | 2.15 |
Total from investment operations | (6.07) | .96 | 2.02 | 2.46 | 2.14 |
Distributions from net investment income | (.09) | (.05) | (.02) | (.01) | (.02) |
Distributions from net realized gain | (1.46) | (3.25) | (1.60) | (1.76) | - |
Total distributions | (1.55) | (3.30) H | (1.62) | (1.77) | (.02) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 |
Total Return A, B | (32.18)% | 3.75% | 9.58% | 11.88% | 10.96% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 1.94% | 1.94% | 1.95% | 1.97% |
Expenses net of fee waivers, if any | 1.96% | 1.94% | 1.94% | 1.95% | 1.97% |
Expenses net of all reductions | 1.96% | 1.94% | 1.93% | 1.92% | 1.95% |
Net investment income (loss) | 1.01% | .29% | .18% | .19% | (.06)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 37,777 | $ 55,219 | $ 62,469 | $ 72,181 | $ 86,199 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 | $ 20.17 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .36 | .31 | .29 | .29 | .23 |
Net realized and unrealized gain (loss) | (6.51) | .93 | 2.05 | 2.50 | 2.21 |
Total from investment operations | (6.15) | 1.24 | 2.34 | 2.79 | 2.44 |
Distributions from net investment income | (.33) | (.30) | (.37) | (.11) | (.24) |
Distributions from net realized gain | (1.46) | (3.25) | (1.63) | (1.76) | - |
Total distributions | (1.79) | (3.55) G | (2.00) | (1.87) | (.24) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 |
Total Return A | (31.47)% | 4.88% | 10.78% | 13.06% | 12.18% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .93% | .89% | .86% | .86% | .88% |
Expenses net of fee waivers, if any | .93% | .89% | .86% | .86% | .88% |
Expenses net of all reductions | .92% | .88% | .85% | .84% | .85% |
Net investment income (loss) | 2.04% | 1.34% | 1.26% | 1.28% | 1.03% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,819 | $ 8,474 | $ 11,892 | $ 12,629 | $ 13,008 |
Portfolio turnover rate D | 48% | 53% | 33% | 61% | 74% |
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.
Financial Services
Notes to Financial Statements
For the period ended July 31, 2008
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, partnerships, deferred trustees compensation, 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 | $ 30,409,453 |
Unrealized depreciation | (46,968,925) |
Net unrealized appreciation (depreciation) | (16,559,472) |
Undistributed ordinary income | 1,761,872 |
Undistributed long-term capital gain | 269,334 |
| |
Cost for federal income tax purposes | $ 260,617,265 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 3,522,419 | $ 3,815,559 |
Long-term Capital Gains | 21,669,034 | 53,009,215 |
Total | $ 25,191,453 | $ 56,824,774 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Financial Services
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 $127,065,281 and $156,248,529, respectively.
The Fund realized a gain and loss of $349 and $1,287, respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $1,287 was fully reimbursed by the Fund's investment advisor.
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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 253,057 | $ 8,460 |
Class T | .25% | .25% | 370,468 | 2,944 |
Class B | .75% | .25% | 381,499 | 286,457 |
Class C | .75% | .25% | 460,038 | 48,563 |
| | | $ 1,465,062 | $ 346,424 |
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
by FDC |
Class A | $ 78,918 |
Class T | 15,214 |
Class B* | 50,358 |
Class C* | 6,763 |
| $ 151,253 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 305,716 | .30 |
Class T | 227,098 | .31 |
Class B | 113,846 | .30 |
Class C | 135,846 | .29 |
Institutional Class | 23,461 | .26 |
| $ 805,967 | |
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 $1,206 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
Expense |
Borrower | $ 3,854,125 | 4.39% | $ 3,760 |
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 $700 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 $208,998.
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 $1,111 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
expense reduction |
Class A | $ 1,280 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $95,210, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income | | |
Class A | $ 1,429,035 | $ 867,686 |
Class T | 833,715 | 765,107 |
Class B | 103,026 | 69,445 |
Class C | 241,388 | 139,125 |
Institutional Class | 223,027 | 152,144 |
Total | $ 2,830,191 | $ 1,993,507 |
From net realized gain | | |
Class A | $ 7,599,793 | $ 12,753,057 |
Class T | 6,343,916 | 15,966,933 |
Class B | 3,935,726 | 15,271,397 |
Class C | 3,829,942 | 9,173,101 |
Institutional Class | 651,885 | 1,666,779 |
Total | $ 22,361,262 | $ 54,831,267 |
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, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,476,462 | 2,132,186 | $ 58,217,275 | $ 48,786,912 |
Reinvestment of distributions | 413,881 | 548,319 | 8,062,306 | 12,292,012 |
Shares redeemed | (2,133,725) | (1,259,845) | (36,028,050) | (28,919,491) |
Net increase (decrease) | 1,756,618 | 1,420,660 | $ 30,251,531 | $ 32,159,433 |
Class T | | | | |
Shares sold | 825,338 | 372,346 | $ 13,397,557 | $ 8,558,636 |
Reinvestment of distributions | 344,513 | 703,948 | 6,720,713 | 15,750,996 |
Shares redeemed | (1,652,503) | (1,393,386) | (28,919,771) | (31,851,718) |
Net increase (decrease) | (482,652) | (317,092) | $ (8,801,501) | $ (7,542,086) |
Class B | | | | |
Shares sold | 511,474 | 242,400 | $ 8,246,792 | $ 5,428,899 |
Reinvestment of distributions | 187,873 | 609,690 | 3,607,784 | 13,365,246 |
Shares redeemed | (2,282,248) | (2,676,523) | (40,060,805) | (59,803,637) |
Net increase (decrease) | (1,582,901) | (1,824,433) | $ (28,206,229) | $ (41,009,492) |
Class C | | | | |
Shares sold | 1,114,854 | 284,897 | $ 17,550,045 | $ 6,372,368 |
Reinvestment of distributions | 173,040 | 345,073 | 3,294,216 | 7,545,497 |
Shares redeemed | (1,038,077) | (670,985) | (17,222,702) | (14,937,683) |
Net increase (decrease) | 249,817 | (41,015) | $ 3,621,559 | $ (1,019,818) |
Institutional Class | | | | |
Shares sold | 1,075,511 | 75,332 | $ 20,129,434 | $ 1,755,195 |
Reinvestment of distributions | 36,137 | 56,949 | 687,993 | 1,292,278 |
Shares redeemed | (1,074,000) | (238,050) | (18,527,868) | (5,551,268) |
Net increase (decrease) | 37,648 | (105,769) | $ 2,289,559 | $ (2,503,795) |
Financial Services
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) C | 5.11% | 26.87% | 15.75% |
Class T (incl. 3.50% sales charge) C | 7.37% | 27.21% | 15.80% |
Class B (incl. contingent deferred sales charge) A,C | 5.62% | 27.26% | 15.84% |
Class C (incl. contingent deferred sales charge) B,C | 9.71% | 27.48% | 15.62% |
A 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' 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.
C Prior to October 1, 2006, Advisor Energy operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Energy Fund - Class A on July 31, 1998, and the current 5.75% 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 Energy Fund
Management's Discussion of Fund Performance
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned 11.52%, 11.27%, 10.62% and 10.71%, respectively (excluding sales charges), outperforming the S&P 500 and the 9.51% gain of the MSCI® US Investable Market Energy Index. Aggressive sector weightings and solid stock selection were key components of the fund's superior performance versus the MSCI index. Underweighting integrated oil stocks gave the fund a strong relative boost, as this industry lagged. A large underweighting in integrated oil company Exxon Mobil was the fund's top contributor. Overweighting the strong-performing coal industry also benefited performance, especially the fund's large stakes in U.S. coal companies CONSOL Energy and Peabody Energy. Overweighting the oil and gas exploration and production (E&P) industry contributed positively, led by an outsized position in Petrohawk, which owns land in the Haynesville shale region of North Louisiana, one of the most promising natural gas reserves in the United States. A large stake in oil-rig manufacturer National Oilwell Varco was another leading contributor, along with a non-index position in Danish wind turbine manufacturer Vestas Wind Systems. Foreign holdings benefited from currency fluctuations as well. Overweighting the oil and gas refining and marketing segment proved disappointing. The biggest detractors were U.S. oil refiners Valero Energy and Sunoco, and West Coast oil and gas refiner Tesoro. Underweighting oil and gas equipment company Schlumberger and integrated oil company Occidental Petroleum also hurt fund performance when these stocks outperformed.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned 11.83%, outperforming the S&P 500 and the 9.51% gain of the MSCI® US Investable Market Energy Index. Aggressive sector weightings and solid stock selection were key components of the fund's superior performance versus the MSCI index. Underweighting integrated oil stocks gave the fund a strong relative boost, as this industry lagged. A large underweighting in integrated oil company Exxon Mobil was the fund's top contributor. Overweighting the strong-performing coal industry also benefited performance, especially the fund's large stakes in U.S. coal companies CONSOL Energy and Peabody Energy. Overweighting the oil and gas exploration and production (E&P) industry contributed positively, led by an outsized position in Petrohawk, which owns land in the Haynesville shale region of North Louisiana, one of the most promising natural gas reserves in the United States. A large stake in oil-rig manufacturer National Oilwell Varco was another leading contributor, along with a non-index position in Danish wind turbine manufacturer Vestas Wind Systems. Foreign holdings benefited from currency fluctuations as well. Overweighting the oil and gas refining and marketing segment proved disappointing. The biggest detractors were U.S. oil refiners Valero Energy and Sunoco, and West Coast oil and gas refiner Tesoro. Underweighting oil and gas equipment company Schlumberger and integrated oil company Occidental Petroleum also hurt fund performance when these stocks outperformed.
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.
Energy
Advisor Energy 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 1,055.00 | $ 5.82 |
HypotheticalA | $ 1,000.00 | $ 1,019.19 | $ 5.72 |
Class T | | | |
Actual | $ 1,000.00 | $ 1,053.70 | $ 6.94 |
HypotheticalA | $ 1,000.00 | $ 1,018.10 | $ 6.82 |
Class B | | | |
Actual | $ 1,000.00 | $ 1,050.60 | $ 9.89 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C | | | |
Actual | $ 1,000.00 | $ 1,051.00 | $ 9.54 |
HypotheticalA | $ 1,000.00 | $ 1,015.56 | $ 9.37 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 1,056.30 | $ 4.40 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.14% |
Class T | 1.36% |
Class B | 1.94% |
Class C | 1.87% |
Institutional Class | .86% |
Annual Report
Advisor Energy Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
National Oilwell Varco, Inc. | 6.3 | 5.9 |
ConocoPhillips | 5.7 | 2.8 |
Range Resources Corp. | 4.5 | 5.2 |
Schlumberger Ltd. (NY Shares) | 4.3 | 4.3 |
Nabors Industries Ltd. | 4.1 | 0.6 |
Valero Energy Corp. | 3.7 | 6.6 |
Peabody Energy Corp. | 3.6 | 3.8 |
Ultra Petroleum Corp. | 3.2 | 3.6 |
Occidental Petroleum Corp. | 3.0 | 1.7 |
Petrohawk Energy Corp. | 2.9 | 1.3 |
| 41.3 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Oil, Gas &
Consumable Fuels | 61.9% | |
| Energy Equipment &
Services | 31.2% | |
| Electrical Equipment | 5.0% | |
| Construction & Engineering | 0.6% | |
| Gas Utilities | 0.3% | |
| All Others* | 1.0% | |
As of January 31, 2008 |
| Oil, Gas &
Consumable Fuels | 69.9% | |
| Energy Equipment &
Services | 24.9% | |
| Electrical Equipment | 3.3% | |
| Construction & Engineering | 0.7% | |
| Chemicals | 0.5% | |
| All Others* | 0.7% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Energy Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 99.8% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 0.0% |
Environmental & Facility Services - 0.0% |
Fuel Tech, Inc. (a) | 16,062 | | $ 297,629 |
CONSTRUCTION & ENGINEERING - 0.6% |
Construction & Engineering - 0.6% |
Jacobs Engineering Group, Inc. (a) | 76,900 | | 5,947,446 |
ELECTRICAL EQUIPMENT - 5.0% |
Electrical Components & Equipment - 3.9% |
Evergreen Solar, Inc. (a) | 406,119 | | 3,793,151 |
First Solar, Inc. (a) | 26,700 | | 7,612,437 |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 481,218 | | 7,300,077 |
Q-Cells AG (a)(d) | 54,693 | | 5,298,765 |
Renewable Energy Corp. AS (a) | 145,000 | | 4,199,136 |
Sunpower Corp. Class A (a)(d) | 111,498 | | 8,782,697 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 97,800 | | 3,272,388 |
| | 40,258,651 |
Heavy Electrical Equipment - 1.1% |
Vestas Wind Systems AS (a) | 91,500 | | 11,933,142 |
TOTAL ELECTRICAL EQUIPMENT | | 52,191,793 |
ENERGY EQUIPMENT & SERVICES - 31.2% |
Oil & Gas Drilling - 9.7% |
Atwood Oceanics, Inc. (a) | 190,200 | | 8,732,082 |
ENSCO International, Inc. | 122,400 | | 8,462,736 |
Helmerich & Payne, Inc. | 96,022 | | 5,677,781 |
Hercules Offshore, Inc. (a) | 250,794 | | 6,262,326 |
Nabors Industries Ltd. (a) | 1,177,554 | | 42,933,619 |
Noble Corp. | 89,500 | | 4,642,365 |
Patterson-UTI Energy, Inc. | 445,747 | | 12,668,130 |
Pride International, Inc. (a) | 99,500 | | 3,856,620 |
Rowan Companies, Inc. | 179,800 | | 7,156,040 |
Transocean, Inc. (a) | 864 | | 117,530 |
| | 100,509,229 |
Oil & Gas Equipment & Services - 21.5% |
Baker Hughes, Inc. | 33 | | 2,736 |
BJ Services Co. | 483,574 | | 14,217,076 |
Complete Production Services, Inc. (a) | 96,400 | | 3,069,376 |
Dril-Quip, Inc. (a) | 20,600 | | 1,115,284 |
Exterran Holdings, Inc. (a) | 71,675 | | 4,045,337 |
FMC Technologies, Inc. (a) | 123,800 | | 7,648,364 |
Fugro NV (Certificaten Van Aandelen) unit | 93,393 | | 6,626,115 |
Halliburton Co. | 556,460 | | 24,940,537 |
NATCO Group, Inc. Class A (a) | 25,900 | | 1,234,135 |
National Oilwell Varco, Inc. (a) | 832,157 | | 65,432,503 |
Oil States International, Inc. (a) | 48,400 | | 2,656,192 |
ProSafe ASA | 397,400 | | 3,455,926 |
Schlumberger Ltd. (NY Shares) | 443,800 | | 45,090,080 |
Smith International, Inc. | 126,327 | | 9,396,202 |
Superior Energy Services, Inc. (a) | 149,700 | | 7,100,271 |
|
| Shares | | Value |
Tenaris SA sponsored ADR | 41,300 | | $ 2,488,325 |
Tidewater, Inc. | 200 | | 11,988 |
TSC Offshore Group Ltd. (a) | 1,674,000 | | 493,514 |
Weatherford International Ltd. (a) | 666,600 | | 25,150,818 |
| | 224,174,779 |
TOTAL ENERGY EQUIPMENT & SERVICES | | 324,684,008 |
GAS UTILITIES - 0.3% |
Gas Utilities - 0.3% |
Questar Corp. | 51,300 | | 2,712,744 |
Zhongyu Gas Holdings Ltd. (a) | 6,592,000 | | 566,120 |
| | 3,278,864 |
INDUSTRIAL CONGLOMERATES - 0.3% |
Industrial Conglomerates - 0.3% |
Walter Industries, Inc. | 28,600 | | 2,999,282 |
MACHINERY - 0.3% |
Industrial Machinery - 0.3% |
Vallourec SA | 8,300 | | 2,471,319 |
METALS & MINING - 0.2% |
Diversified Metals & Mining - 0.2% |
Timminco Ltd. (a) | 81,100 | | 1,916,902 |
MULTI-UTILITIES - 0.0% |
Multi-Utilities - 0.0% |
Sempra Energy | 4 | | 225 |
OIL, GAS & CONSUMABLE FUELS - 61.9% |
Coal & Consumable Fuels - 7.1% |
Arch Coal, Inc. | 195,285 | | 10,996,498 |
CONSOL Energy, Inc. | 127,134 | | 9,457,498 |
Foundation Coal Holdings, Inc. | 128,300 | | 7,621,020 |
International Coal Group, Inc. (a) | 33,600 | | 351,792 |
Massey Energy Co. | 81,200 | | 6,029,100 |
Natural Resource Partners LP | 4,700 | | 178,177 |
Peabody Energy Corp. | 544,547 | | 36,838,605 |
PT Bumi Resources Tbk | 2,851,800 | | 2,115,922 |
| | 73,588,612 |
Integrated Oil & Gas - 15.1% |
Chevron Corp. | 38,500 | | 3,255,560 |
ConocoPhillips | 724,194 | | 59,108,714 |
Exxon Mobil Corp. | 212,843 | | 17,118,962 |
Hess Corp. | 265,400 | | 26,911,560 |
Occidental Petroleum Corp. | 401,800 | | 31,673,894 |
Petroleo Brasileiro SA - Petrobras (PN) sponsored ADR (non-vtg.) | 342,100 | | 15,681,864 |
Suncor Energy, Inc. | 70,800 | | 3,848,931 |
| | 157,599,485 |
Oil & Gas Exploration & Production - 30.5% |
American Oil & Gas, Inc. NV (a)(d) | 84,003 | | 266,290 |
Cabot Oil & Gas Corp. | 673,925 | | 29,659,439 |
Canadian Natural Resources Ltd. | 168,000 | | 13,128,564 |
Common Stocks - continued |
| Shares | | Value |
OIL, GAS & CONSUMABLE FUELS - CONTINUED |
Oil & Gas Exploration & Production - continued |
Chesapeake Energy Corp. | 353,100 | | $ 17,707,965 |
Comstock Resources, Inc. (a) | 162,998 | | 9,944,508 |
Concho Resources, Inc. | 253,498 | | 8,302,060 |
Continental Resources, Inc. (a)(d) | 151,886 | | 8,675,728 |
Denbury Resources, Inc. (a) | 387,800 | | 10,912,692 |
Encore Acquisition Co. (a) | 113,062 | | 6,995,146 |
EOG Resources, Inc. | 1,284 | | 129,081 |
EXCO Resources, Inc. (a) | 225,253 | | 5,867,841 |
Forest Oil Corp. (a) | 107,000 | | 6,102,210 |
GMX Resources, Inc. (a)(d) | 30,200 | | 1,772,740 |
Goodrich Petroleum Corp. (a) | 39,600 | | 1,815,660 |
Junex, Inc. (a) | 112,600 | | 392,618 |
Kodiak Oil & Gas Corp. (a) | 168,100 | | 561,454 |
Newfield Exploration Co. (a) | 21,800 | | 1,067,764 |
Nexen, Inc. | 189,200 | | 5,952,173 |
Northern Oil & Gas, Inc. (a)(d) | 12,300 | | 114,144 |
Oil Search Ltd. | 557,156 | | 3,006,221 |
OPTI Canada, Inc. (a) | 155,600 | | 2,954,402 |
Penn Virginia Corp. | 145,464 | | 8,836,938 |
Petrohawk Energy Corp. (a) | 894,757 | | 29,813,303 |
Petroquest Energy, Inc. (a) | 100,185 | | 2,090,861 |
Plains Exploration & Production Co. (a) | 375,680 | | 21,026,810 |
Questerre Energy Corp. (a)(d) | 121,900 | | 403,615 |
Quicksilver Resources, Inc. (a) | 428,400 | | 11,206,944 |
Range Resources Corp. | 963,888 | | 46,806,401 |
SandRidge Energy, Inc. | 102,900 | | 5,030,781 |
Southwestern Energy Co. (a) | 569,900 | | 20,693,069 |
Talisman Energy, Inc. | 135,900 | | 2,430,365 |
Ultra Petroleum Corp. (a) | 470,300 | | 33,570,014 |
Vanguard Natural Resources LLC | 5,600 | | 86,352 |
XTO Energy, Inc. | 2,225 | | 105,087 |
| | 317,429,240 |
Oil & Gas Refining & Marketing - 7.8% |
Frontier Oil Corp. | 318,914 | | 5,820,181 |
Holly Corp. | 168,979 | | 4,829,420 |
Petroplus Holdings AG | 29,887 | | 1,205,604 |
|
| Shares | | Value |
Sunoco, Inc. (d) | 531,805 | | $ 21,596,601 |
Tesoro Corp. | 532,676 | | 8,224,517 |
Valero Energy Corp. | 1,154,481 | | 38,571,210 |
Western Refining, Inc. (d) | 122,466 | | 974,829 |
| | 81,222,362 |
Oil & Gas Storage & Transport - 1.4% |
El Paso Pipeline Partners LP | 37,200 | | 725,400 |
Energy Transfer Equity LP | 76,933 | | 2,286,449 |
Williams Companies, Inc. | 348,777 | | 11,178,303 |
| | 14,190,152 |
TOTAL OIL, GAS & CONSUMABLE FUELS | | 644,029,851 |
TOTAL COMMON STOCKS (Cost $836,238,786) | 1,037,817,319 |
Money Market Funds - 3.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 4,099,123 | | 4,099,123 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 30,259,025 | | 30,259,025 |
TOTAL MONEY MARKET FUNDS (Cost $34,358,148) | 34,358,148 |
TOTAL INVESTMENT PORTFOLIO - 103.1% (Cost $870,596,934) | | 1,072,175,467 |
NET OTHER ASSETS - (3.1)% | | (31,945,552) |
NET ASSETS - 100% | $ 1,040,229,915 |
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 | $ 222,974 |
Fidelity Securities Lending Cash Central Fund | 89,431 |
Total | $ 312,405 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.3% |
Canada | 6.3% |
Netherlands Antilles | 4.3% |
Cayman Islands | 1.6% |
Brazil | 1.5% |
Denmark | 1.1% |
Others (individually less than 1%) | 2.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy
Advisor Energy Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $28,586,972) - See accompanying schedule: Unaffiliated issuers (cost $836,238,786) | $ 1,037,817,319 | |
Fidelity Central Funds (cost $34,358,148) | 34,358,148 | |
Total Investments (cost $870,596,934) | | $ 1,072,175,467 |
Receivable for investments sold | | 12,849,611 |
Receivable for fund shares sold | | 1,049,552 |
Dividends receivable | | 374,693 |
Distributions receivable from Fidelity Central Funds | | 28,591 |
Prepaid expenses | | 2,685 |
Other receivables | | 17,361 |
Total assets | | 1,086,497,960 |
| | |
Liabilities | | |
Payable for investments purchased | $ 9,364,496 | |
Payable for fund shares redeemed | 5,278,370 | |
Accrued management fee | 529,154 | |
Distribution fees payable | 501,342 | |
Other affiliated payables | 287,490 | |
Other payables and accrued expenses | 48,168 | |
Collateral on securities loaned, at value | 30,259,025 | |
Total liabilities | | 46,268,045 |
| | |
Net Assets | | $ 1,040,229,915 |
Net Assets consist of: | | |
Paid in capital | | $ 686,998,673 |
Accumulated net investment loss | | (795) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 151,653,495 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 201,578,542 |
Net Assets | | $ 1,040,229,915 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($355,199,948 ÷ 7,070,724 shares) | | $ 50.24 |
| | |
Maximum offering price per share (100/94.25 of $50.24) | | $ 53.31 |
Class T:
Net Asset Value and redemption price per share ($407,784,394 ÷ 7,934,008 shares) | | $ 51.40 |
| | |
Maximum offering price per share (100/96.50 of $51.40) | | $ 53.26 |
Class B:
Net Asset Value and offering price per share ($98,602,010 ÷ 2,039,294 shares)A | | $ 48.35 |
| | |
Class C:
Net Asset Value and offering price per share ($156,393,491 ÷ 3,216,060 shares)A | | $ 48.63 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($22,250,072 ÷ 429,842 shares) | | $ 51.76 |
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.
Energy
Statement of Operations
| Year ended July 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 8,505,753 |
Interest | | 7,120 |
Income from Fidelity Central Funds | | 312,405 |
Total income | | 8,825,278 |
| | |
Expenses | | |
Management fee | $ 6,031,676 | |
Transfer agent fees | 2,742,854 | |
Distribution fees | 5,762,200 | |
Accounting and security lending fees | 358,686 | |
Custodian fees and expenses | 62,322 | |
Independent trustees' compensation | 4,672 | |
Registration fees | 107,864 | |
Audit | 49,970 | |
Legal | 4,012 | |
Interest | 4,402 | |
Miscellaneous | 118,166 | |
Total expenses before reductions | 15,246,824 | |
Expense reductions | (36,850) | 15,209,974 |
Net investment income (loss) | | (6,384,696) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers (net of foreign taxes of $3,424) | 190,287,771 | |
Foreign currency transactions | 49,151 | |
Total net realized gain (loss) | | 190,336,922 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $37,594) | (81,040,630) | |
Assets and liabilities in foreign currencies | 7 | |
Total change in net unrealized appreciation (depreciation) | | (81,040,623) |
Net gain (loss) | | 109,296,299 |
Net increase (decrease) in net assets resulting from operations | | $ 102,911,603 |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (6,384,696) | $ (2,803,549) |
Net realized gain (loss) | 190,336,922 | 67,298,011 |
Change in net unrealized appreciation (depreciation) | (81,040,623) | 88,822,102 |
Net increase (decrease) in net assets resulting from operations | 102,911,603 | 153,316,564 |
Distributions to shareholders from net realized gain | (64,657,747) | (117,273,909) |
Share transactions - net increase (decrease) | 82,916,045 | 40,324,071 |
Redemption fees | 43,632 | 36,406 |
Total increase (decrease) in net assets | 121,213,533 | 76,403,132 |
| | |
Net Assets | | |
Beginning of period | 919,016,382 | 842,613,250 |
End of period (including accumulated net investment loss of $795 and accumulated net investment loss of $26,290, respectively) | $ 1,040,229,915 | $ 919,016,382 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 | $ 21.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.17) | (.02) F | (.04) | .06 | .07 |
Net realized and unrealized gain (loss) | 5.59 | 8.42 | 12.30 | 12.21 | 7.50 |
Total from investment operations | 5.42 | 8.40 | 12.26 | 12.27 | 7.57 |
Distributions from net investment income | - | - | - | (.06) | (.10) |
Distributions from net realized gain | (3.46) | (6.51) | (6.81) | (.41) | - |
Total distributions | (3.46) | (6.51) | (6.81) | (.47) | (.10) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 |
Total Return A,B | 11.52% | 22.08% | 32.90% | 42.69% | 35.08% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.14% | 1.19% | 1.21% | 1.25% | 1.30% |
Expenses net of fee waivers, if any | 1.14% | 1.19% | 1.21% | 1.25% | 1.30% |
Expenses net of all reductions | 1.14% | 1.19% | 1.17% | 1.19% | 1.29% |
Net investment income (loss) | (.32)% | (.05)% F | (.09)% | .19% | .28% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 355,200 | $ 268,108 | $ 204,391 | $ 90,342 | $ 44,315 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 | $ 21.97 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.29) | (.11) F | (.13) | - H | .03 |
Net realized and unrealized gain (loss) | 5.72 | 8.61 | 12.49 | 12.37 | 7.60 |
Total from investment operations | 5.43 | 8.50 | 12.36 | 12.37 | 7.63 |
Distributions from net investment income | - | - | - | (.03) | (.08) |
Distributions from net realized gain | (3.29) | (6.42) | (6.65) | (.41) | - |
Total distributions | (3.29) | (6.42) | (6.65) | (.44) | (.08) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 |
Total Return A,B | 11.27% | 21.84% | 32.60% | 42.41% | 34.82% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.36% | 1.40% | 1.42% | 1.44% | 1.48% |
Expenses net of fee waivers, if any | 1.36% | 1.40% | 1.42% | 1.44% | 1.48% |
Expenses net of all reductions | 1.35% | 1.39% | 1.38% | 1.39% | 1.47% |
Net investment income (loss) | (.54)% | (.26)% F | (.29)% | (.01)% | .10% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 407,784 | $ 382,222 | $ 362,272 | $ 280,820 | $ 201,187 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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.
Energy
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 | $ 21.28 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.56) | (.34) F | (.35) | (.18) | (.11) |
Net realized and unrealized gain (loss) | 5.41 | 8.17 | 11.98 | 11.93 | 7.37 |
Total from investment operations | 4.85 | 7.83 | 11.63 | 11.75 | 7.26 |
Distributions from net realized gain | (3.14) | (6.29) | (6.43) | (.41) | - |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 |
Total Return A,B | 10.62% | 21.18% | 31.86% | 41.66% | 34.12% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.93% | 1.96% | 1.96% | 1.98% | 2.02% |
Expenses net of fee waivers, if any | 1.93% | 1.96% | 1.96% | 1.98% | 2.02% |
Expenses net of all reductions | 1.93% | 1.95% | 1.92% | 1.93% | 2.01% |
Net investment income (loss) | (1.11)% | (.82)% F | (.84)% | (.55)% | (.44)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 98,602 | $ 116,487 | $ 130,973 | $ 102,003 | $ 68,347 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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 (.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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 | $ 21.38 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.54) | (.32) F | (.34) | (.17) | (.10) |
Net realized and unrealized gain (loss) | 5.45 | 8.20 | 12.06 | 11.99 | 7.40 |
Total from investment operations | 4.91 | 7.88 | 11.72 | 11.82 | 7.30 |
Distributions from net realized gain | (3.16) | (6.33) | (6.50) | (.41) | - |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 |
Total Return A,B | 10.71% | 21.22% | 31.96% | 41.70% | 34.14% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.87% | 1.91% | 1.92% | 1.94% | 1.99% |
Expenses net of fee waivers, if any | 1.87% | 1.91% | 1.92% | 1.94% | 1.99% |
Expenses net of all reductions | 1.87% | 1.91% | 1.88% | 1.89% | 1.97% |
Net investment income (loss) | (1.05)% | (.77)% F | (.79)% | (.51)% | (.41)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 156,393 | $ 135,072 | $ 125,424 | $ 72,832 | $ 37,206 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 | $ 22.03 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.02) | .11 E | .12 | .19 | .18 |
Net realized and unrealized gain (loss) | 5.74 | 8.67 | 12.56 | 12.44 | 7.62 |
Total from investment operations | 5.72 | 8.78 | 12.68 | 12.63 | 7.80 |
Distributions from net investment income | - | - | - | (.11) | (.19) |
Distributions from net realized gain | (3.64) | (6.58) | (6.97) | (.41) | - |
Total distributions | (3.64) | (6.58) | (6.97) | (.52) | (.19) |
Redemption fees added to paid in capital B | - G | - G | .01 | .01 | - G |
Net asset value, end of period | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 |
Total Return A | 11.83% | 22.47% | 33.35% | 43.21% | 35.60% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .85% | .88% | .87% | .89% | .90% |
Expenses net of fee waivers, if any | .85% | .88% | .87% | .89% | .90% |
Expenses net of all reductions | .85% | .88% | .83% | .84% | .89% |
Net investment income (loss) | (.03)% | .25% E | .26% | .54% | .68% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 22,250 | $ 17,127 | $ 19,553 | $ 9,433 | $ 4,206 |
Portfolio turnover rate D | 90% | 80% | 139% | 125% | 40% |
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.
Energy
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Energy 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the
Energy
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, passive foreign investment companies (PFIC), partnerships, 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 | $ 295,540,500 |
Unrealized depreciation | (96,543,534) |
Net unrealized appreciation (depreciation) | 198,996,966 |
Undistributed ordinary income | 177,681 |
Undistributed long-term capital gain | 137,376,502 |
| |
Cost for federal income tax purposes | $ 873,178,501 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 4,772,747 | $ 36,468,176 |
Long-term Capital Gains | 59,885,000 | 80,805,733 |
Total | $ 64,657,747 | $ 117,273,909 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Annual Report
Notes to Financial Statements - continued
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 $977,150,424 and $959,895,107, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 853,464 | $ 51,049 |
Class T | .25% | .25% | 2,152,298 | 31,591 |
Class B | .75% | .25% | 1,163,814 | 874,450 |
Class C | .75% | .25% | 1,592,624 | 314,372 |
| | | $ 5,762,200 | $ 1,271,462 |
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
by FDC |
Class A | $ 332,562 |
Class T | 73,658 |
Class B* | 174,492 |
Class C* | 32,675 |
| $ 613,387 |
* 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.
Energy
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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 911,111 | .27 |
Class T | 1,002,990 | .23 |
Class B | 355,558 | .31 |
Class C | 392,013 | .25 |
Institutional Class | 81,182 | .23 |
| $ 2,742,854 | |
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 $6,069 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
Expense |
Borrower | $ 32,706,500 | 2.42% | $ 4,402 |
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 $2,404 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 $89,431.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $36,040 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 $693. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Institutional Class | $ 117 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $30,652, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 20,341,408 | $ 30,378,115 |
Class T | 25,677,389 | 48,658,927 |
Class B | 7,474,589 | 18,097,588 |
Class C | 9,397,317 | 17,464,821 |
Institutional Class | 1,767,044 | 2,674,458 |
Total | $ 64,657,747 | $ 117,273,909 |
Energy
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,202,103 | 2,409,415 | $ 169,499,687 | $ 103,800,389 |
Reinvestment of distributions | 375,188 | 718,262 | 18,473,322 | 27,810,279 |
Shares redeemed | (2,059,529) | (1,980,718) | (107,985,396) | (81,122,220) |
Net increase (decrease) | 1,517,762 | 1,146,959 | $ 79,987,613 | $ 50,488,448 |
Class T | | | | |
Shares sold | 1,610,611 | 1,250,444 | $ 87,007,613 | $ 54,473,563 |
Reinvestment of distributions | 478,816 | 1,161,034 | 24,107,280 | 45,909,961 |
Shares redeemed | (1,914,780) | (2,330,754) | (102,045,896) | (98,273,495) |
Net increase (decrease) | 174,647 | 80,724 | $ 9,068,997 | $ 2,110,029 |
Class B | | | | |
Shares sold | 504,843 | 451,905 | $ 25,728,046 | $ 18,746,589 |
Reinvestment of distributions | 135,516 | 414,158 | 6,434,106 | 15,588,355 |
Shares redeemed | (1,098,735) | (1,272,145) | (55,433,977) | (50,696,372) |
Net increase (decrease) | (458,376) | (406,082) | $ (23,271,825) | $ (16,361,428) |
Class C | | | | |
Shares sold | 993,512 | 863,338 | $ 51,238,082 | $ 36,256,164 |
Reinvestment of distributions | 161,795 | 385,215 | 7,736,565 | 14,569,142 |
Shares redeemed | (820,290) | (1,134,191) | (41,459,377) | (44,464,337) |
Net increase (decrease) | 335,017 | 114,362 | $ 17,515,270 | $ 6,360,969 |
Institutional Class | | | | |
Shares sold | 839,635 | 150,039 | $ 44,656,187 | $ 6,836,544 |
Reinvestment of distributions | 25,669 | 39,397 | 1,318,208 | 1,561,516 |
Shares redeemed | (780,213) | (256,502) | (46,358,405) | (10,672,007) |
Net increase (decrease) | 85,091 | (67,066) | $ (384,010) | $ (2,273,947) |
Annual Report
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) | -11.07% | 4.67% | 4.26% |
Class T (incl. 3.50% sales charge) | -9.15% | 4.91% | 4.25% |
Class B (incl. contingent deferred sales charge) A | -10.59% | 4.80% | 4.33% |
Class C (incl. contingent deferred sales charge) B | -7.16% | 5.18% | 4.15% |
A 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' 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 A on July 31, 1998, and the current 5.75% 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 Health Care Fund
Management's Discussion of Fund Performance
Comments from Matthew Sabel, Portfolio Manager of Fidelity® Advisor Health Care Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned -5.64%, -5.86%, -6.30% and -6.31%, respectively (excluding sales charges), underperforming the -1.74% return of the MSCI® US Investable Market Health Care Index but outperforming the S&P 500. The main factors behind the fund's underperformance of the MSCI index were unfavorable stock selection in pharmaceuticals, health care services and biotechnology, along with an underweighting in the last group. An out-of-benchmark stake in packaged foods and meats also hurt. Conversely, the fund benefited from an overweighting in life sciences tools and services, as well as good security selection in that group. Favorable picks in managed health care and an out-of-benchmark position in fertilizers and agricultural chemicals helped as well. Detractors included a significant underweighting in pharmaceutical firm and index heavyweight Johnson & Johnson; an underweighting in biotechnology company Amgen; an out-of-benchmark position in Brazilian drug distributor Profarma; holdings of pharmaceutical company Schering-Plough, NightHawk Radiology and managed health care provider Universal American; as well as an underweighting in biotech firm Celgene. Underweighting two index components that underperformed - pharmaceutical giant Pfizer and managed care company WellPoint - helped relative returns, as did life sciences tools and services firms Bruker BioSciences and Thermo Fisher Scientific, along with health care equipment provider Baxter International. Some stocks mentioned here were not held at period end.
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
Advisor Health Care 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 940.40 | $ 5.89 |
HypotheticalA | $ 1,000.00 | $ 1,018.80 | $ 6.12 |
Class T | | | |
Actual | $ 1,000.00 | $ 939.50 | $ 7.14 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 936.90 | $ 9.54 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Class C | | | |
Actual | $ 1,000.00 | $ 937.30 | $ 9.49 |
HypotheticalA | $ 1,000.00 | $ 1,015.07 | $ 9.87 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 941.80 | $ 4.68 |
HypotheticalA | $ 1,000.00 | $ 1,020.04 | $ 4.87 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.22% |
Class T | 1.48% |
Class B | 1.98% |
Class C | 1.97% |
Institutional Class | .97% |
Annual Report
Advisor Health Care Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Wyeth | 5.3 | 3.1 |
Abbott Laboratories | 5.3 | 4.2 |
Genentech, Inc. | 4.6 | 1.3 |
Thermo Fisher Scientific, Inc. | 4.6 | 2.9 |
Covidien Ltd. | 4.4 | 1.7 |
Baxter International, Inc. | 3.9 | 2.7 |
Amgen, Inc. | 2.7 | 1.8 |
Inverness Medical Innovations, Inc. | 2.5 | 1.7 |
UnitedHealth Group, Inc. | 2.4 | 4.8 |
Medtronic, Inc. | 2.4 | 0.6 |
| 38.1 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Health Care
Equipment & Supplies | 24.8% | |
| Pharmaceuticals | 20.8% | |
| Biotechnology | 16.4% | |
| Health Care
Providers & Services | 14.9% | |
| Life Sciences Tools
& Services | 12.1% | |
| All Others* | 11.0% | |
As of January 31, 2008 |
| Health Care
Equipment & Supplies | 20.3% | |
| Pharmaceuticals | 25.6% | |
| Biotechnology | 13.6% | |
| Health Care
Providers & Services | 19.9% | |
| Life Sciences
Tools & Services | 11.3% | |
| All Others* | 9.3% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Health Care Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 98.4% |
| Shares | | Value |
BIOTECHNOLOGY - 16.4% |
Biotechnology - 16.4% |
Alexion Pharmaceuticals, Inc. (a) | 17,900 | | $ 1,678,125 |
Alnylam Pharmaceuticals, Inc. (a) | 62,137 | | 2,161,125 |
Amgen, Inc. (a) | 221,948 | | 13,900,603 |
Biogen Idec, Inc. (a) | 135,116 | | 9,425,692 |
BioMarin Pharmaceutical, Inc. (a)(d) | 168,962 | | 5,499,713 |
Cephalon, Inc. (a) | 49,510 | | 3,622,152 |
Cepheid, Inc. (a) | 37,159 | | 636,162 |
Cougar Biotechnology, Inc. (a) | 13,326 | | 448,420 |
CSL Ltd. | 82,373 | | 2,683,802 |
Genentech, Inc. (a) | 254,387 | | 24,230,362 |
Genzyme Corp. (a) | 84,600 | | 6,484,590 |
GTx, Inc. (a)(d) | 107,417 | | 2,002,253 |
Human Genome Sciences, Inc. (a) | 42,800 | | 283,764 |
ImClone Systems, Inc. (a) | 20,200 | | 1,291,386 |
Molecular Insight Pharmaceuticals, Inc. (a) | 39,400 | | 332,536 |
Myriad Genetics, Inc. (a) | 29,066 | | 1,932,889 |
Omrix Biopharmaceuticals, Inc. (a) | 34,600 | | 643,560 |
ONYX Pharmaceuticals, Inc. (a) | 96,984 | | 3,927,852 |
PDL BioPharma, Inc. | 63,526 | | 709,585 |
RXi Pharmaceuticals Corp. (a) | 8,141 | | 59,022 |
Theravance, Inc. (a)(d) | 188,900 | | 3,018,622 |
United Therapeutics Corp. (a) | 6,800 | | 771,052 |
| | 85,743,267 |
CHEMICALS - 2.7% |
Fertilizers & Agricultural Chemicals - 2.4% |
Monsanto Co. | 89,461 | | 10,655,700 |
Syngenta AG sponsored ADR | 34,500 | | 2,004,105 |
| | 12,659,805 |
Specialty Chemicals - 0.3% |
Jubilant Organosys Ltd. | 70,122 | | 592,142 |
Sigma Aldrich Corp. | 14,300 | | 868,582 |
| | 1,460,724 |
TOTAL CHEMICALS | | 14,120,529 |
COMMERCIAL SERVICES & SUPPLIES - 0.1% |
Environmental & Facility Services - 0.1% |
American Ecology Corp. | 17,100 | | 538,821 |
DIVERSIFIED CONSUMER SERVICES - 0.5% |
Specialized Consumer Services - 0.5% |
Carriage Services, Inc. Class A (a) | 181,450 | | 1,124,990 |
Hillenbrand, Inc. | 18,200 | | 421,330 |
Stewart Enterprises, Inc. Class A | 113,884 | | 1,014,706 |
StoneMor Partners LP | 8,737 | | 158,839 |
| | 2,719,865 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.4% |
Electronic Equipment & Instruments - 1.4% |
Mettler-Toledo International, Inc. (a) | 66,567 | | 7,156,618 |
|
| Shares | | Value |
FOOD & STAPLES RETAILING - 0.7% |
Drug Retail - 0.7% |
A&D Pharma Holdings NV (Reg. S) unit | 10,900 | | $ 37,217 |
China Nepstar Chain Drugstore Ltd. ADR | 17,400 | | 135,372 |
CVS Caremark Corp. | 99,500 | | 3,631,750 |
| | 3,804,339 |
FOOD PRODUCTS - 2.7% |
Agricultural Products - 1.5% |
Archer Daniels Midland Co. | 97,800 | | 2,800,014 |
Bunge Ltd. | 51,239 | | 5,068,562 |
| | 7,868,576 |
Packaged Foods & Meats - 1.2% |
Marine Harvest ASA (a) | 642,000 | | 454,836 |
Nestle SA: | | | |
(Reg.) | 104,101 | | 4,567,041 |
sponsored ADR | 28,750 | | 1,259,250 |
| | 6,281,127 |
TOTAL FOOD PRODUCTS | | 14,149,703 |
HEALTH CARE EQUIPMENT & SUPPLIES - 24.8% |
Health Care Equipment - 20.7% |
Abaxis, Inc. (a) | 1,700 | | 33,813 |
American Medical Systems Holdings, Inc. (a)(d) | 162,094 | | 2,669,688 |
ArthroCare Corp. (a) | 9,940 | | 210,132 |
Baxter International, Inc. | 297,630 | | 20,420,394 |
Beckman Coulter, Inc. | 10,600 | | 766,804 |
Boston Scientific Corp. (a) | 774,600 | | 9,209,994 |
C.R. Bard, Inc. | 52,576 | | 4,881,156 |
China Medical Technologies, Inc. sponsored ADR (d) | 13,600 | | 651,712 |
Covidien Ltd. | 460,974 | | 22,698,360 |
Electro-Optical Sciences, Inc. (a) | 178,991 | | 1,084,685 |
Electro-Optical Sciences, Inc.: | | | |
warrants 11/2/11 (a)(f) | 60,018 | | 171,008 |
warrants 8/2/12 (a)(f) | 16,500 | | 47,699 |
Gen-Probe, Inc. (a) | 35,800 | | 1,908,856 |
Golden Meditech Co. Ltd. | 4,928,000 | | 1,579,163 |
Hill-Rom Holdings, Inc. | 18,200 | | 511,238 |
I-Flow Corp. (a) | 42,707 | | 443,299 |
IDEXX Laboratories, Inc. (a) | 21,900 | | 1,171,650 |
Integra LifeSciences Holdings Corp. (a) | 60,155 | | 2,746,677 |
Kinetic Concepts, Inc. (a) | 56,600 | | 1,978,170 |
Masimo Corp. | 21,300 | | 804,501 |
Medtronic, Inc. | 237,398 | | 12,541,736 |
Mentor Corp. | 11,000 | | 272,910 |
Meridian Bioscience, Inc. | 17,300 | | 449,973 |
Mindray Medical International Ltd. sponsored ADR | 43,700 | | 1,745,815 |
Mingyuan Medicare Development Co. Ltd. | 3,890,000 | | 513,574 |
Natus Medical, Inc. (a) | 839 | | 19,473 |
Common Stocks - continued |
| Shares | | Value |
HEALTH CARE EQUIPMENT & SUPPLIES - CONTINUED |
Health Care Equipment - continued |
Quidel Corp. (a) | 19,900 | | $ 403,174 |
Smith & Nephew PLC | 38,500 | | 411,134 |
Smith & Nephew PLC sponsored ADR | 4,100 | | 219,965 |
St. Jude Medical, Inc. (a) | 122,300 | | 5,696,734 |
Stryker Corp. | 140,300 | | 9,005,857 |
Syneron Medical Ltd. (a) | 191,199 | | 2,684,434 |
ThermoGenesis Corp. (a) | 123,934 | | 182,183 |
| | 108,135,961 |
Health Care Supplies - 4.1% |
Alcon, Inc. | 26,333 | | 4,540,599 |
Cremer SA | 30,800 | | 271,452 |
Haemonetics Corp. (a) | 5,400 | | 313,524 |
Immucor, Inc. (a) | 21,440 | | 645,987 |
InfuSystems Holdings, Inc. (a) | 453,700 | | 1,224,990 |
InfuSystems Holdings, Inc. warrants 4/11/11 (a) | 83,700 | | 16,740 |
Inverness Medical Innovations, Inc. (a)(d) | 382,244 | | 12,885,445 |
RTI Biologics, Inc. (a) | 68,800 | | 570,352 |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 656,000 | | 884,578 |
| | 21,353,667 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 129,489,628 |
HEALTH CARE PROVIDERS & SERVICES - 14.7% |
Health Care Distributors & Services - 2.8% |
Celesio AG | 900 | | 29,380 |
McKesson Corp. | 182,500 | | 10,218,175 |
Profarma Distribuidora de Produtos Farmaceuticos SA | 449,800 | | 4,308,979 |
| | 14,556,534 |
Health Care Facilities - 1.1% |
Brookdale Senior Living, Inc. | 8,500 | | 129,710 |
Community Health Systems, Inc. (a) | 21,300 | | 702,474 |
Emeritus Corp. (a) | 68,389 | | 1,152,355 |
Health Management Associates, Inc. Class A (a) | 283,798 | | 1,745,358 |
Sun Healthcare Group, Inc. (a) | 31,393 | | 448,606 |
Universal Health Services, Inc. Class B | 26,900 | | 1,630,678 |
| | 5,809,181 |
Health Care Services - 4.9% |
Apria Healthcare Group, Inc. (a) | 238,528 | | 4,582,123 |
athenahealth, Inc. | 500 | | 15,100 |
CardioNet, Inc. | 6,000 | | 165,360 |
Diagnosticos da America SA | 69,900 | | 1,665,136 |
Emergency Medical Services Corp.
Class A (a) | 100 | | 2,702 |
Express Scripts, Inc. (a) | 119,280 | | 8,414,011 |
Genoptix, Inc. | 17,900 | | 521,785 |
Health Grades, Inc. (a) | 356,798 | | 1,148,890 |
|
| Shares | | Value |
Medco Health Solutions, Inc. (a) | 109,000 | | $ 5,404,220 |
NightHawk Radiology Holdings, Inc. (a) | 398,881 | | 3,330,656 |
Rural/Metro Corp. (a) | 13,331 | | 24,529 |
Virtual Radiologic Corp. | 24,100 | | 223,166 |
| | 25,497,678 |
Managed Health Care - 5.9% |
Coventry Health Care, Inc. (a) | 30,000 | | 1,061,100 |
Health Net, Inc. (a) | 9,600 | | 268,416 |
Humana, Inc. (a) | 95,926 | | 4,212,111 |
Medial Saude SA | 72,100 | | 815,027 |
UnitedHealth Group, Inc. | 453,309 | | 12,728,917 |
Universal American Financial Corp. (a) | 318,494 | | 3,341,002 |
WellPoint, Inc. (a) | 156,100 | | 8,187,445 |
| | 30,614,018 |
TOTAL HEALTH CARE PROVIDERS & SERVICES | | 76,477,411 |
HEALTH CARE TECHNOLOGY - 0.9% |
Health Care Technology - 0.9% |
Eclipsys Corp. (a) | 99,727 | | 2,198,980 |
HLTH Corp. (a) | 177,100 | | 1,937,474 |
Phase Forward, Inc. (a) | 15,500 | | 285,200 |
| | 4,421,654 |
INTERNET SOFTWARE & SERVICES - 0.1% |
Internet Software & Services - 0.1% |
WebMD Health Corp. Class A (a)(d) | 24,789 | | 599,894 |
LIFE SCIENCES TOOLS & SERVICES - 12.1% |
Life Sciences Tools & Services - 12.1% |
AMAG Pharmaceuticals, Inc. (a)(d) | 16,810 | | 689,210 |
Applied Biosystems, Inc. | 26,174 | | 966,606 |
Bio-Rad Laboratories, Inc. Class A (a) | 6,243 | | 556,251 |
Bruker BioSciences Corp. (a) | 207,329 | | 2,865,287 |
Charles River Laboratories International, Inc. (a) | 36,700 | | 2,439,082 |
Covance, Inc. (a) | 18,676 | | 1,714,457 |
Dishman Pharmaceuticals and Chemicals Ltd. | 143,211 | | 993,765 |
Exelixis, Inc. (a) | 75,713 | | 529,991 |
Harvard Bioscience, Inc. (a) | 40,833 | | 203,348 |
Illumina, Inc. (a) | 43,772 | | 4,081,301 |
Invitrogen Corp. (a) | 31,178 | | 1,382,744 |
Lonza Group AG | 68,047 | | 9,864,472 |
PAREXEL International Corp. (a) | 54,800 | | 1,601,804 |
PerkinElmer, Inc. | 76,278 | | 2,219,690 |
Pharmaceutical Product Development, Inc. | 55,600 | | 2,120,584 |
QIAGEN NV (a) | 184,200 | | 3,461,118 |
Techne Corp. (a) | 14,535 | | 1,155,823 |
Thermo Fisher Scientific, Inc. (a) | 398,016 | | 24,087,928 |
Varian, Inc. (a) | 26,374 | | 1,302,876 |
Common Stocks - continued |
| Shares | | Value |
LIFE SCIENCES TOOLS & SERVICES - CONTINUED |
Life Sciences Tools & Services - continued |
Waters Corp. (a) | 7,794 | | $ 529,524 |
Wuxi Pharmatech Cayman, Inc. sponsored ADR (d) | 25,143 | | 455,591 |
| | 63,221,452 |
MACHINERY - 0.4% |
Industrial Machinery - 0.4% |
Pall Corp. | 56,000 | | 2,263,520 |
PERSONAL PRODUCTS - 0.1% |
Personal Products - 0.1% |
Nutraceutical International Corp. (a) | 17,300 | | 211,233 |
PHARMACEUTICALS - 20.8% |
Pharmaceuticals - 20.8% |
Abbott Laboratories | 493,000 | | 27,775,620 |
Alembic Ltd. | 17,828 | | 19,304 |
Allergan, Inc. (d) | 171,218 | | 8,891,351 |
Bristol-Myers Squibb Co. | 471,517 | | 9,958,439 |
China Shineway Pharmaceutical Group Ltd. | 1,132,000 | | 825,610 |
Eczacibasi ILAC Sanayi TAS | 82,000 | | 287,979 |
Elan Corp. PLC sponsored ADR (a) | 21,100 | | 423,055 |
Eurand NV (a) | 4,300 | | 79,077 |
Merck & Co., Inc. | 42,990 | | 1,414,371 |
Nexmed, Inc. (a) | 401,447 | | 537,939 |
Pfizer, Inc. | 657,119 | | 12,268,412 |
Piramal Healthcare Ltd. | 70,067 | | 529,088 |
Shire PLC sponsored ADR | 83,300 | | 4,193,322 |
Simcere Pharmaceutical Group sponsored ADR (a) | 26,750 | | 321,000 |
Teva Pharmaceutical Industries Ltd. sponsored ADR (d) | 276,500 | | 12,398,260 |
Wyeth | 686,142 | | 27,802,475 |
XenoPort, Inc. (a) | 17,300 | | 792,686 |
| | 108,517,988 |
TOTAL COMMON STOCKS (Cost $483,953,890) | 513,435,922 |
Nonconvertible Bonds - 0.2% |
| Principal Amount | | |
HEALTH CARE PROVIDERS & SERVICES - 0.2% |
Health Care Services - 0.2% |
DASA Finance Corp. 8.75% 5/29/18 (e)
(Cost $1,296,874) | | $ 1,280,000 | | 1,280,000 |
Money Market Funds - 5.4% |
| Shares | | Value |
Fidelity Cash Central Fund, 2.35% (b) | 2,952,758 | | $ 2,952,758 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 25,101,949 | | 25,101,949 |
TOTAL MONEY MARKET FUNDS (Cost $28,054,707) | 28,054,707 |
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $513,305,471) | 542,770,629 |
NET OTHER ASSETS - (4.0)% | (21,098,448) |
NET ASSETS - 100% | $ 521,672,181 |
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 $1,280,000 or 0.2% 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 $218,707 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 |
Electro-Optical Sciences, Inc. warrants 8/2/12 | 8/1/07 | $ 17 |
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 | $ 393,429 |
Fidelity Securities Lending Cash Central Fund | 236,988 |
Total | $ 630,417 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.7% |
Bermuda | 5.5% |
Switzerland | 4.3% |
Israel | 2.9% |
Brazil | 1.3% |
Cayman Islands | 1.0% |
Others (individually less than 1%) | 3.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Health Care Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $24,922,816) - See accompanying schedule: Unaffiliated issuers (cost $485,250,764) | $ 514,715,922 | |
Fidelity Central Funds (cost $28,054,707) | 28,054,707 | |
Total Investments (cost $513,305,471) | | $ 542,770,629 |
Foreign currency held at value (cost $421,672) | | 422,906 |
Receivable for investments sold | | 19,495,476 |
Receivable for fund shares sold | | 348,253 |
Dividends receivable | | 396,206 |
Interest receivable | | 18,978 |
Distributions receivable from Fidelity Central Funds | | 29,240 |
Prepaid expenses | | 777 |
Other receivables | | 48,965 |
Total assets | | 563,531,430 |
| | |
Liabilities | | |
Payable for investments purchased | $ 15,102,325 | |
Payable for fund shares redeemed | 986,815 | |
Accrued management fee | 239,776 | |
Distribution fees payable | 219,909 | |
Other affiliated payables | 149,189 | |
Other payables and accrued expenses | 59,286 | |
Collateral on securities loaned, at value | 25,101,949 | |
Total liabilities | | 41,859,249 |
| | |
Net Assets | | $ 521,672,181 |
Net Assets consist of: | | |
Paid in capital | | $ 482,602,604 |
Accumulated net investment loss | | (71) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 9,605,646 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 29,464,002 |
Net Assets | | $ 521,672,181 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($220,888,450 ÷ 11,199,333 shares) | | $ 19.72 |
| | |
Maximum offering price per share (100/94.25 of $19.72) | | $ 20.92 |
Class T:
Net Asset Value and redemption price per share ($143,236,790 ÷ 7,438,226 shares) | | $ 19.26 |
| | |
Maximum offering price per share (100/96.50 of $19.26) | | $ 19.96 |
Class B:
Net Asset Value and offering price per share ($55,589,075 ÷ 3,042,652 shares)A | | $ 18.27 |
| | |
Class C:
Net Asset Value and offering price per share ($83,132,688 ÷ 4,561,169 shares)A | | $ 18.23 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($18,825,178 ÷ 923,392 shares) | | $ 20.39 |
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.
Health Care
Statement of Operations
| Year ended July 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 5,768,227 |
Interest | | 56,936 |
Income from Fidelity Central Funds | | 630,417 |
Total income | | 6,455,580 |
| | |
Expenses | | |
Management fee | $ 3,392,498 | |
Transfer agent fees | 1,829,148 | |
Distribution fees | 3,260,952 | |
Accounting and security lending fees | 230,706 | |
Custodian fees and expenses | 101,998 | |
Independent trustees' compensation | 2,611 | |
Registration fees | 61,300 | |
Audit | 64,928 | |
Legal | 3,781 | |
Interest | 960 | |
Miscellaneous | 114,017 | |
Total expenses before reductions | 9,062,899 | |
Expense reductions | (51,414) | 9,011,485 |
Net investment income (loss) | | (2,555,905) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 27,586,271 | |
Foreign currency transactions | (27,526) | |
Total net realized gain (loss) | | 27,558,745 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $37,025) | (58,671,328) | |
Assets and liabilities in foreign currencies | 747 | |
Total change in net unrealized appreciation (depreciation) | | (58,670,581) |
Net gain (loss) | | (31,111,836) |
Net increase (decrease) in net assets resulting from operations | | $ (33,667,741) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (2,555,905) | $ (3,461,354) |
Net realized gain (loss) | 27,558,745 | 78,309,606 |
Change in net unrealized appreciation (depreciation) | (58,670,581) | (16,377,138) |
Net increase (decrease) in net assets resulting from operations | (33,667,741) | 58,471,114 |
Distributions to shareholders from net realized gain | (58,232,148) | (83,314,166) |
Share transactions - net increase (decrease) | (48,796,453) | (46,973,972) |
Redemption fees | 7,557 | 16,966 |
Total increase (decrease) in net assets | (140,688,785) | (71,800,058) |
| | |
Net Assets | | |
Beginning of period | 662,360,966 | 734,161,024 |
End of period (including accumulated net investment loss of $71 and accumulated net investment loss of $199, respectively) | $ 521,672,181 | $ 662,360,966 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 | $ 18.29 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) | (.03) | (.09) | (.05) | (.05) |
Net realized and unrealized gain (loss) | (1.08) | 1.91 | .96 | 4.08 | .67 |
Total from investment operations | (1.11) | 1.88 | .87 | 4.03 | .62 |
Distributions from net realized gain | (2.07) | (2.75) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 |
Total Return A, B | (5.64)% | 8.54% | 3.79% | 21.31% | 3.39% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.20% | 1.22% | 1.25% | 1.28% | 1.32% |
Expenses net of fee waivers, if any | 1.20% | 1.22% | 1.25% | 1.28% | 1.32% |
Expenses net of all reductions | 1.19% | 1.21% | 1.21% | 1.26% | 1.29% |
Net investment income (loss) | (.13)% | (.14)% | (.38)% | (.22)% | (.26)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 220,888 | $ 234,656 | $ 199,221 | $ 139,158 | $ 104,258 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 | $ 18.03 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.08) | (.09) | (.15) | (.09) | (.09) |
Net realized and unrealized gain (loss) | (1.06) | 1.87 | .95 | 3.99 | .66 |
Total from investment operations | (1.14) | 1.78 | .80 | 3.90 | .57 |
Distributions from net realized gain | (1.99) | (2.65) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 |
Total Return A, B | (5.86)% | 8.25% | 3.55% | 20.97% | 3.16% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.46% | 1.48% | 1.50% | 1.53% | 1.56% |
Expenses net of fee waivers, if any | 1.46% | 1.48% | 1.50% | 1.53% | 1.56% |
Expenses net of all reductions | 1.45% | 1.47% | 1.47% | 1.51% | 1.53% |
Net investment income (loss) | (.40)% | (.40)% | (.63)% | (.47)% | (.51)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 143,237 | $ 186,628 | $ 218,280 | $ 243,353 | $ 243,176 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class B
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 | $ 17.45 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.18) | (.20) | (.25) | (.19) | (.18) |
Net realized and unrealized gain (loss) | (.99) | 1.79 | .91 | 3.83 | .64 |
Total from investment operations | (1.17) | 1.59 | .66 | 3.64 | .46 |
Distributions from net realized gain | (1.85) | (2.47) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 |
Total Return A, B | (6.30)% | 7.66% | 3.06% | 20.32% | 2.64% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.95% | 1.99% | 2.01% | 2.04% | 2.06% |
Expenses net of fee waivers, if any | 1.95% | 1.99% | 2.01% | 2.04% | 2.06% |
Expenses net of all reductions | 1.94% | 1.98% | 1.98% | 2.01% | 2.03% |
Net investment income (loss) | (.89)% | (.91)% | (1.14)% | (.98)% | (1.01)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 55,589 | $ 113,384 | $ 180,364 | $ 266,319 | $ 285,299 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 | $ 17.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.17) | (.19) | (.24) | (.17) | (.17) |
Net realized and unrealized gain (loss) | (1.00) | 1.79 | .91 | 3.84 | .64 |
Total from investment operations | (1.17) | 1.60 | .67 | 3.67 | .47 |
Distributions from net realized gain | (1.89) | (2.55) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 |
Total Return A, B | (6.31)% | 7.75% | 3.10% | 20.46% | 2.69% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.94% | 1.94% | 1.94% | 1.97% | 2.00% |
Expenses net of fee waivers, if any | 1.94% | 1.94% | 1.94% | 1.97% | 2.00% |
Expenses net of all reductions | 1.94% | 1.93% | 1.91% | 1.94% | 1.97% |
Net investment income (loss) | (.88)% | (.86)% | (1.07)% | (.91)% | (.95)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 83,133 | $ 105,519 | $ 115,644 | $ 131,277 | $ 130,184 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 | $ 18.58 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .03 | .05 | - F | .04 | .03 |
Net realized and unrealized gain (loss) | (1.12) | 1.96 | .99 | 4.16 | .67 |
Total from investment operations | (1.09) | 2.01 | .99 | 4.20 | .70 |
Distributions from net realized gain | (2.14) | (2.82) | (.04) | - | - |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 |
Total Return A | (5.36)% | 8.90% | 4.21% | 21.78% | 3.77% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .93% | .88% | .86% | .88% | .91% |
Expenses net of fee waivers, if any | .93% | .88% | .86% | .88% | .91% |
Expenses net of all reductions | .92% | .87% | .83% | .85% | .88% |
Net investment income (loss) | .14% | .19% | .01% | .18% | .14% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 18,825 | $ 22,174 | $ 20,652 | $ 19,698 | $ 20,358 |
Portfolio turnover rate D | 134% | 141% | 99% | 71% | 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.
See accompanying notes which are an integral part of the financial statements.
Health Care
Notes to Financial Statements
For the period ended July 31, 2008
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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 | $ 59,028,671 |
Unrealized depreciation | (31,657,654) |
Net unrealized appreciation (depreciation) | 27,371,017 |
Undistributed long-term capital gain | 9,933,027 |
| |
Cost for federal income tax purposes | $ 515,399,612 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 10,044,071 | $ 9,215,258 |
Long-term Capital Gains | 48,188,077 | 74,098,908 |
Total | $ 58,232,148 | $ 83,314,166 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to 0.75% 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Health Care
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 $799,559,103 and $911,701,404, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 586,589 | $ 21,847 |
Class T | .25% | .25% | 852,634 | 7,286 |
Class B | .75% | .25% | 847,984 | 636,459 |
Class C | .75% | .25% | 973,745 | 50,133 |
| | | $ 3,260,952 | $ 715,725 |
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
by FDC |
Class A | $ 36,015 |
Class T | 20,463 |
Class B* | 115,416 |
Class C* | 5,494 |
| $ 177,388 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 704,151 | .30 |
Class T | 526,894 | .31 |
Class B | 254,540 | .30 |
Class C | 282,679 | .29 |
Institutional Class | 60,884 | .28 |
| $ 1,829,148 | |
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 $12,242 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
Expense |
Borrower | $ 6,555,000 | 5.27% | $ 960 |
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 $1,493 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 $236,988.
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 $33,610 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 $4,633.
Health Care
9. Expense Reductions - continued
During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 12,095 |
Class C | 528 |
Institutional Class | 548 |
| $ 13,171 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $196,360, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 21,294,782 | $ 23,887,113 |
Class T | 16,323,384 | 24,697,844 |
Class B | 9,098,884 | 18,914,669 |
Class C | 9,241,641 | 13,345,526 |
Institutional Class | 2,273,457 | 2,469,014 |
Total | $ 58,232,148 | $ 83,314,166 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,081,992 | 3,628,491 | $ 65,718,810 | $ 84,047,399 |
Reinvestment of distributions | 845,716 | 919,326 | 18,561,495 | 20,489,356 |
Shares redeemed | (2,977,484) | (2,679,409) | (63,109,379) | (62,216,884) |
Net increase (decrease) | 950,224 | 1,868,408 | $ 21,170,926 | $ 42,319,871 |
Class T | | | | |
Shares sold | 746,344 | 811,354 | $ 15,578,653 | $ 18,411,031 |
Reinvestment of distributions | 718,829 | 1,065,004 | 15,418,473 | 23,268,418 |
Shares redeemed | (2,364,110) | (2,924,887) | (48,580,585) | (66,315,193) |
Net increase (decrease) | (898,937) | (1,048,529) | $ (17,583,459) | $ (24,635,744) |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions - continued
Transactions for each class of shares were as follows - continued
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class B | | | | |
Shares sold | 261,619 | 416,759 | $ 5,241,565 | $ 8,968,832 |
Reinvestment of distributions | 400,851 | 800,087 | 8,175,269 | 16,715,113 |
Shares redeemed | (2,945,003) | (4,028,295) | (58,341,596) | (87,078,801) |
Net increase (decrease) | (2,282,533) | (2,811,449) | $ (44,924,762) | $ (61,394,856) |
Class C | | | | |
Shares sold | 383,741 | 498,290 | $ 7,630,409 | $ 10,716,280 |
Reinvestment of distributions | 358,758 | 508,339 | 7,307,934 | 10,614,471 |
Shares redeemed | (1,138,609) | (1,249,593) | (22,157,508) | (26,990,765) |
Net increase (decrease) | (396,110) | (242,964) | $ (7,219,165) | $ (5,660,014) |
Institutional Class | | | | |
Shares sold | 423,102 | 415,448 | $ 9,559,061 | $ 10,086,881 |
Reinvestment of distributions | 64,316 | 77,688 | 1,455,613 | 1,779,821 |
Shares redeemed | (503,017) | (399,590) | (11,254,667) | (9,469,931) |
Net increase (decrease) | (15,599) | 93,546 | $ (239,993) | $ 2,396,771 |
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge)C | -10.19% | 14.27% | 8.59% |
Class T (incl. 3.50% sales charge)C | -8.28% | 14.55% | 8.59% |
Class B (incl. contingent deferred sales charge) A, C | -9.75% | 14.50% | 8.66% |
Class C (incl. contingent deferred sales charge) B, C | -6.30% | 14.79% | 8.42% |
A 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' 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.
C Prior to October 1, 2006, Advisor Industrials operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Industrials Fund - Class A on July 31, 1998, and the current 5.75% 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 Industrials Fund
Management's Discussion of Fund Performance
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial Average SM and the Standard & Poor's 500 SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -4.71%, -4.96%, -5.46% and -5.44%, respectively (excluding sales charges), topping the S&P 500 and the -9.98% return of the MSCI® US Investable Market Industrials Index. Versus the MSCI index, heavily underweighting industrial conglomerates was helpful, especially General Electric (GE), the fund's top contributor and the largest index component. GE missed its first-quarter earnings estimates and scaled back guidance for the balance of 2008, sending its stock price sharply lower. Stock selection also added value in the aerospace and defense group and the heavy electrical equipment segment. A combination of good stock picking and industry overweightings further helped in the industrial machinery and trucking groups. Other individual contributors included Denmark-based Vestas Wind Systems - an out-of-benchmark holding - railroad Norfolk Southern, industrial pump and valve maker Flowserve, and The Brink's Company, a provider of armored car and residential security services. Underweighting aerospace holding Boeing - which I sold off completely during the period - - helped as well. Conversely, an underweighting in the strong-performing railroad group hurt, as Burlington Northern Santa Fe and CSX - neither of which we held at period end - were the fund's largest detractors. My stock picking in automobile manufacturers and in the diversified metals and mining segment also held back performance. Specialty vehicle maker Oshkosh performed poorly, as did airline US Airways Group and Titanium Metals, an out-of-index position that was hampered by the delayed production of a key customer. All of the detractors I mentioned were sold by the end of the period.
During the year, the fund's Institutional Class shares returned -4.40%, topping the S&P 500 and the -9.98% return of the MSCI® US Investable Market Industrials Index. Versus the MSCI index, heavily underweighting industrial conglomerates was helpful, especially General Electric (GE), the fund's top contributor and the largest index component. GE missed its first-quarter earnings estimates and scaled back guidance for the balance of 2008, sending its stock price sharply lower. Stock selection also added value in the aerospace and defense group and the heavy electrical equipment segment. A combination of good stock picking and industry overweightings further helped in the industrial machinery and trucking groups. Other individual contributors included Denmark-based Vestas Wind Systems - an out-of-benchmark holding - railroad Norfolk Southern, industrial pump and valve maker Flowserve, and The Brink's Company, a provider of armored car and residential security services. Underweighting aerospace holding Boeing - which I sold off completely during the period - helped as well. Conversely, an underweighting in the strong-performing railroad group hurt, as Burlington Northern Santa Fe and CSX - neither of which we held at period end - were the fund's largest detractors. My stock picking in automobile manufacturers and in the diversified metals and mining segment also held back performance. Specialty vehicle maker Oshkosh performed poorly, as did airline US Airways Group and Titanium Metals, an out-of-index position that was hampered by the delayed production of a key customer. All the detractors I mentioned were sold off by the end of the period.
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
Advisor Industrials 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 991.00 | $ 5.79 |
HypotheticalA | $ 1,000.00 | $ 1,019.05 | $ 5.87 |
Class T | | | |
Actual | $ 1,000.00 | $ 989.50 | $ 7.02 |
HypotheticalA | $ 1,000.00 | $ 1,017.80 | $ 7.12 |
Class B | | | |
Actual | $ 1,000.00 | $ 987.10 | $ 9.63 |
HypotheticalA | $ 1,000.00 | $ 1,015.17 | $ 9.77 |
Class C | | | |
Actual | $ 1,000.00 | $ 987.20 | $ 9.49 |
HypotheticalA | $ 1,000.00 | $ 1,015.32 | $ 9.62 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 992.60 | $ 4.36 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.17% |
Class T | 1.42% |
Class B | 1.95% |
Class C | 1.92% |
Institutional Class | .88% |
Annual Report
Advisor Industrials Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
General Electric Co. | 5.6 | 9.1 |
United Technologies Corp. | 5.2 | 5.8 |
Honeywell International, Inc. | 4.6 | 5.0 |
United Parcel Service, Inc. Class B | 4.2 | 0.0 |
Lockheed Martin Corp. | 3.7 | 3.7 |
Union Pacific Corp. | 3.7 | 1.1 |
Norfolk Southern Corp. | 3.7 | 1.0 |
Cummins, Inc. | 3.5 | 1.5 |
Caterpillar, Inc. | 3.4 | 0.0 |
Danaher Corp. | 3.3 | 2.8 |
| 40.9 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Machinery | 23.2% | |
| Aerospace & Defense | 16.4% | |
| Electrical Equipment | 11.7% | |
| Industrial Conglomerates | 10.7% | |
| Road & Rail | 10.0% | |
| All Others* | 28.0% | |
As of January 31, 2008 |
| Machinery | 20.7% | |
| Aerospace & Defense | 19.6% | |
| Industrial Conglomerates | 13.3% | |
| Commercial Services & Supplies | 11.3% | |
| Electrical Equipment | 9.2% | |
| All Others* | 25.9% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Industrials Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.3% |
| Shares | | Value |
AEROSPACE & DEFENSE - 16.4% |
Aerospace & Defense - 16.4% |
Honeywell International, Inc. | 361,600 | | $ 18,383,744 |
Lockheed Martin Corp. | 144,600 | | 15,086,118 |
Precision Castparts Corp. | 7,600 | | 710,068 |
Raytheon Co. | 192,900 | | 10,981,797 |
United Technologies Corp. | 329,300 | | 21,068,614 |
| | 66,230,341 |
AIR FREIGHT & LOGISTICS - 6.6% |
Air Freight & Logistics - 6.6% |
C.H. Robinson Worldwide, Inc. | 45,700 | | 2,202,740 |
FedEx Corp. (d) | 67,000 | | 5,282,280 |
Hub Group, Inc. Class A (a) | 45,200 | | 1,756,472 |
United Parcel Service, Inc. Class B (d) | 270,400 | | 17,056,832 |
UTI Worldwide, Inc. | 30,100 | | 547,519 |
| | 26,845,843 |
AUTO COMPONENTS - 3.1% |
Auto Parts & Equipment - 3.1% |
Johnson Controls, Inc. | 333,100 | | 10,046,296 |
WABCO Holdings, Inc. | 56,500 | | 2,551,540 |
| | 12,597,836 |
BUILDING PRODUCTS - 2.1% |
Building Products - 2.1% |
Masco Corp. | 337,700 | | 5,568,673 |
Owens Corning (a) | 105,000 | | 2,731,050 |
| | 8,299,723 |
CHEMICALS - 2.6% |
Fertilizers & Agricultural Chemicals - 0.6% |
CF Industries Holdings, Inc. | 15,000 | | 2,451,900 |
Specialty Chemicals - 2.0% |
Albemarle Corp. | 92,900 | | 3,616,597 |
Nalco Holding Co. | 84,500 | | 1,985,750 |
W.R. Grace & Co. (a) | 92,900 | | 2,394,033 |
| | 7,996,380 |
TOTAL CHEMICALS | | 10,448,280 |
COMMERCIAL SERVICES & SUPPLIES - 6.6% |
Diversified Commercial & Professional Services - 2.9% |
Corrections Corp. of America (a) | 97,000 | | 2,718,910 |
Equifax, Inc. | 88,700 | | 3,112,483 |
The Brink's Co. | 85,210 | | 5,876,082 |
| | 11,707,475 |
Environmental & Facility Services - 3.2% |
Allied Waste Industries, Inc. (a) | 556,000 | | 6,727,600 |
Fuel Tech, Inc. (a)(d) | 105,879 | | 1,961,938 |
Republic Services, Inc. | 139,500 | | 4,533,750 |
| | 13,223,288 |
|
| Shares | | Value |
Office Services & Supplies - 0.5% |
Avery Dennison Corp. | 44,700 | | $ 1,967,247 |
TOTAL COMMERCIAL SERVICES & SUPPLIES | | 26,898,010 |
CONSTRUCTION & ENGINEERING - 1.1% |
Construction & Engineering - 1.1% |
Shaw Group, Inc. (a) | 79,450 | | 4,592,210 |
ELECTRICAL EQUIPMENT - 11.7% |
Electrical Components & Equipment - 8.0% |
AMETEK, Inc. | 114,900 | | 5,499,114 |
Cooper Industries Ltd. Class A | 139,000 | | 5,861,630 |
Emerson Electric Co. | 140,300 | | 6,832,610 |
First Solar, Inc. (a)(d) | 17,900 | | 5,103,469 |
Nexans SA | 16,100 | | 1,911,003 |
Roper Industries, Inc. | 38,100 | | 2,330,958 |
Saft Groupe SA | 45,000 | | 1,770,981 |
Sunpower Corp. Class A (a)(d) | 39,700 | | 3,127,169 |
| | 32,436,934 |
Heavy Electrical Equipment - 3.7% |
Alstom SA | 36,100 | | 4,040,822 |
China High Speed Transmission Equipment Group Co. Ltd. | 1,189,000 | | 2,255,589 |
Suzlon Energy Ltd. | 528,338 | | 2,774,541 |
Vestas Wind Systems AS (a) | 44,100 | | 5,751,383 |
| | 14,822,335 |
TOTAL ELECTRICAL EQUIPMENT | | 47,259,269 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.4% |
Electronic Equipment & Instruments - 1.4% |
Itron, Inc. (a) | 59,200 | | 5,465,936 |
INDUSTRIAL CONGLOMERATES - 10.7% |
Industrial Conglomerates - 10.7% |
General Electric Co. | 805,700 | | 22,793,254 |
Siemens AG sponsored ADR | 89,935 | | 10,916,310 |
Tyco International Ltd. | 219,625 | | 9,786,490 |
| | 43,496,054 |
MACHINERY - 23.2% |
Construction & Farm Machinery & Heavy Trucks - 8.8% |
Caterpillar, Inc. (d) | 199,500 | | 13,869,240 |
Cummins, Inc. | 212,632 | | 14,106,007 |
Deere & Co. | 78,000 | | 5,472,480 |
Navistar International Corp. (a) | 39,700 | | 2,223,200 |
| | 35,670,927 |
Industrial Machinery - 14.4% |
Colfax Corp. | 112,881 | | 3,080,522 |
Danaher Corp. | 165,800 | | 13,205,970 |
Eaton Corp. | 65,400 | | 4,646,016 |
Flowserve Corp. | 25,900 | | 3,453,506 |
Illinois Tool Works, Inc. | 104,200 | | 4,881,770 |
Ingersoll-Rand Co. Ltd. Class A | 129,600 | | 4,665,600 |
Common Stocks - continued |
| Shares | | Value |
MACHINERY - CONTINUED |
Industrial Machinery - continued |
Invensys PLC (a) | 314,600 | | $ 1,751,938 |
ITT Corp. | 58,500 | | 3,917,160 |
Pall Corp. | 82,000 | | 3,314,440 |
SPX Corp. | 26,600 | | 3,372,348 |
Sulzer AG (Reg.) | 53,418 | | 6,404,514 |
The Weir Group PLC | 121,900 | | 2,145,198 |
Timken Co. | 15,300 | | 505,206 |
Valmont Industries, Inc. | 28,600 | | 3,057,626 |
| | 58,401,814 |
TOTAL MACHINERY | | 94,072,741 |
MARINE - 0.3% |
Marine - 0.3% |
Safe Bulkers, Inc. | 57,000 | | 1,080,150 |
METALS & MINING - 0.4% |
Gold - 0.4% |
Agnico-Eagle Mines Ltd. | 30,200 | | 1,654,754 |
OIL, GAS & CONSUMABLE FUELS - 0.5% |
Coal & Consumable Fuels - 0.5% |
Peabody Energy Corp. | 30,200 | | 2,043,030 |
ROAD & RAIL - 10.0% |
Railroads - 7.4% |
Norfolk Southern Corp. | 205,710 | | 14,794,663 |
Union Pacific Corp. | 182,600 | | 15,053,544 |
| | 29,848,207 |
Trucking - 2.6% |
Con-way, Inc. | 93,800 | | 4,742,528 |
Landstar System, Inc. | 49,026 | | 2,479,735 |
Old Dominion Freight Lines, Inc. (a) | 60,736 | | 2,229,011 |
YRC Worldwide, Inc. (a) | 77,100 | | 1,302,990 |
| | 10,754,264 |
TOTAL ROAD & RAIL | | 40,602,471 |
|
| Shares | | Value |
TRADING COMPANIES & DISTRIBUTORS - 0.6% |
Trading Companies & Distributors - 0.6% |
Rush Enterprises, Inc. Class A (a) | 222,406 | | $ 2,510,964 |
TOTAL COMMON STOCKS (Cost $382,454,438) | 394,097,612 |
Nonconvertible Bonds - 0.0% |
| Principal Amount | | |
AIRLINES - 0.0% |
Airlines - 0.0% |
Delta Air Lines, Inc. 8.3% 12/15/29 (a)
(Cost $77,750) | | $ 2,690,000 | | 33,625 |
Money Market Funds - 10.9% |
| Shares | | |
Fidelity Cash Central Fund, 2.35% (b) | 12,519,669 | | 12,519,669 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 31,641,100 | | 31,641,100 |
TOTAL MONEY MARKET FUNDS (Cost $44,160,769) | 44,160,769 |
TOTAL INVESTMENT PORTFOLIO - 108.2% (Cost $426,692,957) | | 438,292,006 |
NET OTHER ASSETS - (8.2)% | | (33,034,299) |
NET ASSETS - 100% | $ 405,257,707 |
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 | $ 268,682 |
Fidelity Securities Lending Cash Central Fund | 336,021 |
Total | $ 604,703 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.5% |
Bermuda | 4.9% |
Germany | 2.7% |
France | 1.9% |
Switzerland | 1.6% |
Denmark | 1.4% |
Others (individually less than 1%) | 3.0% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $4,342,576 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Industrials
Advisor Industrials Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $30,348,959) - See accompanying schedule: Unaffiliated issuers (cost $382,532,188) | $ 394,131,237 | |
Fidelity Central Funds (cost $44,160,769) | 44,160,769 | |
Total Investments (cost $426,692,957) | | $ 438,292,006 |
Receivable for investments sold | | 4,900,748 |
Receivable for fund shares sold | | 821,262 |
Dividends receivable | | 405,931 |
Distributions receivable from Fidelity Central Funds | | 67,890 |
Prepaid expenses | | 450 |
Other receivables | | 6,433 |
Total assets | | 444,494,720 |
| | |
Liabilities | | |
Payable for investments purchased | $ 6,628,246 | |
Payable for fund shares redeemed | 484,527 | |
Accrued management fee | 182,939 | |
Distribution fees payable | 152,469 | |
Other affiliated payables | 105,143 | |
Other payables and accrued expenses | 42,589 | |
Collateral on securities loaned, at value | 31,641,100 | |
Total liabilities | | 39,237,013 |
| | |
Net Assets | | $ 405,257,707 |
Net Assets consist of: | | |
Paid in capital | | $ 397,364,093 |
Undistributed net investment income | | 809,200 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (4,513,832) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 11,598,246 |
Net Assets | | $ 405,257,707 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($188,858,529 ÷ 8,596,015 shares) | | $ 21.97 |
| | |
Maximum offering price per share (100/94.25 of $21.97) | | $ 23.31 |
Class T:
Net Asset Value and redemption price per share ($85,025,192 ÷ 3,923,193 shares) | | $ 21.67 |
| | |
Maximum offering price per share (100/96.50 of $21.67) | | $ 22.46 |
Class B:
Net Asset Value and offering price per share ($39,989,391 ÷ 1,927,977 shares)A | | $ 20.74 |
| | |
Class C:
Net Asset Value and offering price per share ($57,742,210 ÷ 2,776,992 shares)A | | $ 20.79 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($33,642,385 ÷ 1,481,000 shares) | | $ 22.72 |
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.
Industrials
Statement of Operations
| Year ended July 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 5,671,028 |
Interest | | 1,372 |
Income from Fidelity Central Funds (including $336,021 from security lending) | | 604,703 |
Total income | | 6,277,103 |
| | |
Expenses | | |
Management fee | $ 2,155,526 | |
Transfer agent fees | 1,036,611 | |
Distribution fees | 1,865,868 | |
Accounting and security lending fees | 154,618 | |
Custodian fees and expenses | 25,367 | |
Independent trustees' compensation | 1,605 | |
Registration fees | 67,586 | |
Audit | 52,544 | |
Legal | 1,437 | |
Miscellaneous | 47,623 | |
Total expenses before reductions | 5,408,785 | |
Expense reductions | (12,218) | 5,396,567 |
Net investment income (loss) | | 880,536 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers (net of foreign taxes of $46,578) | 5,758,939 | |
Foreign currency transactions | (24,751) | |
Total net realized gain (loss) | | 5,734,188 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $60) | (28,846,541) | |
Assets and liabilities in foreign currencies | (803) | |
Total change in net unrealized appreciation (depreciation) | | (28,847,344) |
Net gain (loss) | | (23,113,156) |
Net increase (decrease) in net assets resulting from operations | | $ (22,232,620) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 880,536 | $ 348,138 |
Net realized gain (loss) | 5,734,188 | 35,388,071 |
Change in net unrealized appreciation (depreciation) | (28,847,344) | 31,233,909 |
Net increase (decrease) in net assets resulting from operations | (22,232,620) | 66,970,118 |
Distributions to shareholders from net investment income | - | (473,352) |
Distributions to shareholders from net realized gain | (36,229,373) | (21,383,547) |
Total distributions | (36,229,373) | (21,856,899) |
Share transactions - net increase (decrease) | 109,034,065 | 61,861,883 |
Redemption fees | 14,921 | 14,915 |
Total increase (decrease) in net assets | 50,586,993 | 106,990,017 |
| | |
Net Assets | | |
Beginning of period | 354,670,714 | 247,680,697 |
End of period (including undistributed net investment income of $809,200 and distributions in excess of net investment income of $6, respectively) | $ 405,257,707 | $ 354,670,714 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 | $ 14.15 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .11 | .09 | .08 | .02 | (.02) |
Net realized and unrealized gain (loss) | (1.17) | 5.11 | 1.63 | 4.35 | 3.96 |
Total from investment operations | (1.06) | 5.20 | 1.71 | 4.37 | 3.94 |
Distributions from net investment income | - | (.06) | - | - | - |
Distributions from net realized gain | (2.46) | (1.81) | (1.08) | (.94) | - |
Total distributions | (2.46) | (1.87) | (1.08) | (.94) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 |
Total Return A,B | (4.71)% | 25.13% | 8.40% | 25.04% | 27.92% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.17% | 1.21% | 1.26% | 1.34% | 1.65% |
Expenses net of fee waivers, if any | 1.17% | 1.21% | 1.26% | 1.34% | 1.50% |
Expenses net of all reductions | 1.16% | 1.21% | 1.24% | 1.29% | 1.47% |
Net investment income (loss) | .46% | .38% | .34% | .09% | (.12)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 188,859 | $ 157,451 | $ 99,255 | $ 40,264 | $ 12,612 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 | $ 14.02 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .05 | .03 | .02 | (.03) | (.06) |
Net realized and unrealized gain (loss) | (1.15) | 5.05 | 1.61 | 4.31 | 3.93 |
Total from investment operations | (1.10) | 5.08 | 1.63 | 4.28 | 3.87 |
Distributions from net investment income | - | (.03) | - | - | - |
Distributions from net realized gain | (2.40) | (1.74) | (1.04) | (.91) | - |
Total distributions | (2.40) | (1.77) | (1.04) | (.91) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 |
Total Return A,B | (4.96)% | 24.82% | 8.13% | 24.78% | 27.67% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.41% | 1.46% | 1.49% | 1.57% | 1.90% |
Expenses net of fee waivers, if any | 1.41% | 1.46% | 1.49% | 1.57% | 1.75% |
Expenses net of all reductions | 1.41% | 1.46% | 1.47% | 1.52% | 1.72% |
Net investment income (loss) | .21% | .13% | .11% | (.14)% | (.36)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 85,025 | $ 75,530 | $ 55,936 | $ 40,126 | $ 13,089 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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.
Industrials
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 | $ 13.61 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) | (.09) | (.09) | (.13) | (.14) |
Net realized and unrealized gain (loss) | (1.10) | 4.87 | 1.55 | 4.17 | 3.79 |
Total from investment operations | (1.17) | 4.78 | 1.46 | 4.04 | 3.65 |
Distributions from net realized gain | (2.28) | (1.61) | (.99) | (.76) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 |
Total Return A.B | (5.46)% | 24.18% | 7.54% | 24.12% | 26.89% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.95% | 2.00% | 2.04% | 2.11% | 2.37% |
Expenses net of fee waivers, if any | 1.95% | 2.00% | 2.04% | 2.11% | 2.25% |
Expenses net of all reductions | 1.95% | 2.00% | 2.02% | 2.07% | 2.22% |
Net investment income (loss) | (.33)% | (.41)% | (.44)% | (.68)% | (.87)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 39,989 | $ 44,330 | $ 37,082 | $ 32,242 | $ 14,722 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 | $ 13.67 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.06) | (.08) | (.08) | (.12) | (.14) |
Net realized and unrealized gain (loss) | (1.11) | 4.88 | 1.56 | 4.19 | 3.82 |
Total from investment operations | (1.17) | 4.80 | 1.48 | 4.07 | 3.68 |
Distributions from net realized gain | (2.30) | (1.70) | (1.00) | (.75) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 |
Total Return A,B | (5.44)% | 24.25% | 7.59% | 24.16% | 26.99% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.91% | 1.94% | 1.99% | 2.07% | 2.28% |
Expenses net of fee waivers, if any | 1.91% | 1.94% | 1.99% | 2.07% | 2.25% |
Expenses net of all reductions | 1.90% | 1.94% | 1.97% | 2.02% | 2.22% |
Net investment income (loss) | (.28)% | (.35)% | (.38)% | (.64)% | (.87)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 57,742 | $ 57,862 | $ 42,363 | $ 20,595 | $ 9,507 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 | $ 14.41 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .18 | .16 | .16 | .07 | .02 |
Net realized and unrealized gain (loss) | (1.19) | 5.27 | 1.66 | 4.46 | 4.04 |
Total from investment operations | (1.01) | 5.43 | 1.82 | 4.53 | 4.06 |
Distributions from net investment income | - | (.13) | - | - | - |
Distributions from net realized gain | (2.53) | (1.81) | (1.11) | (.95) | - |
Total distributions | (2.53) | (1.94) | (1.11) | (.95) | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | .01 |
Net asset value, end of period | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 |
Total Return A | (4.40)% | 25.53% | 8.73% | 25.41% | 28.24% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | .88% | .92% | .91% | 1.06% | 1.38% |
Expenses net of fee waivers, if any | .88% | .92% | .91% | 1.06% | 1.25% |
Expenses net of all reductions | .87% | .91% | .89% | 1.01% | 1.22% |
Net investment income (loss) | .75% | .67% | .69% | .37% | .13% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 33,642 | $ 19,498 | $ 13,043 | $ 4,379 | $ 1,490 |
Portfolio turnover rate D | 91% | 130% | 94% | 116% | 106% |
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.
Industrials
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Industrials 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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, certain foreign taxes 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 | $ 38,085,541 |
Unrealized depreciation | (27,082,435) |
Net unrealized appreciation (depreciation) | 11,003,106 |
Undistributed ordinary income | 751,469 |
| |
Cost for federal income tax purposes | $ 427,288,900 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 17,058,178 | $ 8,244,210 |
Long-term Capital Gains | 19,171,195 | 13,612,689 |
Total | $ 36,229,373 | $ 21,856,899 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to 0.75% 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Industrials
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 $415,453,956 and $348,043,940, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 444,027 | $ 35,508 |
Class T | .25% | .25% | 394,896 | 1,104 |
Class B | .75% | .25% | 431,080 | 323,649 |
Class C | .75% | .25% | 595,865 | 146,780 |
| | | $ 1,865,868 | $ 507,041 |
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
by FDC |
Class A | $ 195,375 |
Class T | 19,761 |
Class B* | 74,045 |
Class C* | 13,882 |
| $ 303,063 |
* 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. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 476,837 | .27 |
Class T | 209,485 | .27 |
Class B | 131,131 | .30 |
Class C | 155,130 | .26 |
Institutional Class | 64,028 | .23 |
| $ 1,036,611 | |
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 $5,221 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 $874 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 $8,391 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 $3,197. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 630 |
Industrials
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,115 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
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 | $ 16,681,692 | $ 9,177,798 |
Class T | 7,329,611 | 4,598,164 |
Class B | 4,260,086 | 2,897,402 |
Class C | 5,759,702 | 3,663,404 |
Institutional Class | 2,198,282 | 1,046,779 |
Total | $ 36,229,373 | $ 21,383,547 |
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, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,949,728 | 3,210,590 | $ 92,641,467 | $ 74,239,252 |
Reinvestment of distributions | 645,516 | 397,118 | 15,365,861 | 8,609,345 |
Shares redeemed | (2,176,163) | (1,910,674) | (50,202,759) | (44,327,457) |
Net increase (decrease) | 2,419,081 | 1,697,034 | $ 57,804,569 | $ 38,521,140 |
Class T | | | | |
Shares sold | 1,380,018 | 851,649 | $ 31,838,651 | $ 19,483,528 |
Reinvestment of distributions | 292,360 | 204,709 | 6,876,188 | 4,388,662 |
Shares redeemed | (750,047) | (614,792) | (16,849,781) | (14,036,675) |
Net increase (decrease) | 922,331 | 441,566 | $ 21,865,058 | $ 9,835,515 |
Class B | | | | |
Shares sold | 453,829 | 490,419 | $ 10,091,104 | $ 10,776,085 |
Reinvestment of distributions | 159,890 | 118,628 | 3,612,025 | 2,452,560 |
Shares redeemed | (518,209) | (540,505) | (11,329,079) | (11,926,256) |
Net increase (decrease) | 95,510 | 68,542 | $ 2,374,050 | $ 1,302,389 |
Class C | | | | |
Shares sold | 947,863 | 809,623 | $ 21,153,831 | $ 17,844,285 |
Reinvestment of distributions | 198,290 | 135,846 | 4,489,229 | 2,814,613 |
Shares redeemed | (754,472) | (562,223) | (16,433,752) | (12,468,615) |
Net increase (decrease) | 391,681 | 383,246 | $ 9,209,308 | $ 8,190,283 |
Institutional Class | | | | |
Shares sold | 1,095,024 | 466,987 | $ 26,168,229 | $ 11,092,441 |
Reinvestment of distributions | 66,827 | 33,033 | 1,640,412 | 737,185 |
Shares redeemed | (423,274) | (330,519) | (10,027,561) | (7,817,070) |
Net increase (decrease) | 738,577 | 169,501 | $ 17,781,080 | $ 4,012,556 |
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) | -21.85% | 3.86% | 1.83% |
Class T (incl. 3.50% sales charge) | -20.17% | 4.12% | 1.84% |
Class B (incl. contingent deferred sales charge) A | -21.81% | 3.98% | 1.89% |
Class C (incl. contingent deferred sales charge) B | -18.50% | 4.34% | 1.71% |
A 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' 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 A on July 31, 1998, and the current 5.75% 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.
Technology
Advisor Technology Fund
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -17.08%, -17.27%, -17.70% and -17.67%, respectively (excluding sales charges), trailing both the S&P 500 and the -8.34% return of the MSCI® US Investable Market Information Technology Index. Versus the MSCI index, my stock picking hurt in semiconductors, communications equipment and home entertainment software, although in the latter case the damage was largely offset by overweighting that strong-performing group. Overweighting communications equipment and underweighting the computer hardware and systems software segments hurt as well. Not having a stake in strong-performing major index component IBM was counterproductive. Also holding back performance was Sandvine, which makes Internet traffic-monitoring equipment; NAND flash memory supplier SanDisk; and chip maker Marvell Technology Group, which I sold. Sandvine was an out-of-index holding. Additionally, ill-timed trading in personal computer and consumer electronics maker Apple, the fund's largest holding at period end, detracted modestly. Overall, though, my picks in consumer electronics and in education services benefited the fund, as did a small cash position and the impact of currency fluctuations on our foreign holdings. Canada-based Research In Motion boosted performance amid healthy sales of its BlackBerry "smartphone." Other contributors were Tele Atlas, a Dutch provider of digital map data, which I sold, and Taiwanese contract electronics manufacturer HTC Corp. All of these contributors were out-of-index positions.
During the year, the fund's Institutional Class shares returned -16.84%, trailing both the S&P 500 and the -8.34% return of the MSCI® US Investable Market Information Technology Index. Versus the MSCI index, my stock picking hurt in semiconductors, communications equipment and home entertainment software, although in the latter case the damage was largely offset by overweighting that strong-performing group. Overweighting communications equipment and underweighting the computer hardware and systems software segments hurt as well. Not having a stake in strong-performing major index component IBM was counterproductive. Also holding back performance was Sandvine, which makes Internet traffic-monitoring equipment; NAND flash memory supplier SanDisk; and chip maker Marvell Technology Group, which I sold. Sandvine was an out-of-index holding. Additionally, ill-timed trading in personal computer and consumer electronics maker Apple, the fund's largest holding at period end, detracted modestly. Overall, though, my picks in consumer electronics and in education services benefited the fund, as did a small cash position and the impact of currency fluctuations on our foreign holdings. Canada-based Research In Motion boosted performance amid healthy sales of its BlackBerry "smartphone." Other contributors were Tele Atlas, a Dutch provider of digital map data, which I sold, and Taiwanese contract electronics manufacturer HTC Corp. All of these contributors were out-of-index positions.
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
Advisor Technology 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 981.60 | $ 6.06 |
HypotheticalA | $ 1,000.00 | $ 1,018.75 | $ 6.17 |
Class T | | | |
Actual | $ 1,000.00 | $ 980.50 | $ 7.29 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 978.20 | $ 9.79 |
HypotheticalA | $ 1,000.00 | $ 1,014.97 | $ 9.97 |
Class C | | | |
Actual | $ 1,000.00 | $ 978.30 | $ 9.74 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 983.30 | $ 4.83 |
HypotheticalA | $ 1,000.00 | $ 1,019.99 | $ 4.92 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.23% |
Class T | 1.48% |
Class B | 1.99% |
Class C | 1.98% |
Institutional Class | .98% |
Annual Report
Advisor Technology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Apple, Inc. | 11.2 | 3.0 |
Research In Motion Ltd. | 6.0 | 2.0 |
Nintendo Co. Ltd. | 5.3 | 7.5 |
QUALCOMM, Inc. | 5.0 | 1.0 |
Cisco Systems, Inc. | 4.3 | 10.7 |
Applied Materials, Inc. | 2.7 | 1.8 |
Cypress Semiconductor Corp. | 2.2 | 1.9 |
Visa, Inc. | 2.1 | 0.0 |
Oracle Corp. | 2.0 | 1.0 |
Mindray Medical International Ltd. sponsored ADR | 2.0 | 2.3 |
| 42.8 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Communications Equipment | 23.6% | |
| Semiconductors & Semiconductor Equipment | 18.4% | |
| Computers & Peripherals | 16.9% | |
| Software | 15.7% | |
| Health Care
Equipment & Supplies | 4.1% | |
| All Others* | 21.3% | |
As of January 31, 2008 |
| Communications Equipment | 30.0% | |
| Semiconductors & Semiconductor Equipment | 22.0% | |
| Software | 19.4% | |
| Computers & Peripherals | 8.6% | |
| Internet Software & Services | 6.6% | |
| All Others* | 13.4% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Technology Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.9% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 1.6% |
Commercial Printing - 0.3% |
Nissha Printing Co. Ltd. | 29,300 | | $ 1,474,641 |
Diversified Commercial & Professional Services - 1.3% |
China Security & Surveillance Technology, Inc. (a)(d) | 550,634 | | 7,763,939 |
TOTAL COMMERCIAL SERVICES & SUPPLIES | | 9,238,580 |
COMMUNICATIONS EQUIPMENT - 23.4% |
Communications Equipment - 23.4% |
ADC Telecommunications, Inc. (a) | 610,700 | | 5,777,222 |
ADVA AG Optical Networking (a)(d) | 442,449 | | 1,114,751 |
Aruba Networks, Inc. (a)(d) | 9,800 | | 57,134 |
AudioCodes Ltd. (a) | 396,250 | | 1,739,538 |
Balda AG (a)(d) | 111,500 | | 287,355 |
Cisco Systems, Inc. (a) | 1,134,031 | | 24,937,342 |
Cogo Group, Inc. (a)(d) | 318,475 | | 1,471,355 |
CommScope, Inc. (a) | 173,200 | | 7,722,988 |
Comverse Technology, Inc. (a) | 179,500 | | 2,688,910 |
Delta Networks, Inc. | 1,875,000 | | 528,738 |
F5 Networks, Inc. (a) | 123,600 | | 3,602,940 |
Infinera Corp. (d) | 116,200 | | 1,308,412 |
Mogem Co. Ltd. (a) | 309,043 | | 780,549 |
OZ Optics Ltd. unit (e) | 68,000 | | 821,100 |
Powerwave Technologies, Inc. (a)(d) | 1,060,700 | | 4,348,870 |
QUALCOMM, Inc. | 530,600 | | 29,363,404 |
Research In Motion Ltd. (a) | 286,610 | | 35,201,441 |
Riverbed Technology, Inc. (a)(d) | 36,100 | | 572,907 |
Sandvine Corp. (a) | 1,587,300 | | 1,472,809 |
Sandvine Corp. (U.K.) (a) | 1,078,100 | | 956,320 |
Sonus Networks, Inc. (a) | 481,360 | | 1,747,337 |
Starent Networks Corp. (a) | 738,212 | | 9,670,577 |
| | 136,171,999 |
COMPUTERS & PERIPHERALS - 16.9% |
Computer Hardware - 14.0% |
3PAR, Inc. | 5,900 | | 48,203 |
Apple, Inc. (a) | 412,055 | | 65,496,139 |
Hewlett-Packard Co. | 35,900 | | 1,608,320 |
HTC Corp. | 665,180 | | 10,439,139 |
Palm, Inc. (d) | 171,400 | | 1,127,812 |
Stratasys, Inc. (a)(d) | 175,290 | | 2,725,760 |
| | 81,445,373 |
Computer Storage & Peripherals - 2.9% |
Chicony Electronics Co. Ltd. | 189,390 | | 339,038 |
Netezza Corp. | 159,300 | | 2,070,900 |
SanDisk Corp. (a)(d) | 474,648 | | 6,692,537 |
Synaptics, Inc. (a)(d) | 156,000 | | 7,522,320 |
| | 16,624,795 |
TOTAL COMPUTERS & PERIPHERALS | | 98,070,168 |
|
| Shares | | Value |
DIVERSIFIED CONSUMER SERVICES - 1.2% |
Education Services - 1.2% |
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 100,500 | | $ 7,035,000 |
ELECTRIC UTILITIES - 0.4% |
Electric Utilities - 0.4% |
Enernoc, Inc. (a)(d) | 132,867 | | 2,144,473 |
ELECTRICAL EQUIPMENT - 3.9% |
Electrical Components & Equipment - 3.7% |
Canadian Solar, Inc. (a)(d) | 46,900 | | 1,349,313 |
Energy Conversion Devices, Inc. (a) | 28,800 | | 2,013,984 |
First Solar, Inc. (a)(d) | 20,714 | | 5,905,769 |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 226,900 | | 3,442,073 |
Neo-Neon Holdings Ltd. | 4,976,000 | | 2,168,581 |
Q-Cells AG (a) | 15,800 | | 1,530,735 |
Renewable Energy Corp. AS (a) | 63,200 | | 1,830,244 |
SolarWorld AG | 33,000 | | 1,538,098 |
Sunpower Corp. Class A (a) | 18,800 | | 1,480,876 |
| | 21,259,673 |
Heavy Electrical Equipment - 0.2% |
China High Speed Transmission Equipment Group Co. Ltd. | 769,000 | | 1,458,829 |
TOTAL ELECTRICAL EQUIPMENT | | 22,718,502 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.8% |
Electronic Equipment & Instruments - 1.2% |
Chroma ATE, Inc. | 1,191,316 | | 2,102,856 |
Comverge, Inc. (a)(d) | 108,100 | | 1,178,290 |
Coretronic Corp. | 265,000 | | 278,624 |
Cyntec Co. Ltd. | 517,226 | | 687,565 |
ENE Technology, Inc. | 66,000 | | 137,101 |
Everlight Electronics Co. Ltd. | 937,376 | | 2,480,812 |
| | 6,865,248 |
Electronic Manufacturing Services - 0.9% |
Ju Teng International Holdings Ltd. (a) | 1,328,000 | | 663,864 |
Trimble Navigation Ltd. (a) | 141,700 | | 4,704,440 |
| | 5,368,304 |
Technology Distributors - 0.7% |
Arrow Electronics, Inc. (a) | 49,800 | | 1,604,556 |
Avnet, Inc. (a) | 88,200 | | 2,404,332 |
| | 4,008,888 |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | | 16,242,440 |
ENERGY EQUIPMENT & SERVICES - 0.1% |
Oil & Gas Equipment & Services - 0.1% |
IHS, Inc. Class A (a) | 10,300 | | 640,969 |
Common Stocks - continued |
| Shares | | Value |
HEALTH CARE EQUIPMENT & SUPPLIES - 4.1% |
Health Care Equipment - 3.9% |
China Medical Technologies, Inc. sponsored ADR | 36,900 | | $ 1,768,248 |
Conceptus, Inc. (a) | 79,500 | | 1,357,065 |
Golden Meditech Co. Ltd. | 6,548,000 | | 2,098,288 |
I-Flow Corp. (a) | 107,110 | | 1,111,802 |
Mindray Medical International Ltd. sponsored ADR (d) | 292,900 | | 11,701,355 |
Mingyuan Medicare Development Co. Ltd. (d) | 33,580,000 | | 4,433,373 |
| | 22,470,131 |
Health Care Supplies - 0.2% |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 962,000 | | 1,297,201 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 23,767,332 |
HEALTH CARE PROVIDERS & SERVICES - 0.0% |
Health Care Services - 0.0% |
athenahealth, Inc. | 600 | | 18,120 |
HOTELS, RESTAURANTS & LEISURE - 1.1% |
Hotels, Resorts & Cruise Lines - 1.1% |
Ctrip.com International Ltd. sponsored ADR (d) | 139,400 | | 6,285,546 |
HOUSEHOLD DURABLES - 0.0% |
Consumer Electronics - 0.0% |
TomTom Group BV (a) | 100 | | 2,254 |
INTERNET SOFTWARE & SERVICES - 3.0% |
Internet Software & Services - 3.0% |
DealerTrack Holdings, Inc. (a) | 12,300 | | 191,634 |
Equinix, Inc. (a) | 43,500 | | 3,539,160 |
Google, Inc. Class A (sub. vtg.) (a) | 12,250 | | 5,803,438 |
Omniture, Inc. (a)(d) | 139,708 | | 2,423,934 |
Tencent Holdings Ltd. | 637,200 | | 5,680,535 |
| | 17,638,701 |
IT SERVICES - 3.3% |
Data Processing & Outsourced Services - 2.9% |
CyberSource Corp. (a) | 78,100 | | 1,386,275 |
ExlService Holdings, Inc. (a) | 99,700 | | 1,500,485 |
Visa, Inc. | 163,900 | | 11,974,534 |
WNS Holdings Ltd. ADR (a) | 114,500 | | 1,946,500 |
| | 16,807,794 |
IT Consulting & Other Services - 0.4% |
China Information Security Technology, Inc. (a)(d) | 66,500 | | 338,485 |
Yucheng Technologies Ltd. (a) | 141,100 | | 1,828,656 |
| | 2,167,141 |
TOTAL IT SERVICES | | 18,974,935 |
|
| Shares | | Value |
LIFE SCIENCES TOOLS & SERVICES - 0.1% |
Life Sciences Tools & Services - 0.1% |
QIAGEN NV (a) | 32,100 | | $ 603,159 |
MACHINERY - 0.6% |
Industrial Machinery - 0.6% |
China Fire & Security Group, Inc. (a)(d) | 177,700 | | 1,775,223 |
Hi-P International Ltd. | 2,622,000 | | 1,121,742 |
Shin Zu Shing Co. Ltd. | 148,424 | | 682,563 |
| | 3,579,528 |
MEDIA - 0.5% |
Advertising - 0.5% |
VisionChina Media, Inc. ADR (d) | 105,600 | | 2,644,224 |
METALS & MINING - 0.3% |
Diversified Metals & Mining - 0.3% |
Timminco Ltd. (a) | 70,500 | | 1,666,357 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 17.7% |
Semiconductor Equipment - 9.7% |
Advanced Energy Industries, Inc. (a) | 88,700 | | 1,225,834 |
Aixtron AG | 106,700 | | 964,100 |
Applied Materials, Inc. | 919,500 | | 15,925,740 |
ASML Holding NV (NY Shares) | 190,600 | | 4,343,774 |
Cymer, Inc. (a) | 89,400 | | 2,368,206 |
Eagle Test Systems, Inc. (a) | 200,804 | | 2,489,970 |
FormFactor, Inc. (a) | 139,300 | | 2,423,820 |
Global Unichip Corp. | 298,675 | | 2,069,966 |
Lam Research Corp. (a) | 342,700 | | 11,271,403 |
LTX Corp. (a) | 400,965 | | 874,104 |
MEMSIC, Inc. | 152,000 | | 463,600 |
Tessera Technologies, Inc. (a) | 150,300 | | 2,618,226 |
Varian Semiconductor Equipment Associates, Inc. (a) | 320,400 | | 9,362,088 |
| | 56,400,831 |
Semiconductors - 8.0% |
Advanced Micro Devices, Inc. (a)(d) | 224,936 | | 946,981 |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 338,800 | | 1,487,332 |
Applied Micro Circuits Corp. (a) | 36,050 | | 279,748 |
Atheros Communications, Inc. (a) | 222,400 | | 6,894,400 |
AuthenTec, Inc. (a) | 154,900 | | 1,183,436 |
Bright Led Electronics Corp. | 183,600 | | 248,932 |
Broadcom Corp. Class A (a) | 120,622 | | 2,929,908 |
Cavium Networks, Inc. (a)(d) | 449,231 | | 7,210,158 |
CSR PLC (a) | 282,700 | | 1,603,715 |
Cypress Semiconductor Corp. (a)(d) | 464,300 | | 12,652,175 |
Elan Microelectronics Corp. | 195,000 | | 239,958 |
Formosa Epitaxy, Inc. | 590,000 | | 494,696 |
Infineon Technologies AG sponsored ADR (a) | 412,100 | | 3,098,992 |
Intersil Corp. Class A | 2,800 | | 67,564 |
MediaTek, Inc. | 32,320 | | 335,160 |
Mindspeed Technologies, Inc. (a) | 215,163 | | 811,165 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - continued |
MoSys, Inc. (a) | 32,100 | | $ 127,758 |
NVIDIA Corp. (a) | 186,800 | | 2,136,992 |
PLX Technology, Inc. (a) | 45,400 | | 249,700 |
PMC-Sierra, Inc. (a) | 8,865 | | 64,183 |
Seoul Semiconductor Co. Ltd. | 26,639 | | 327,089 |
Spansion, Inc. Class A (a) | 212,000 | | 485,480 |
Taiwan Semiconductor Manufacturing Co. Ltd. | 4,471 | | 8,077 |
Zoran Corp. (a) | 360,300 | | 2,979,681 |
| | 46,863,280 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 103,264,111 |
SOFTWARE - 15.7% |
Application Software - 6.9% |
Adobe Systems, Inc. (a) | 42,700 | | 1,765,645 |
Autonomy Corp. PLC (a) | 160,100 | | 3,373,179 |
Callidus Software, Inc. (a) | 107,291 | | 514,997 |
Citrix Systems, Inc. (a) | 43,500 | | 1,158,840 |
Concur Technologies, Inc. (a) | 109,600 | | 4,517,712 |
Global Digital Creations Holdings Ltd. (a) | 7,908,000 | | 354,773 |
Kingdee International Software Group Co. Ltd. | 4,106,000 | | 936,818 |
Longtop Financial Technologies Ltd. ADR | 143,900 | | 2,427,593 |
Nuance Communications, Inc. (a) | 162,600 | | 2,523,552 |
Salesforce.com, Inc. (a) | 122,400 | | 7,807,896 |
Smith Micro Software, Inc. (a)(d) | 485,900 | | 3,498,480 |
SuccessFactors, Inc. | 147,400 | | 1,552,122 |
Synchronoss Technologies, Inc. (a)(d) | 255,967 | | 2,999,933 |
Taleo Corp. Class A (a) | 229,688 | | 4,304,353 |
Ulticom, Inc. (a) | 359,426 | | 2,515,982 |
| | 40,251,875 |
Home Entertainment Software - 5.3% |
Nintendo Co. Ltd. | 66,500 | | 30,723,001 |
Systems Software - 3.5% |
BMC Software, Inc. (a) | 39,200 | | 1,289,288 |
CA, Inc. | 123,600 | | 2,949,096 |
Insyde Software Corp. | 539,000 | | 1,934,324 |
McAfee, Inc. (a) | 70,600 | | 2,312,150 |
Microsoft Corp. | 11,500 | | 295,780 |
Oracle Corp. (a) | 552,400 | | 11,893,172 |
| | 20,673,810 |
TOTAL SOFTWARE | | 91,648,686 |
|
| Shares | | Value |
SPECIALTY RETAIL - 1.2% |
Computer & Electronics Retail - 1.2% |
The Game Group PLC | 1,425,700 | | $ 7,215,212 |
TOTAL COMMON STOCKS (Cost $674,720,907) | 569,570,296 |
Convertible Bonds - 0.9% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.2% |
Communications Equipment - 0.2% |
Ciena Corp. 0.25% 5/1/13 | | $ 1,270,000 | | 987,435 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.7% |
Semiconductors - 0.7% |
Advanced Micro Devices, Inc. 5.75% 8/15/12 | | 6,960,000 | | 4,350,000 |
TOTAL CONVERTIBLE BONDS (Cost $6,482,764) | 5,337,435 |
Money Market Funds - 8.9% |
| Shares | | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c)
(Cost $51,558,323) | 51,558,323 | 51,558,323 |
TOTAL INVESTMENT PORTFOLIO - 107.7% (Cost $732,761,994) | 626,466,054 |
NET OTHER ASSETS - (7.7)% | (44,526,814) |
NET ASSETS - 100% | $ 581,939,240 |
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 $821,100 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 | $ 182,803 |
Fidelity Securities Lending Cash Central Fund | 785,470 |
Total | $ 968,273 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 67.4% |
Canada | 7.1% |
Cayman Islands | 7.1% |
Japan | 5.6% |
Taiwan | 4.2% |
United Kingdom | 2.4% |
Germany | 1.6% |
China | 1.2% |
Others (individually less than 1%) | 3.4% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $1,389,526,620 of which $889,719,837 and $499,806,783 will expire on July 31, 2010 and 2011, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $44,009,554 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Technology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $50,060,381) - See accompanying schedule: Unaffiliated issuers (cost $681,203,671) | $ 574,907,731 | |
Fidelity Central Funds (cost $51,558,323) | 51,558,323 | |
Total Investments (cost $732,761,994) | | $ 626,466,054 |
Cash | | 424 |
Foreign currency held at value (cost $914,730) | | 914,729 |
Receivable for investments sold | | 33,831,993 |
Receivable for fund shares sold | | 396,062 |
Dividends receivable | | 739,356 |
Interest receivable | | 184,210 |
Distributions receivable from Fidelity Central Funds | | 115,659 |
Prepaid expenses | | 982 |
Other receivables | | 35,799 |
Total assets | | 662,685,268 |
| | |
Liabilities | | |
Payable for investments purchased | $ 18,770,434 | |
Payable for fund shares redeemed | 3,264,496 | |
Accrued management fee | 275,881 | |
Distribution fees payable | 227,279 | |
Notes payable | 6,396,000 | |
Other affiliated payables | 185,250 | |
Other payables and accrued expenses | 68,365 | |
Collateral on securities loaned, at value | 51,558,323 | |
Total liabilities | | 80,746,028 |
| | |
Net Assets | | $ 581,939,240 |
Net Assets consist of: | | |
Paid in capital | | $ 2,123,374,926 |
Undistributed net investment income | | 77,762 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (1,435,202,468) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (106,310,980) |
Net Assets | | $ 581,939,240 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($275,117,344 ÷ 16,141,388 shares) | | $ 17.04 |
| | |
Maximum offering price per share (100/94.25 of $17.04) | | $ 18.08 |
Class T:
Net Asset Value and redemption price per share ($173,917,330 ÷ 10,463,472 shares) | | $ 16.62 |
| | |
Maximum offering price per share (100/96.50 of $16.62) | | $ 17.22 |
Class B:
Net Asset Value and offering price per share ($47,293,576 ÷ 3,008,351 shares)A | | $ 15.72 |
| | |
Class C:
Net Asset Value and offering price per share ($63,590,308 ÷ 4,027,442 shares)A | | $ 15.79 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($22,020,682 ÷ 1,245,540 shares) | | $ 17.68 |
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
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Dividends | | $ 3,845,038 |
Interest | | 220,047 |
Income from Fidelity Central Funds (including $785,470 from security lending) | | 968,273 |
Total income | | 5,033,358 |
| | |
Expenses | | |
Management fee | $ 3,979,597 | |
Transfer agent fees | 2,175,438 | |
Distribution fees | 3,462,924 | |
Accounting and security lending fees | 260,403 | |
Custodian fees and expenses | 136,812 | |
Independent trustees' compensation | 3,055 | |
Registration fees | 58,785 | |
Audit | 57,486 | |
Legal | 5,755 | |
Interest | 13,867 | |
Miscellaneous | 178,318 | |
Total expenses before reductions | 10,332,440 | |
Expense reductions | (121,142) | 10,211,298 |
Net investment income (loss) | | (5,177,940) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (11,139,416) | |
Foreign currency transactions | (134,394) | |
Total net realized gain (loss) | | (11,273,810) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (114,724,105) | |
Assets and liabilities in foreign currencies | (16,571) | |
Total change in net unrealized appreciation (depreciation) | | (114,740,676) |
Net gain (loss) | | (126,014,486) |
Net increase (decrease) in net assets resulting from operations | | $ (131,192,426) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (5,177,940) | $ (9,596,456) |
Net realized gain (loss) | (11,273,810) | 101,139,166 |
Change in net unrealized appreciation (depreciation) | (114,740,676) | 120,841,656 |
Net increase (decrease) in net assets resulting from operations | (131,192,426) | 212,384,366 |
Share transactions - net increase (decrease) | (67,084,453) | (169,547,974) |
Redemption fees | 32,772 | 20,415 |
Total increase (decrease) in net assets | (198,244,107) | 42,856,807 |
| | |
Net Assets | | |
Beginning of period | 780,183,347 | 737,326,540 |
End of period (including undistributed net investment income of $77,762 and accumulated net investment loss of $288, respectively) | $ 581,939,240 | $ 780,183,347 |
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 | $ 13.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.10) | (.17) | (.15) | .02 F | (.17) |
Net realized and unrealized gain (loss) | (3.41) | 5.13 | (.42) | 2.24 | .79 |
Total from investment operations | (3.51) | 4.96 | (.57) | 2.26 | .62 |
Distributions from net investment income | - | - | - | (.08) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 |
Total Return A,B | (17.08)% | 31.82% | (3.53)% | 16.20% | 4.64% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.21% | 1.25% | 1.30% | 1.37% | 1.44% |
Expenses net of fee waivers, if any | 1.21% | 1.25% | 1.30% | 1.37% | 1.44% |
Expenses net of all reductions | 1.19% | 1.24% | 1.20% | 1.26% | 1.35% |
Net investment income (loss) | (.49)% | (.91)% | (.88)% | .12% F | (1.10)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 275,117 | $ 309,105 | $ 189,054 | $ 144,970 | $ 123,389 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 | $ 13.17 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) | (.21) | (.19) | (.02) F | (.19) |
Net realized and unrealized gain (loss) | (3.33) | 5.02 | (.41) | 2.21 | .78 |
Total from investment operations | (3.47) | 4.81 | (.60) | 2.19 | .59 |
Distributions from net investment income | - | - | - | (.07) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 |
Total Return A,B | (17.27)% | 31.48% | (3.78)% | 15.94% | 4.48% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.46% | 1.51% | 1.55% | 1.60% | 1.62% |
Expenses net of fee waivers, if any | 1.46% | 1.51% | 1.55% | 1.60% | 1.62% |
Expenses net of all reductions | 1.45% | 1.49% | 1.44% | 1.48% | 1.53% |
Net investment income (loss) | (.74)% | (1.16)% | (1.13)% | (.11)% F | (1.28)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 173,917 | $ 260,339 | $ 260,966 | $ 315,930 | $ 363,399 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 | $ 12.76 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.23) | (.28) | (.27) | (.09) F | (.27) |
Net realized and unrealized gain (loss) | (3.15) | 4.79 | (.38) | 2.12 | .76 |
Total from investment operations | (3.38) | 4.51 | (.65) | 2.03 | .49 |
Distributions from net investment income | - | - | - | (.04) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 |
Total Return A,B | (17.70)% | 30.91% | (4.27)% | 15.33% | 3.84% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 2.01% | 2.05% | 2.13% | 2.21% |
Expenses net of fee waivers, if any | 1.96% | 2.01% | 2.05% | 2.13% | 2.21% |
Expenses net of all reductions | 1.94% | 2.00% | 1.94% | 2.02% | 2.12% |
Net investment income (loss) | (1.24)% | (1.67)% | (1.63)% | (.65)% F | (1.87)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 47,294 | $ 102,655 | $ 192,790 | $ 309,020 | $ 355,927 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 | $ 12.80 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.23) | (.29) | (.27) | (.08) F | (.26) |
Net realized and unrealized gain (loss) | (3.16) | 4.81 | (.38) | 2.12 | .77 |
Total from investment operations | (3.39) | 4.52 | (.65) | 2.04 | .51 |
Distributions from net investment income | - | - | - | (.04) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 |
Total Return A,B | (17.67)% | 30.83% | (4.25)% | 15.34% | 3.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 2.01% | 2.05% | 2.10% | 2.13% |
Expenses net of fee waivers, if any | 1.96% | 2.01% | 2.05% | 2.10% | 2.13% |
Expenses net of all reductions | 1.94% | 1.99% | 1.94% | 1.99% | 2.04% |
Net investment income (loss) | (1.24)% | (1.66)% | (1.63)% | (.61)% F | (1.79)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 63,590 | $ 86,974 | $ 82,835 | $ 108,287 | $ 125,926 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 | $ 13.61 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.04) | (.11) | (.09) | .09 E | (.09) |
Net realized and unrealized gain (loss) | (3.54) | 5.30 | (.44) | 2.30 | .80 |
Total from investment operations | (3.58) | 5.19 | (.53) | 2.39 | .71 |
Distributions from net investment income | - | - | - | (.11) | - |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 |
Total Return A | (16.84)% | 32.30% | (3.19)% | 16.73% | 5.22% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .94% | .93% | .90% | .92% | .93% |
Expenses net of fee waivers, if any | .94% | .93% | .90% | .92% | .93% |
Expenses net of all reductions | .92% | .92% | .80% | .81% | .84% |
Net investment income (loss) | (.22)% | (.59)% | (.49)% | .57% E | (.59)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 22,021 | $ 21,111 | $ 11,681 | $ 11,640 | $ 10,984 |
Portfolio turnover rate D | 214% | 208% | 258% | 180% | 105% |
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, 2008
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
Technology
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, 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 | $ 27,458,788 |
Unrealized depreciation | (135,343,128) |
Net unrealized appreciation (depreciation) | (107,884,340) |
Capital loss carryforward | (1,389,526,620) |
| |
Cost for federal income tax purposes | $ 734,350,394 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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
Annual Report
Notes to Financial Statements - continued
4. Operating Policies - continued
Repurchase Agreements - continued
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 $1,533,223,630 and $1,609,484,477, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 762,718 | $ 27,500 |
Class T | .25% | .25% | 1,155,470 | 5,646 |
Class B | .75% | .25% | 755,830 | 567,417 |
Class C | .75% | .25% | 788,906 | 49,851 |
| | | $ 3,462,924 | $ 650,414 |
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
by FDC |
Class A | $ 55,710 |
Class T | 23,517 |
Class B* | 100,370 |
Class C* | 6,485 |
| $ 186,082 |
* 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.
Technology
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 928,140 | .30 |
Class T | 709,949 | .31 |
Class B | 228,893 | .30 |
Class C | 239,572 | .30 |
Institutional Class | 68,884 | .29 |
| $ 2,175,438 | |
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 $35,532 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
Expense |
Borrower | $ 7,579,750 | 3.29% | $ 13,867 |
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 $1,715 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 in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $110,238 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.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 7,835 |
Class B | 258 |
Class C | 1,784 |
Institutional Class | 1,027 |
| $ 10,904 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $258,686, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 5,381,278 | 7,888,385 | $ 105,720,351 | $ 145,922,304 |
Shares redeemed | (4,279,571) | (4,978,587) | (82,236,119) | (92,460,573) |
Net increase (decrease) | 1,101,707 | 2,909,798 | $ 23,484,232 | $ 53,461,731 |
Class T | | | | |
Shares sold | 2,146,310 | 1,926,573 | $ 41,674,472 | $ 34,966,338 |
Shares redeemed | (4,638,425) | (6,053,307) | (86,554,961) | (109,073,221) |
Net increase (decrease) | (2,492,115) | (4,126,734) | $ (44,880,489) | $ (74,106,883) |
Class B | | | | |
Shares sold | 406,127 | 357,014 | $ 7,558,898 | $ 6,182,320 |
Shares redeemed | (2,773,060) | (8,194,716) | (50,298,253) | (140,978,328) |
Net increase (decrease) | (2,366,933) | (7,837,702) | $ (42,739,355) | $ (134,796,008) |
Class C | | | | |
Shares sold | 550,177 | 490,290 | $ 10,400,107 | $ 8,483,174 |
Shares redeemed | (1,056,703) | (1,608,094) | (18,857,821) | (27,833,773) |
Net increase (decrease) | (506,526) | (1,117,804) | $ (8,457,714) | $ (19,350,599) |
Institutional Class | | | | |
Shares sold | 628,983 | 640,632 | $ 12,989,931 | $ 12,507,491 |
Shares redeemed | (376,415) | (374,535) | (7,481,058) | (7,263,706) |
Net increase (decrease) | 252,568 | 266,097 | $ 5,508,873 | $ 5,243,785 |
Technology
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) C | -6.52% | 14.59% | 4.49% |
Class T (incl. 3.50% sales charge) C | -4.57% | 14.83% | 4.47% |
Class B (incl. contingent deferred sales charge) A,C | -6.50% | 14.86% | 4.55% |
Class C (incl. contingent deferred sales charge) B,C | -2.56% | 15.16% | 4.37% |
A 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' 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.
C Prior to October 1, 2006, Advisor Utilities operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Utilities Fund - Class A on July 31, 1998, and the current 5.75% 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 Utilities Fund
Management's Discussion of Fund Performance
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned -0.82%, -1.11%, -1.59% and -1.58%, respectively (excluding sales charges), underperforming the 2.47% return of the MSCI® US Investable Market Utilities Index but outperforming the S&P 500. Less-than-favorable stock selection and an underweighting in the gas utilities area hurt, as did an overweighting in independent power/energy traders and unsuccessful security selection among electric utilities. On the other hand, an out-of-benchmark stake in oil and gas storage/transport buoyed the fund's performance relative to the MSCI index. Detractors included gas utility Southern Union, independent power producers AES, NRG Energy and Reliant Energy, along with New Jersey-based multi-utility Public Service Enterprise Group and an underweighting in gas utility Energen. An out-of-benchmark stake in Texas-based oil and gas pipeline company Spectra Energy - no longer held - contributed, as did independent power/energy trader TXU from Texas, Sempra Energy from Southern California, and an underweighting and timely ownership of two multi-utilities, Virginia-based Dominion Resources and New Mexico-based PNM Resources, benchmark components that lagged. Some stocks mentioned here were not held at period end.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned -0.49%, underperforming the 2.47% return of the MSCI® US Investable Market Utilities Index but outperforming the S&P 500. Less-than-favorable stock selection and an underweighting in the gas utilities area hurt, as did an overweighting in independent power/energy traders and unsuccessful security selection among electric utilities. On the other hand, an out-of-benchmark stake in oil and gas storage/transport buoyed the fund's performance relative to the MSCI index. Detractors included gas utility Southern Union, independent power producers AES, NRG Energy and Reliant Energy, along with New Jersey-based multi-utility Public Service Enterprise Group and an underweighting in gas utility Energen. An out-of-benchmark stake in Texas-based oil and gas pipeline company Spectra Energy - no longer held - contributed, as did independent power/energy trader TXU from Texas, Sempra Energy from Southern California, and an underweighting and timely ownership of two multi-utilities, Virginia-based Dominion Resources and New Mexico-based PNM Resources, benchmark components that lagged. Some stocks mentioned here were not held at period end.
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.
Utilities
Advisor Utilities 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 950.30 | $ 5.92 |
Hypothetical A | $ 1,000.00 | $ 1,018.80 | $ 6.12 |
Class T | | | |
Actual | $ 1,000.00 | $ 948.90 | $ 7.17 |
Hypothetical A | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 946.50 | $ 9.58 |
Hypothetical A | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Class C | | | |
Actual | $ 1,000.00 | $ 946.80 | $ 9.54 |
Hypothetical A | $ 1,000.00 | $ 1,015.07 | $ 9.87 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 951.80 | $ 4.51 |
Hypothetical A | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.22% |
Class T | 1.48% |
Class B | 1.98% |
Class C | 1.97% |
Institutional Class | .93% |
Annual Report
Advisor Utilities Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
PPL Corp. | 10.9 | 9.3 |
Exelon Corp. | 9.5 | 8.8 |
FPL Group, Inc. | 7.6 | 5.3 |
Constellation Energy Group, Inc. | 6.2 | 6.0 |
Entergy Corp. | 6.0 | 5.2 |
Allegheny Energy, Inc. | 5.2 | 4.1 |
Sempra Energy | 5.0 | 4.8 |
FirstEnergy Corp. | 4.9 | 3.7 |
NRG Energy, Inc. | 4.9 | 2.7 |
Edison International | 4.2 | 4.1 |
| 64.4 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Electric Utilities | 54.3% | |
| Independent Power Producers & Energy Traders | 18.0% | |
| Multi-utilities | 14.1% | |
| Gas Utilities | 4.0% | |
| Electronic Equipment & Instruments | 0.4% | |
| All Others* | 9.2% | |
|
As of January 31, 2008 |
| Electric Utilities | 50.4% | |
| Multi-utilities | 20.6% | |
| Independent Power Producers & Energy Traders | 15.9% | |
| Gas Utilities | 4.0% | |
| Water Utilities | 0.5% | |
| All Others* | 8.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Utilities Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 91.2% |
| Shares | | Value |
DIVERSIFIED FINANCIAL SERVICES - 0.2% |
Other Diversifed Financial Services - 0.2% |
Hicks Acquisition Co. I, Inc. unit | 52,100 | | $ 500,160 |
ELECTRIC UTILITIES - 54.3% |
Electric Utilities - 54.3% |
Allegheny Energy, Inc. | 240,500 | | 11,640,200 |
American Electric Power Co., Inc. | 238,300 | | 9,412,850 |
Edison International | 195,300 | | 9,440,802 |
Entergy Corp. | 126,100 | | 13,482,612 |
Exelon Corp. | 269,900 | | 21,219,538 |
FirstEnergy Corp. | 150,100 | | 11,039,855 |
FPL Group, Inc. | 261,700 | | 16,887,501 |
Great Plains Energy, Inc. | 15,322 | | 387,034 |
ITC Holdings Corp. | 27,900 | | 1,454,148 |
PPL Corp. | 517,900 | | 24,320,583 |
Sierra Pacific Resources | 183,000 | | 2,075,220 |
| | 121,360,343 |
ELECTRICAL EQUIPMENT - 0.2% |
Heavy Electrical Equipment - 0.2% |
ABB Ltd. sponsored ADR | 16,500 | | 432,630 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.4% |
Electronic Equipment & Instruments - 0.4% |
Itron, Inc. (a) | 10,300 | | 950,999 |
GAS UTILITIES - 4.0% |
Gas Utilities - 4.0% |
Energen Corp. | 28,500 | | 1,715,700 |
Equitable Resources, Inc. | 51,500 | | 2,690,875 |
Questar Corp. | 87,200 | | 4,611,136 |
| | 9,017,711 |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 18.0% |
Independent Power Producers & Energy Traders - 18.0% |
AES Corp. (a)(d) | 274,000 | | 4,422,360 |
Calpine Corp. (a) | 43,200 | | 751,680 |
Constellation Energy Group, Inc. | 167,400 | | 13,920,984 |
Dynegy, Inc. Class A (a) | 264,600 | | 1,780,758 |
Mirant Corp. (a)(d) | 121,500 | | 3,719,115 |
|
| Shares | | Value |
NRG Energy, Inc. (a) | 299,000 | | $ 10,850,710 |
Reliant Energy, Inc. (a) | 264,300 | | 4,786,473 |
| | 40,232,080 |
MULTI-UTILITIES - 14.1% |
Multi-Utilities - 14.1% |
CenterPoint Energy, Inc. | 190,700 | | 3,007,339 |
CMS Energy Corp. | 87,400 | | 1,179,900 |
Integrys Energy Group, Inc. | 27,200 | | 1,388,832 |
PG&E Corp. | 112,686 | | 4,341,792 |
Public Service Enterprise Group, Inc. | 207,180 | | 8,660,124 |
Sempra Energy | 199,000 | | 11,175,840 |
TECO Energy, Inc. | 87,200 | | 1,617,560 |
| | 31,371,387 |
TOTAL COMMON STOCKS (Cost $202,173,358) | 203,865,310 |
Money Market Funds - 4.4% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 4,703,711 | | 4,703,711 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 5,097,000 | | 5,097,000 |
TOTAL MONEY MARKET FUNDS (Cost $9,800,711) | 9,800,711 |
TOTAL INVESTMENT PORTFOLIO - 95.6% (Cost $211,974,069) | | 213,666,021 |
NET OTHER ASSETS - 4.4% | | 9,736,799 |
NET ASSETS - 100% | $ 223,402,820 |
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 | $ 644,715 |
Fidelity Securities Lending Cash Central Fund | 43,398 |
Total | $ 688,113 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $232,998,756 of which $78,586,224 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
Advisor Utilities Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $4,833,610) - See accompanying schedule: Unaffiliated issuers (cost $202,173,358) | $ 203,865,310 | |
Fidelity Central Funds (cost $9,800,711) | 9,800,711 | |
Total Investments (cost $211,974,069) | | $ 213,666,021 |
Receivable for investments sold | | 19,628,256 |
Receivable for fund shares sold | | 132,554 |
Dividends receivable | | 7,631 |
Distributions receivable from Fidelity Central Funds | | 11,345 |
Prepaid expenses | | 304 |
Other receivables | | 304 |
Total assets | | 233,446,415 |
| | |
Liabilities | | |
Payable for investments purchased | $ 4,304,233 | |
Payable for fund shares redeemed | 329,142 | |
Accrued management fee | 108,813 | |
Distribution fees payable | 97,904 | |
Other affiliated payables | 70,246 | |
Other payables and accrued expenses | 36,257 | |
Collateral on securities loaned, at value | 5,097,000 | |
Total liabilities | | 10,043,595 |
| | |
Net Assets | | $ 223,402,820 |
Net Assets consist of: | | |
Paid in capital | | $ 454,361,638 |
Undistributed net investment income | | 494,309 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (233,145,079) |
Net unrealized appreciation (depreciation) on investments | | 1,691,952 |
Net Assets | | $ 223,402,820 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($105,219,160 ÷ 5,189,541 shares) | | $ 20.28 |
| | |
Maximum offering price per share (100/94.25 of $20.28) | | $ 21.52 |
Class T:
Net Asset Value and redemption price per share ($54,345,622 ÷ 2,682,009 shares) | | $ 20.26 |
| | |
Maximum offering price per share (100/96.50 of $20.26) | | $ 20.99 |
Class B:
Net Asset Value and offering price per share ($20,747,369 ÷ 1,036,762 shares)A | | $ 20.01 |
| | |
Class C:
Net Asset Value and offering price per share ($37,387,082 ÷ 1,876,011 shares)A | | $ 19.93 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($5,703,587 ÷ 277,995 shares) | | $ 20.52 |
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.
Utilities
Statement of Operations
| Year ended July 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 5,423,144 |
Interest | | 9,379 |
Income from Fidelity Central Funds | | 688,113 |
Total income | | 6,120,636 |
| | |
Expenses | | |
Management fee | $ 1,474,743 | |
Transfer agent fees | 792,649 | |
Distribution fees | 1,336,434 | |
Accounting and security lending fees | 105,377 | |
Custodian fees and expenses | 9,800 | |
Independent trustees' compensation | 1,128 | |
Registration fees | 47,983 | |
Audit | 43,851 | |
Legal | 4,846 | |
Interest | 1,860 | |
Miscellaneous | 46,066 | |
Total expenses before reductions | 3,864,737 | |
Expense reductions | (3,108) | 3,861,629 |
Net investment income (loss) | | 2,259,007 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 15,067,569 | |
Foreign currency transactions | (5,133) | |
Total net realized gain (loss) | | 15,062,436 |
Change in net unrealized appreciation (depreciation) on investment securities | | (20,022,346) |
Net gain (loss) | | (4,959,910) |
Net increase (decrease) in net assets resulting from operations | | $ (2,700,903) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 2,259,007 | $ 1,715,800 |
Net realized gain (loss) | 15,062,436 | 44,242,815 |
Change in net unrealized appreciation (depreciation) | (20,022,346) | (2,387,149) |
Net increase (decrease) in net assets resulting from operations | (2,700,903) | 43,571,466 |
Distributions to shareholders from net investment income | (2,837,541) | (1,795,359) |
Share transactions - net increase (decrease) | (28,461,258) | 17,609,310 |
Redemption fees | 9,517 | 19,962 |
Total increase (decrease) in net assets | (33,990,185) | 59,405,379 |
| | |
Net Assets | | |
Beginning of period | 257,393,005 | 197,987,626 |
End of period (including undistributed net investment income of $494,309 and undistributed net investment income of $1,153,544, respectively) | $ 223,402,820 | $ 257,393,005 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 | $ 10.37 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .24 | .21 | .24 | .28 F | .10 |
Net realized and unrealized gain (loss) | (.38) | 3.56 | 2.06 | 3.01 | 1.72 |
Total from investment operations | (.14) | 3.77 | 2.30 | 3.29 | 1.82 |
Distributions from net investment income | (.32) | (.23) | (.27) | (.21) | (.10) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 |
Total Return A,B | (.82)% | 22.14% | 15.38% | 27.48% | 17.67% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.21% | 1.27% | 1.34% | 1.39% | 1.51% |
Expenses net of fee waivers, if any | 1.21% | 1.27% | 1.34% | 1.39% | 1.50% |
Expenses net of all reductions | 1.21% | 1.26% | 1.32% | 1.36% | 1.45% |
Net investment income (loss) | 1.11% | 1.04% | 1.51% | 2.03% F | .87% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 105,219 | $ 94,842 | $ 40,599 | $ 29,150 | $ 21,987 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 | $ 10.33 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .18 | .15 | .19 | .24 F | .07 |
Net realized and unrealized gain (loss) | (.39) | 3.56 | 2.08 | 2.99 | 1.72 |
Total from investment operations | (.21) | 3.71 | 2.27 | 3.23 | 1.79 |
Distributions from net investment income | (.24) | (.18) | (.19) | (.17) | (.08) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 |
Total Return A,B | (1.11)% | 21.74% | 15.20% | 27.03% | 17.42% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.47% | 1.54% | 1.60% | 1.67% | 1.79% |
Expenses net of fee waivers, if any | 1.47% | 1.54% | 1.60% | 1.67% | 1.75% |
Expenses net of all reductions | 1.47% | 1.54% | 1.58% | 1.64% | 1.70% |
Net investment income (loss) | .84% | .76% | 1.25% | 1.76% F | .62% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 54,346 | $ 62,592 | $ 52,128 | $ 55,683 | $ 53,255 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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.
Utilities
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 | $ 10.15 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .08 | .05 | .12 | .17 F | .01 |
Net realized and unrealized gain (loss) | (.39) | 3.52 | 2.03 | 2.95 | 1.69 |
Total from investment operations | (.31) | 3.57 | 2.15 | 3.12 | 1.70 |
Distributions from net investment income | (.08) | (.07) | (.08) | (.11) | (.03) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 |
Total Return A,B | (1.59)% | 21.18% | 14.57% | 26.51% | 16.79% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 2.04% | 2.09% | 2.14% | 2.25% |
Expenses net of fee waivers, if any | 1.96% | 2.04% | 2.09% | 2.14% | 2.25% |
Expenses net of all reductions | 1.95% | 2.03% | 2.06% | 2.11% | 2.20% |
Net investment income (loss) | .36% | .27% | .76% | 1.28% F | .12% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 20,747 | $ 43,845 | $ 65,959 | $ 82,577 | $ 84,742 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 | $ 10.16 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .08 | .06 | .13 | .18 F | .02 |
Net realized and unrealized gain (loss) | (.39) | 3.51 | 2.04 | 2.94 | 1.70 |
Total from investment operations | (.31) | 3.57 | 2.17 | 3.12 | 1.72 |
Distributions from net investment income | (.14) | (.10) | (.10) | (.12) | (.04) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 |
Total Return A,B | (1.58)% | 21.23% | 14.72% | 26.48% | 16.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.95% | 1.99% | 2.02% | 2.07% | 2.17% |
Expenses net of fee waivers, if any | 1.95% | 1.99% | 2.02% | 2.07% | 2.17% |
Expenses net of all reductions | 1.95% | 1.99% | 2.00% | 2.04% | 2.12% |
Net investment income (loss) | .36% | .32% | .83% | 1.36% F | .21% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 37,387 | $ 43,292 | $ 32,823 | $ 34,827 | $ 35,038 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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 .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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 | $ 10.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .31 | .29 | .30 | .33 E | .15 |
Net realized and unrealized gain (loss) | (.38) | 3.58 | 2.10 | 3.03 | 1.73 |
Total from investment operations | (.07) | 3.87 | 2.40 | 3.36 | 1.88 |
Distributions from net investment income | (.36) | (.30) | (.33) | (.25) | (.15) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 |
Total Return A | (.49)% | 22.54% | 15.95% | 27.88% | 18.14% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .91% | .92% | .94% | .99% | 1.09% |
Expenses net of fee waivers, if any | .91% | .92% | .94% | .99% | 1.09% |
Expenses net of all reductions | .90% | .92% | .92% | .96% | 1.04% |
Net investment income (loss) | 1.41% | 1.39% | 1.91% | 2.44% E | 1.29% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,704 | $ 12,822 | $ 6,479 | $ 1,766 | $ 2,254 |
Portfolio turnover rate D | 77% | 118% | 64% | 44% | 38% |
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.
Utilities
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Utilities 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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, capital loss carryforwards, 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 | $ 16,668,640 |
Unrealized depreciation | (15,123,216) |
Net unrealized appreciation (depreciation) | 1,545,424 |
Undistributed ordinary income | 494,327 |
Capital loss carryforward | (232,998,756) |
| |
Cost for federal income tax purposes | $ 212,120,597 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 2,837,541 | $ 1,795,359 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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.
Utilities
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $189,408,234 and $236,387,873, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 274,288 | $ 18,467 |
Class T | .25% | .25% | 310,876 | 1,678 |
Class B | .75% | .25% | 317,442 | 238,665 |
Class C | .75% | .25% | 433,828 | 67,743 |
| | | $ 1,336,434 | $ 326,553 |
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
by FDC |
Class A | $ 63,262 |
Class T | 14,697 |
Class B* | 46,183 |
Class C* | 9,457 |
| $ 133,599 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 330,203 | .30 |
Class T | 195,807 | .31 |
Class B | 95,545 | .30 |
Class C | 126,719 | .29 |
Institutional Class | 44,375 | .25 |
| $ 792,649 | |
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.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,830 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
Expense |
Borrower | $ 7,018,500 | 2.38% | $ 1,860 |
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 $642 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 $43,398.
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 $2,154 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
expense reduction |
Class A | $ 954 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
Utilities
10. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $41,180 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income | | |
Class A | $ 1,513,480 | $ 644,012 |
Class T | 697,662 | 560,438 |
Class B | 116,029 | 253,871 |
Class C | 289,510 | 209,022 |
Institutional Class | 220,860 | 128,016 |
Total | $ 2,837,541 | $ 1,795,359 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 2,354,893 | 3,629,587 | $ 52,162,968 | $ 74,211,808 |
Reinvestment of distributions | 60,065 | 31,700 | 1,341,196 | 573,106 |
Shares redeemed | (1,798,285) | (1,448,205) | (38,893,897) | (30,175,903) |
Net increase (decrease) | 616,673 | 2,213,082 | $ 14,610,267 | $ 44,609,011 |
Class T | | | | |
Shares sold | 607,632 | 1,035,618 | $ 13,411,231 | $ 20,689,420 |
Reinvestment of distributions | 29,500 | 29,413 | 659,942 | 530,959 |
Shares redeemed | (977,155) | (1,078,012) | (21,255,306) | (22,011,808) |
Net increase (decrease) | (340,023) | (12,981) | $ (7,184,133) | $ (791,429) |
Class B | | | | |
Shares sold | 265,082 | 496,053 | $ 5,789,226 | $ 9,866,415 |
Reinvestment of distributions | 4,528 | 12,604 | 103,786 | 221,292 |
Shares redeemed | (1,382,108) | (2,262,406) | (29,771,682) | (44,828,420) |
Net increase (decrease) | (1,112,498) | (1,753,749) | $ (23,878,670) | $ (34,740,713) |
Class C | | | | |
Shares sold | 413,208 | 1,008,161 | $ 8,976,142 | $ 20,364,886 |
Reinvestment of distributions | 10,061 | 8,956 | 223,730 | 157,448 |
Shares redeemed | (671,632) | (834,201) | (14,302,911) | (16,902,583) |
Net increase (decrease) | (248,363) | 182,916 | $ (5,103,039) | $ 3,619,751 |
Institutional Class | | | | |
Shares sold | 1,285,993 | 1,116,023 | $ 28,765,131 | $ 24,167,100 |
Reinvestment of distributions | 7,559 | 2,016 | 173,189 | 36,805 |
Shares redeemed | (1,627,489) | (878,823) | (35,844,003) | (19,291,215) |
Net increase (decrease) | (333,937) | 239,216 | $ (6,905,683) | $ 4,912,690 |
Annual Report
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, Fidelity Advisor Consumer Discretionary Fund, Fidelity Advisory Electronics Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Consumer Discretionary Fund, Fidelity Advisory Electronics Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (collectively, the "Funds"), including the schedules of investments, as of July 31, 2008, 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 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, 2008, 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, Fidelity Advisor Consumer Discretionary Fund, Fidelity Advisory Electronics Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund as of July 31, 2008, 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 23, 2008
Annual Report
The Trustees, Member 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 (78) |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr.
Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 (60) |
| 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 a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and 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 AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). 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 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) |
| Year of Election or Appointment: 2008 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). |
Cornelia M. Small (64) |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), 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. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers**:
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 (64) |
| 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. |
Kenneth B. Robins (38) |
| Year of Election or Appointment: 2008 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. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-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). |
Brian B. Hogan (43) |
| Year of Election or Appointment: 2007 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. Hogan also serves as Vice President of Sector Funds (2007-present) and Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (40) |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) 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 Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) |
| Year of Election or Appointment: 2008 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. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an
employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) |
| Year of Election or Appointment: 2008 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. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) |
| Year of Election or Appointment: 2008 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. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) |
| 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 Fidelity's Equity and High Income Funds (2004-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). |
Bryan A. Mehrmann (47) |
| 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). |
Adrien E. Deberghes (40) |
| Year of Election or Appointment: 2008 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. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) |
| 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 Fidelity Pricing and Cash Management Services (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 (54) |
| 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-present) and is an employee of FMR. |
Paul M. Murphy (61) |
| Year of Election or Appointment: 2007 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. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) |
| 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
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 Energy Fund | | | | |
Class A | 09/15/08 | 09/12/08 | - | $6.90 |
Class T | 09/15/08 | 09/12/08 | - | $6.90 |
Class B | 09/15/08 | 09/12/08 | - | $6.90 |
Class C | 09/15/08 | 09/12/08 | - | $6.90 |
Fidelity Advisor Financial Services Fund | | | | |
Class A | 09/15/08 | 09/12/08 | $.136 | $.02 |
Class T | 09/15/08 | 09/12/08 | $.107 | $.02 |
Class B | 09/15/08 | 09/12/08 | $.05 | $.02 |
Class C | 09/15/08 | 09/12/08 | $.076 | $.02 |
Fidelity Advisor Health Care Fund | | | | |
Class A | 09/15/08 | 09/12/08 | - | $.37 |
Class T | 09/15/08 | 09/12/08 | - | $.37 |
Class B | 09/15/08 | 09/12/08 | - | $.37 |
Class C | 09/15/08 | 09/12/08 | - | $.37 |
Fidelity Advisor Industrials Fund | | | | |
Class A | 09/15/08 | 09/12/08 | $.038 | $.02 |
Class T | 09/15/08 | 09/12/08 | $.011 | $.02 |
Class B | 09/15/08 | 09/12/08 | - | - |
Class C | 09/15/08 | 09/12/08 | - | - |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended July 31, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Fidelity Advisor Biotechnology Fund | $1,255,636 |
Fidelity Advisor Consumer Discretionary Fund | $321,878 |
Fidelity Advisor Energy Fund | $179,399,979 |
Fidelity Advisor Financial Services Fund | $3,949,349 |
Fidelity Advisor Health Care Fund | $23,469,350 |
Fidelity Advisor Industrials Fund | $5,579,858 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| September 2007 | December 2007 |
Fidelity Advisor Consumer Discretionary Fund | | |
Class A | 12% | - |
Class T | 12% | - |
Class B | 13% | - |
Class C | 13% | - |
Fidelity Advisor Energy Fund | | |
Class A | 100% | 73% |
Class T | 100% | 95% |
Class B | - | 100% |
Class C | - | 100% |
Fidelity Advisor Financial Services Fund | | |
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
| September 2007 | December 2007 |
Fidelity Advisor Health Care Fund | | |
Class A | 100% | 52% |
Class T | 100% | 64% |
Class B | 100% | 100% |
Class C | 100% | 96% |
Fidelity Advisor Industrials Fund | | |
Class A | 23% | 40% |
Class T | 24% | 44% |
Class B | 26% | 53% |
Class C | 26% | 52% |
Fidelity Advisor Utilities Fund | | |
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
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 2007 | December 2007 |
Fidelity Advisor Consumer Discretionary Fund | | |
Class A | 15% | - |
Class T | 15% | - |
Class B | 17% | - |
Class C | 16% | - |
Fidelity Advisor Energy Fund | | |
Class A | 100% | 91% |
Class T | 100% | 100% |
Class B | - | 100% |
Class C | - | 100% |
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 | 100% | 62% |
Class T | 100% | 76% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Fidelity Advisor Industrials Fund | | |
Class A | 24% | 40% |
Class T | 25% | 44% |
Class B | 27% | 54% |
Class C | 27% | 53% |
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 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
A special meeting of each fund's shareholders was held on April 16, 2008. 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 |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 1,843,094,379.23 | 96.319 |
Withheld | 70,445,651.74 | 3.681 |
TOTAL | 1,913,540,030.97 | 100.000 |
Dennis J. Dirks |
Affirmative | 1,844,705,271.13 | 96.403 |
Withheld | 68,834,759.84 | 3.597 |
TOTAL | 1,913,540,030.97 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 1,841,350,074.57 | 96.227 |
Withheld | 72,189,956.40 | 3.773 |
TOTAL | 1,913,540,030.97 | 100.000 |
Alan J. Lacy |
Affirmative | 1,843,985,654.20 | 96.365 |
Withheld | 69,554,376.77 | 3.635 |
TOTAL | 1,913,540,030.97 | 100.000 |
Ned C. Lautenbach |
Affirmative | 1,844,982,064.29 | 96.417 |
Withheld | 68,557,966.68 | 3.583 |
TOTAL | 1,913,540,030.97 | 100.000 |
Joseph Mauriello |
Affirmative | 1,843,252,653.53 | 96.327 |
Withheld | 70,287,377.44 | 3.673 |
TOTAL | 1,913,540,030.97 | 100.000 |
Cornelia M. Small |
Affirmative | 1,845,097,505.44 | 96.423 |
Withheld | 68,442,525.53 | 3.577 |
TOTAL | 1,913,540,030.97 | 100.000 |
William S. Stavropoulos |
Affirmative | 1,840,012,418.12 | 96.158 |
Withheld | 73,527,612.85 | 3.842 |
TOTAL | 1,913,540,030.97 | 100.000 |
David M. Thomas |
Affirmative | 1,845,597,797.69 | 96.449 |
Withheld | 67,942,233.28 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
Michael E. Wiley |
Affirmative | 1,845,590,500.21 | 96.449 |
Withheld | 67,949,530.76 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust of Fidelity Advisor Series VII to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 1,059,631,083.78 | 55.375 |
Against | 187,649,461.13 | 9.807 |
Abstain | 74,155,654.32 | 3.875 |
Broker Non-Votes | 592,103,831.74 | 30.943 |
TOTAL | 1,913,540,030.97 | 100.000 |
A Denotes trust-wide proposal and voting results.
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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. 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 each fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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' investment personnel 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 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 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 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 also 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 further considered that Fidelity voluntarily pays for market data out of its own resources.
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 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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Investment Performance. 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.
For each of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, and Advisor Utilities, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, 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).
For Advisor Technology, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, 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).
Advisor Biotechnology
The Board stated that the 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.
Annual Report
Advisor Communications Equipment
The Board stated that the 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.
Advisor Consumer Discretionary
The Board stated that the 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
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Electronics
The Board stated that the investment performance of the fund was lower than its benchmark for the one- and five-year periods, although the three-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.
Advisor Energy
The Board stated that the 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
Advisor Financial Services
The Board stated that the 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 Health Care
The Board stated that the 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 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 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
Advisor Utilities
The Board stated that the 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 6% means that 94% 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 2007.
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 2007, and the total expenses of Class T ranked above its competitive median for 2007.
Annual Report
The Board noted that the total expenses of each of Class A and Class C of Advisor Communications Equipment ranked below its competitive median for 2007, the total expenses of Class B ranked equal to its competitive median for 2007, and the total expenses of Class T and Institutional Class ranked above its competitive median for 2007.
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 2007, the total expenses of Institutional Class ranked equal to its competitive median for 2007, and the total expenses of Class T ranked above its competitive median for 2007.
The Board noted that the total expenses of each of Class A and Class C of Advisor Electronics ranked below its competitive median for 2007, the total expenses of Class B ranked equal to its competitive median for 2007, and the total expenses of Class T and Institutional Class ranked above its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Energy ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Financial Services ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Health Care ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Industrials ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Technology ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Utilities ranked below its competitive median for 2007.
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.
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. 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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
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. †
Boston, MA
State Street Bank and Trust ††
Quincy, MA
† Custodian for Fidelity Advisor Energy Fund only.
†† Custodian for Fidelity Advisor Biotechnology Fund, Fidelity Advisor
Communications Equipment Fund, and Fidelity Advisor Electronics Fund only.
AFOC-UANNPRO-0908
1.789241.104
Fidelity Advisor
Focus Funds®
Institutional Class
Biotechnology
Communications Equipment
Consumer Discretionary
Electronics
Energy
Financial Services
Health Care
Industrials
Technology
Utilities
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
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 LLC or an affiliated company.
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
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of
fundA |
Institutional Class | 16.35% | 7.51% | -2.00% |
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.
Communications Equipment
Advisor Biotechnology Fund
Management's Discussion of Fund Performance
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned 15.95%, 15.64%, 14.96% and 14.96%, respectively (excluding sales charges), trailing the 25.57% result of the MSCI® US Investable Market Biotechnology Index but handily topping the S&P 500. Versus the MSCI index, positions in a number of out-of-index biotechnology and pharmaceutical holdings in the small- and mid-cap segments hurt the fund's relative performance. In particular, the share price of Vanda Pharmaceuticals - which I sold during the period - lost most of its value during the period, as the company received word near the end of July 2008 that Iloperidone, its antipsychotic medication under review for treating schizophrenia, was not approved for that purpose by the Food and Drug Administration (FDA). Also holding back our results was BioMarin Pharmaceutical. Meanwhile, Akorn was sidetracked by delays in FDA approval of a generic form of Vancocin, an antibiotic. Among larger-caps, significantly underweighting one strong-
performing major index component, Gilead Sciences, held back our results, and Wyeth turned in a disappointing performance. Conversely, the fund's holdings in major index component Celgene provided the biggest boost. I was able to purchase the bulk of the position after the stock fell sharply in December 2007, after which it advanced nicely. Alexion Pharmaceuticals also bolstered our results, as did Auxilium Pharmaceuticals and OSI Pharmaceuticals. Auxilium, Vanda, Wyeth and Akorn were out-of-index holdings.
During the year, the fund's Institutional Class shares returned 16.35%, trailing the 25.57% result of the MSCI® US Investable Market Biotechnology Index but handily topping the S&P 500. Versus the MSCI index, positions in a number of out-of-index biotechnology and pharmaceutical holdings in the small- and mid-cap segments hurt the fund's relative performance. In particular, the share price of Vanda Pharmaceuticals - which I sold during the period - lost most of its value during the period, as the company received word near the end of July 2008 that Iloperidone, its antipsychotic medication under review for treating schizophrenia, was not approved for that purpose by the Food and Drug Administration (FDA). Also holding back our results was BioMarin Pharmaceutical. Meanwhile, Akorn was sidetracked by delays in FDA approval of a generic form of Vancocin, an antibiotic. Among larger-caps, significantly underweighting one strong-performing major index component, Gilead Sciences, held back our results, and Wyeth turned in a disappointing performance. Conversely, the fund's holdings in major index component Celgene provided the biggest boost. I was able to purchase the bulk of the position after the stock fell sharply in December 2007, after which it advanced nicely. Alexion Pharmaceuticals also bolstered our results, as did Auxilium Pharmaceuticals and OSI Pharmaceuticals. Auxilium, Vanda, Wyeth and Akorn were out-of-index holdings.
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 Biotechnology 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 1,135.20 | $ 7.11 |
HypotheticalA | $ 1,000.00 | $ 1,018.20 | $ 6.72 |
Class T | | | |
Actual | $ 1,000.00 | $ 1,133.30 | $ 8.75 |
HypotheticalA | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B | | | |
Actual | $ 1,000.00 | $ 1,131.00 | $ 11.07 |
HypotheticalA | $ 1,000.00 | $ 1,014.47 | $ 10.47 |
Class C | | | |
Actual | $ 1,000.00 | $ 1,129.20 | $ 11.01 |
HypotheticalA | $ 1,000.00 | $ 1,014.52 | $ 10.42 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 1,136.40 | $ 5.47 |
HypotheticalA | $ 1,000.00 | $ 1,019.74 | $ 5.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.34% |
Class T | 1.65% |
Class B | 2.09% |
Class C | 2.08% |
Institutional Class | 1.03% |
Portfolio/Sector
Advisor Biotechnology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Amgen, Inc. | 19.6 | 0.4 |
Genentech, Inc. | 10.3 | 10.9 |
Gilead Sciences, Inc. | 8.4 | 8.9 |
Alexion Pharmaceuticals, Inc. | 5.1 | 4.0 |
Biogen Idec, Inc. | 4.4 | 7.2 |
Cephalon, Inc. | 3.8 | 4.6 |
Acorda Therapeutics, Inc. | 3.3 | 0.2 |
Auxilium Pharmaceuticals, Inc. | 3.0 | 3.2 |
Celgene Corp. | 2.7 | 6.9 |
United Therapeutics Corp. | 2.7 | 3.4 |
| 63.3 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
 | Biotechnology | 81.7% | |
 | Pharmaceuticals | 13.7% | |
 | Health Care
Equipment & Supplies | 1.4% | |
 | Life Sciences
Tools & Services | 0.7% | |
 | All Others* | 2.5% | |
As of January 31, 2008 |
| Biotechnology | 80.8% | |
 | Pharmaceuticals | 14.2% | |
 | Health Care
Equipment & Supplies | 1.8% | |
 | Life Sciences
Tools & Services | 2.8% | |
| Health Care
Providers & Services | 0.2% | |
| All Others* | 0.2% | |
* Includes short-term investments and net other assets. |
Biotechnology
Advisor Biotechnology Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.5% |
| Shares | | Value |
BIOTECHNOLOGY - 81.7% |
Biotechnology - 81.7% |
Acadia Pharmaceuticals, Inc. (a) | 28,874 | | $ 86,045 |
Acorda Therapeutics, Inc. (a) | 58,304 | | 1,912,954 |
Affymax, Inc. (a) | 7,300 | | 144,321 |
Alexion Pharmaceuticals, Inc. (a) | 32,233 | | 3,021,844 |
Alkermes, Inc. (a) | 13,100 | | 206,325 |
Alnylam Pharmaceuticals, Inc. (a) | 7,000 | | 243,460 |
Amgen, Inc. (a) | 183,920 | | 11,518,905 |
Amylin Pharmaceuticals, Inc. (a) | 23,584 | | 744,075 |
Antigenics, Inc. (a) | 452,000 | | 890,440 |
Antigenics, Inc.: | | | |
warrants 1/9/10 (a)(e) | 452,000 | | 83,478 |
warrants 1/9/18 (a)(e) | 452,000 | | 533,805 |
Arena Pharmaceuticals, Inc. (a) | 7,600 | | 51,528 |
Biogen Idec, Inc. (a) | 36,802 | | 2,567,308 |
BioMarin Pharmaceutical, Inc. (a) | 43,189 | | 1,405,802 |
Celera Corp. (a) | 11,700 | | 159,705 |
Celgene Corp. (a) | 21,238 | | 1,603,257 |
Cephalon, Inc. (a) | 30,699 | | 2,245,939 |
Cepheid, Inc. (a) | 7,500 | | 128,400 |
Cougar Biotechnology, Inc. (a) | 12,700 | | 427,355 |
Cubist Pharmaceuticals, Inc. (a) | 8,215 | | 186,152 |
CV Therapeutics, Inc. (a) | 9,400 | | 88,078 |
Dendreon Corp. (a)(d) | 10,800 | | 63,936 |
Enzon Pharmaceuticals, Inc. (a) | 5,400 | | 44,172 |
Genentech, Inc. (a) | 63,511 | | 6,049,423 |
Genzyme Corp. (a) | 9,438 | | 723,423 |
Gilead Sciences, Inc. (a) | 91,498 | | 4,939,062 |
GTx, Inc. (a) | 2,670 | | 49,769 |
Halozyme Therapeutics, Inc. (a) | 5,010 | | 40,130 |
Human Genome Sciences, Inc. (a) | 17,377 | | 115,210 |
ImClone Systems, Inc. (a) | 10,800 | | 690,444 |
Incyte Corp. (a) | 14,895 | | 137,928 |
Isis Pharmaceuticals, Inc. (a) | 17,700 | | 303,201 |
Ligand Pharmaceuticals, Inc. Class B (a) | 26,500 | | 88,245 |
Martek Biosciences (a) | 3,500 | | 131,635 |
Momenta Pharmaceuticals, Inc. (a) | 4,000 | | 66,320 |
Myriad Genetics, Inc. (a) | 7,505 | | 499,083 |
Omrix Biopharmaceuticals, Inc. (a) | 1,900 | | 35,340 |
ONYX Pharmaceuticals, Inc. (a) | 18,094 | | 732,807 |
OREXIGEN Therapeutics, Inc. (a) | 9,226 | | 80,728 |
OSI Pharmaceuticals, Inc. (a) | 10,100 | | 531,563 |
PDL BioPharma, Inc. | 27,700 | | 309,409 |
Poniard Pharmaceuticals, Inc. (a) | 7,700 | | 29,645 |
Progenics Pharmaceuticals, Inc. (a) | 4,500 | | 74,250 |
Regeneron Pharmaceuticals, Inc. (a) | 8,891 | | 194,624 |
Rigel Pharmaceuticals, Inc. (a) | 7,635 | | 194,234 |
Sangamo Biosciences, Inc. (a) | 7,098 | | 77,723 |
Savient Pharmaceuticals, Inc. (a) | 10,505 | | 279,223 |
Theratechnologies, Inc. (a) | 5,700 | | 29,673 |
Theravance, Inc. (a) | 7,765 | | 124,085 |
|
| Shares | | Value |
United Therapeutics Corp. (a) | 13,839 | | $ 1,569,204 |
Vertex Pharmaceuticals, Inc. (a) | 45,304 | | 1,562,988 |
Zymogenetics, Inc. (a) | 11,295 | | 97,137 |
| | 48,113,790 |
HEALTH CARE EQUIPMENT & SUPPLIES - 1.4% |
Health Care Equipment - 1.4% |
Alsius Corp. (a) | 14,200 | | 32,376 |
Clinical Data, Inc. (a) | 4,547 | | 77,754 |
Quidel Corp. (a) | 34,400 | | 696,944 |
| | 807,074 |
LIFE SCIENCES TOOLS & SERVICES - 0.7% |
Life Sciences Tools & Services - 0.7% |
AMAG Pharmaceuticals, Inc. (a) | 3,415 | | 140,015 |
Exelixis, Inc. (a) | 34,300 | | 240,100 |
Medivation, Inc. (a) | 1,359 | | 27,180 |
| | 407,295 |
PHARMACEUTICALS - 13.7% |
Pharmaceuticals - 13.7% |
Akorn, Inc. (a) | 106,079 | | 544,185 |
Auxilium Pharmaceuticals, Inc. (a) | 47,658 | | 1,768,112 |
Biodel, Inc. (a) | 57,233 | | 963,231 |
Catalyst Pharmaceutical Partners, Inc. (a) | 21,241 | | 69,033 |
Elan Corp. PLC sponsored ADR (a) | 72,250 | | 1,448,613 |
Jazz Pharmaceuticals, Inc. (a) | 335 | | 2,258 |
Sepracor, Inc. (a) | 17,210 | | 300,831 |
Wyeth | 36,900 | | 1,495,188 |
XenoPort, Inc. (a) | 31,735 | | 1,454,098 |
| | 8,045,549 |
TOTAL COMMON STOCKS (Cost $46,219,476) | 57,373,708 |
Money Market Funds - 1.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 746,664 | | 746,664 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 52,200 | | 52,200 |
TOTAL MONEY MARKET FUNDS (Cost $798,864) | 798,864 |
TOTAL INVESTMENT PORTFOLIO - 98.8% (Cost $47,018,340) | 58,172,572 |
NET OTHER ASSETS - 1.2% | | 684,099 |
NET ASSETS - 100% | $ 58,856,671 |
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 $617,283 or 1.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Antigenics, Inc. warrants 1/9/10 | 1/9/08 | $ 3 |
Antigenics, Inc. warrants 1/9/18 | 1/9/08 | $ 563,722 |
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 | $ 11,289 |
Fidelity Securities Lending Cash Central Fund | 8,739 |
Total | $ 20,028 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $4,310,179 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Advisor Biotechnology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $51,504) - See accompanying schedule: Unaffiliated issuers (cost $46,219,476) | $ 57,373,708 | |
Fidelity Central Funds (cost $798,864) | 798,864 | |
Total Investments (cost $47,018,340) | | $ 58,172,572 |
Cash | | 1 |
Receivable for investments sold | | 1,758,028 |
Receivable for fund shares sold | | 693,925 |
Distributions receivable from Fidelity Central Funds | | 1,476 |
Prepaid expenses | | 65 |
Total assets | | 60,626,067 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,512,567 | |
Payable for fund shares redeemed | 101,479 | |
Accrued management fee | 25,888 | |
Distribution fees payable | 27,372 | |
Other affiliated payables | 13,849 | |
Other payables and accrued expenses | 36,041 | |
Collateral on securities loaned, at value | 52,200 | |
Total liabilities | | 1,769,396 |
| | |
Net Assets | | $ 58,856,671 |
Net Assets consist of: | | |
Paid in capital | | $ 52,735,618 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (5,033,179) |
Net unrealized appreciation (depreciation) on investments | | 11,154,232 |
Net Assets | | $ 58,856,671 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($18,249,412 ÷ 2,336,366 shares) | | $ 7.81 |
| | |
Maximum offering price per share (100/94.25 of $7.81) | | $ 8.29 |
Class T:
Net Asset Value and redemption price per share ($15,122,889 ÷ 1,977,167 shares) | | $ 7.65 |
| | |
Maximum offering price per share (100/96.50 of $7.65) | | $ 7.93 |
Class B:
Net Asset Value and offering price per share ($11,044,373 ÷ 1,504,428 shares)A | | $ 7.34 |
| | |
Class C:
Net Asset Value and offering price per share ($13,323,006 ÷ 1,814,396 shares)A | | $ 7.34 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($1,116,991 ÷ 139,694 shares) | | $ 8.00 |
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.
Biotechnology
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Special dividends | | 42,843 |
Interest | | 1,016 |
Income from Fidelity Central Funds (including $8,739 from security lending) | | 20,028 |
Total income | | 63,887 |
| | |
Expenses | | |
Management fee | $ 287,392 | |
Transfer agent fees | 164,004 | |
Distribution fees | 334,626 | |
Accounting and security lending fees | 21,818 | |
Custodian fees and expenses | 10,146 | |
Independent trustees' compensation | 216 | |
Registration fees | 47,193 | |
Audit | 42,785 | |
Legal | 260 | |
Miscellaneous | 13,578 | |
Total expenses before reductions | 922,018 | |
Expense reductions | (5,153) | 916,865 |
Net investment income (loss) | | (852,978) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (1,922,156) | |
Foreign currency transactions | 300 | |
Total net realized gain (loss) | | (1,921,856) |
Change in net unrealized appreciation (depreciation) on investment securities | | 10,243,107 |
Net gain (loss) | | 8,321,251 |
Net increase (decrease) in net assets resulting from operations | | $ 7,468,273 |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (852,978) | $ (966,220) |
Net realized gain (loss) | (1,921,856) | 8,930,811 |
Change in net unrealized appreciation (depreciation) | 10,243,107 | (4,482,074) |
Net increase (decrease) in net assets resulting from operations | 7,468,273 | 3,482,517 |
Distributions to shareholders from net realized gain | (3,898,928) | - |
Share transactions - net increase (decrease) | 3,736,181 | (8,274,098) |
Redemption fees | 1,940 | 1,128 |
Total increase (decrease) in net assets | 7,307,466 | (4,790,453) |
| | |
Net Assets | | |
Beginning of period | 51,549,205 | 56,339,658 |
End of period | $ 58,856,671 | $ 51,549,205 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 | $ 5.94 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) F | (.09) | (.09) | (.08) G | (.09) |
Net realized and unrealized gain (loss) | 1.20 | .51 | .10 | .88 | .15 |
Total from investment operations | 1.11 | .42 | .01 | .80 | .06 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 |
Total Return A,B | 15.95% | 6.17% | .15% | 13.33% | 1.01% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.37% | 1.42% | 1.48% | 1.56% | 1.68% |
Expenses net of fee waivers, if any | 1.37% | 1.40% | 1.40% | 1.45% | 1.50% |
Expenses net of all reductions | 1.37% | 1.40% | 1.37% | 1.43% | 1.48% |
Net investment income (loss) | (1.24)% F | (1.25)% | (1.29)% | (1.36)% G | (1.38)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 18,249 | $ 13,081 | $ 12,539 | $ 11,022 | $ 10,197 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.33)%.
G 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)%.
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. 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.
I Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 | $ 5.90 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.11) F | (.11) | (.11) | (.10) G | (.10) |
Net realized and unrealized gain (loss) | 1.18 | .51 | .10 | .87 | .15 |
Total from investment operations | 1.07 | .40 | (.01) | .77 | .05 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 |
Total Return A,B | 15.64% | 5.96% | (.15)% | 12.94% | .85% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.69% | 1.75% | 1.79% | 1.93% | 2.10% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.70% | 1.75% |
Expenses net of all reductions | 1.65% | 1.65% | 1.62% | 1.68% | 1.73% |
Net investment income (loss) | (1.53)% F | (1.49)% | (1.54)% | (1.61)% G | (1.63)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 15,123 | $ 13,008 | $ 13,808 | $ 14,177 | $ 13,367 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
G 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)%.
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. 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.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 | $ 5.82 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) F | (.14) | (.14) | (.13)G | (.13) |
Net realized and unrealized gain (loss) | 1.13 | .50 | .10 | .85 | .15 |
Total from investment operations | .99 | .36 | (.04) | .72 | .02 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 |
Total Return A,B | 14.96% | 5.52% | (.61)% | 12.33% | .34% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.12% | 2.17% | 2.23% | 2.33% | 2.46% |
Expenses net of fee waivers, if any | 2.12% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.12% | 2.15% | 2.12% | 2.18% | 2.22% |
Net investment income (loss) | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G | (2.12)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 11,044 | $ 12,656 | $ 14,938 | $ 16,921 | $ 16,819 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G 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)%.
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. 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.
I Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 | $ 5.82 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.13) F | (.14) | (.14) | (.13)G | (.13) |
Net realized and unrealized gain (loss) | 1.12 | .50 | .09 | .86 | .15 |
Total from investment operations | .99 | .36 | (.05) | .73 | .02 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capitalC,I | - | - | - | - | - |
Net asset value, end of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 |
Total Return A,B | 14.96% | 5.52% | (.76)% | 12.50% | .34% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.12% | 2.16% | 2.17% | 2.24% | 2.31% |
Expenses net of fee waivers, if any | 2.12% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.12% | 2.15% | 2.12% | 2.18% | 2.23% |
Net investment income (loss) | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G | (2.13)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,323 | $ 11,813 | $ 13,787 | $ 12,538 | $ 13,215 |
Portfolio turnover rate E | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G 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)%.
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. 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.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 | $ 5.97 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.07) E | (.07) | (.07) | (.06) F | (.06) |
Net realized and unrealized gain (loss) | 1.23 | .53 | .09 | .89 | .15 |
Total from investment operations | 1.16 | .46 | .02 | .83 | .09 |
Distributions from net realized gain | (.53) | - | - | - | - |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 |
Total Return A | 16.35% | 6.66% | .29% | 13.70% | 1.51% |
Ratios to Average Net Assets C,G | | | | | |
Expenses before reductions | 1.06% | 1.06% | 1.05% | 1.10% | 1.16% |
Expenses net of fee waivers, if any | 1.06% | 1.06% | 1.05% | 1.10% | 1.16% |
Expenses net of all reductions | 1.06% | 1.06% | 1.03% | 1.09% | 1.14% |
Net investment income (loss) | (.94)% E | (.91)% | (.94)% | (1.02)% F | (1.04)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,117 | $ 991 | $ 1,268 | $ 1,243 | $ 1,146 |
Portfolio turnover rate D | 132% | 120% | 62% | 30% | 50% |
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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
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 (1.02)%.
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
Notes to Financial Statements
For the period ended July 31, 2008
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.
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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. As a result of a change in the estimate of the return of capital component of dividend income realized in the year ended July 31, 2007, dividend income has been reduced $26,000 with a corresponding increase to net unrealized appreciation (depreciation). The change in estimate has no impact on total net assets or total return of the Fund. 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 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 | $ 12,751,365 |
Unrealized depreciation | (2,320,139) |
Net unrealized appreciation (depreciation) | 10,431,226 |
Cost for federal income tax purposes | $ 47,741,346 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Long-term Capital Gains | $ 3,898,928 | $ - |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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 $68,262,335 and $70,783,788, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 34,272 | $ 685 |
Class T | .25% | .25% | 67,098 | 258 |
Class B | .75% | .25% | 116,219 | 87,830 |
Class C | .75% | .25% | 117,037 | 15,913 |
| | | $ 334,626 | $ 104,686 |
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
by FDC |
Class A | $ 11,012 |
Class T | 7,435 |
Class B* | 25,964 |
Class C* | 1,956 |
| $ 46,367 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 41,176 | .30 |
Class T | 49,606 | .37 |
Class B | 35,123 | .30 |
Class C | 35,280 | .30 |
Institutional Class | 2,819 | .24 |
| $ 164,004 | |
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 $2,116 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 $122 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
Limitations | Reimbursement
from adviser |
Class T | 1.65% | $ 5,030 |
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 $123 for the period.
Biotechnology
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $6,156, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 958,767 | $ - |
Class T | 975,566 | - |
Class B | 968,071 | - |
Class C | 911,566 | - |
Institutional Class | 84,958 | - |
Total | $ 3,898,928 | $ - |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 968,364 | 654,030 | $ 6,960,029 | $ 4,756,477 |
Reinvestment of distributions | 116,475 | - | 854,207 | - |
Shares redeemed | (556,578) | (687,789) | (3,954,261) | (5,067,147) |
Net increase (decrease) | 528,261 | (33,759) | $ 3,859,975 | $ (310,670) |
Class T | | | | |
Shares sold | 558,497 | 413,953 | $ 3,914,836 | $ 2,989,158 |
Reinvestment of distributions | 133,154 | - | 959,165 | - |
Shares redeemed | (543,030) | (643,045) | (3,782,531) | (4,647,999) |
Net increase (decrease) | 148,621 | (229,092) | $ 1,091,470 | $ (1,658,841) |
Class B | | | | |
Shares sold | 270,835 | 235,936 | $ 1,836,564 | $ 1,623,598 |
Reinvestment of distributions | 123,818 | - | 860,151 | - |
Shares redeemed | (730,418) | (686,826) | (4,825,895) | (4,815,046) |
Net increase (decrease) | (335,765) | (450,890) | $ (2,129,180) | $ (3,191,448) |
Class C | | | | |
Shares sold | 452,084 | 294,514 | $ 3,145,989 | $ 2,075,073 |
Reinvestment of distributions | 110,151 | - | 765,068 | - |
Shares redeemed | (465,047) | (691,341) | (3,112,018) | (4,822,276) |
Net increase (decrease) | 97,188 | (396,827) | $ 799,039 | $ (2,747,203) |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions - continued
Transactions for each class of shares were as follows - continued
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Institutional Class | | | | |
Shares sold | 190,433 | 40,455 | $ 1,427,209 | $ 308,779 |
Reinvestment of distributions | 6,538 | - | 48,898 | - |
Shares redeemed | (191,649) | (89,434) | (1,361,230) | (674,715) |
Net increase (decrease) | 5,322 | (48,979) | $ 114,877 | $ (365,936) |
Biotechnology
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of
fundA |
Institutional Class B | -16.16% | 7.60% | -2.75% |
A From December 27, 2000.
B Prior to October 1, 2006, Advisor Communications Eqipment operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$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.
Communications Equipment
Advisor Communications Equipment Fund
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -16.43%, -16.59%, -16.94% and -17.06%, respectively (excluding sales charges), trailing the S&P 500 and the -15.92% return of the MSCI® US Investable Market Communications Equipment Index. Versus the MSCI index, unfavorable stock selection in communications equipment and two groups not represented in the index - Internet software/services and semiconductors - had a negative impact on fund performance. From a capitalization perspective, the fund was hurt by my stock selection in the small-cap area and by overweighting mid-caps, which did relatively poorly. An underweighted position in major index component QUALCOMM was the fund's top detractor, as the stock registered a solid gain. Also holding back performance were an out-of-index stake in Canada's Sandvine, which makes network traffic-monitoring equipment; F5 Networks, a maker of software for application delivery networking; wireless network services provider Harris Stratex Networks; Powerwave Technologies, which makes equipment for wireless communications networks; and Starent Networks, a provider of infrastructure solutions for wireless telecom services carriers. Conversely, favorable stock picking outside of the benchmark in consumer electronics, computer hardware and home entertainment software benefited the fund. Additionally, given the fund's significant exposure to foreign stocks, the weak U.S. dollar helped. Canada's "smartphone" maker Research In Motion was an important contributor, buoyed by new products and expanding markets. Other contributors were Tele Atlas, a Dutch provider of digital map data that I sold, and Taiwan's HTC Corp., a leading contract manufacturer for makers of computers and cellular phones. Large underweightings in major index components Cisco Systems - the communications equipment giant - and cellular handset maker Motorola, the latter of which I sold completely by period end, also were timely. All the contributors I mentioned except for Motorola and Cisco were out-of-index positions.
During the year, the fund's Institutional Class shares returned -16.16%, trailing the S&P 500 and just slightly behind the -15.92% return of the MSCI® US Investable Market Communications Equipment Index. Versus the MSCI index, unfavorable stock selection in communications equipment and two groups not represented in the index - Internet software/services and semiconductors - had a negative impact on fund performance. From a capitalization perspective, the fund was hurt by my stock selection in the small-cap area and by overweighting mid-caps, which did relatively poorly. An underweighted position in major index component QUALCOMM was the fund's top detractor, as the stock registered a solid gain. Also holding back performance were an out-of-index stake in Canada's Sandvine, which makes network traffic-monitoring equipment; F5 Networks, a maker of software for application delivery networking; wireless network services provider Harris Stratex Networks; Powerwave Technologies, which makes equipment for wireless communications networks; and Starent Networks, a provider of infrastructure solutions for wireless telecom services carriers. Conversely, favorable stock picking outside of the benchmark in consumer electronics, computer hardware and home entertainment software benefited the fund. Additionally, given the fund's significant exposure to foreign stocks, the weak U.S. dollar helped. Canada's "smartphone" maker Research In Motion was an important contributor, buoyed by new products and expanding markets. Other contributors were Tele Atlas, a Dutch provider of digital map data that I sold, and Taiwan's HTC Corp., a leading contract manufacturer for makers of computers and cellular phones. Large underweightings in major index components Cisco Systems - the communications equipment giant - and cellular handset maker Motorola, the latter of which I sold completely by period end, also were timely. All the contributors I mentioned except for Motorola and Cisco were out-of-index positions.
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 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 979.90 | $ 6.89 |
Hypothetical A | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class T | | | |
Actual | $ 1,000.00 | $ 979.60 | $ 8.12 |
Hypothetical A | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B | | | |
Actual | $ 1,000.00 | $ 977.50 | $ 10.57 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C | | | |
Actual | $ 1,000.00 | $ 976.20 | $ 10.56 |
Hypothetical A | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 982.80 | $ 5.67 |
Hypothetical A | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Communications Equipment
Advisor Communications Equipment Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
QUALCOMM, Inc. | 16.4 | 6.6 |
Cisco Systems, Inc. | 10.1 | 15.4 |
Research In Motion Ltd. | 8.6 | 10.1 |
Comverse Technology, Inc. | 6.7 | 6.9 |
Starent Networks Corp. | 5.2 | 1.8 |
HTC Corp. | 4.6 | 4.7 |
CommScope, Inc. | 4.4 | 0.0 |
Powerwave Technologies, Inc. | 4.0 | 3.5 |
ADC Telecommunications, Inc. | 3.0 | 2.4 |
Apple, Inc. | 2.9 | 0.0 |
| 65.9 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Communications Equipment | 71.6% | |
 | Computers & Peripherals | 7.7% | |
| Semiconductors & Semiconductor Equipment | 4.0% | |
| Software | 3.6% | |
| Commercial Services & Supplies | 2.2% | |
| All Others* | 10.9% | |
|
As of January 31, 2008 |
| Communications Equipment | 72.9% | |
| Computers & Peripherals | 5.1% | |
| Semiconductors & Semiconductor Equipment | 5.9% | |
| Software | 6.1% | |
| Household Durables | 2.4% | |
| All Others* | 7.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Communications Equipment Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 89.5% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 2.2% |
Diversified Commercial & Professional Services - 2.2% |
China Security & Surveillance Technology, Inc. (a) | 11,200 | | $ 157,920 |
COMMUNICATIONS EQUIPMENT - 71.4% |
Communications Equipment - 71.4% |
Acme Packet, Inc. (a) | 100 | | 486 |
ADC Telecommunications, Inc. (a) | 22,600 | | 213,796 |
Adtran, Inc. | 1,483 | | 33,160 |
ADVA AG Optical Networking (a) | 7,013 | | 17,669 |
Alcatel-Lucent SA sponsored ADR | 12,400 | | 74,524 |
Arris Group, Inc. (a) | 6,444 | | 61,669 |
Aruba Networks, Inc. (a) | 100 | | 583 |
AudioCodes Ltd. (a) | 20,500 | | 89,995 |
Avanex Corp. (a) | 11,600 | | 7,540 |
Ceragon Networks Ltd. (a) | 100 | | 787 |
Cisco Systems, Inc. (a) | 32,869 | | 722,789 |
Cogo Group, Inc. (a) | 13,001 | | 60,065 |
CommScope, Inc. (a) | 7,100 | | 316,589 |
Comverse Technology, Inc. (a) | 31,906 | | 477,952 |
Corning, Inc. | 6,400 | | 128,064 |
F5 Networks, Inc. (a) | 3,300 | | 96,195 |
Finisar Corp. (a) | 2,800 | | 3,752 |
Foxconn International Holdings Ltd. (a) | 2,000 | | 1,915 |
Harris Stratex Networks, Inc. Class A (a) | 15,495 | | 113,888 |
Infinera Corp. (a) | 1,300 | | 14,638 |
Opnext, Inc. (a) | 500 | | 2,770 |
Powerwave Technologies, Inc. (a) | 69,500 | | 284,950 |
QUALCOMM, Inc. | 21,100 | | 1,167,674 |
Research In Motion Ltd. (a) | 5,020 | | 616,556 |
Riverbed Technology, Inc. (a) | 1,100 | | 17,457 |
Sandvine Corp. (a) | 18,400 | | 17,073 |
Sandvine Corp. (U.K.) (a) | 56,400 | | 50,029 |
Sonus Networks, Inc. (a) | 19,504 | | 70,800 |
Starent Networks Corp. (a) | 28,476 | | 373,036 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 6,200 | | 64,976 |
| | 5,101,377 |
COMPUTERS & PERIPHERALS - 7.7% |
Computer Hardware - 7.6% |
Apple, Inc. (a) | 1,300 | | 206,635 |
Compal Electronics, Inc. | 5,698 | | 5,425 |
HTC Corp. | 21,100 | | 331,137 |
NEC Corp. | 90 | | 493 |
| | 543,690 |
Computer Storage & Peripherals - 0.1% |
SanDisk Corp. (a) | 610 | | 8,601 |
TOTAL COMPUTERS & PERIPHERALS | | 552,291 |
|
| Shares | | Value |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.3% |
Electronic Manufacturing Services - 0.3% |
Trimble Navigation Ltd. (a) | 600 | | $ 19,920 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.0% |
Semiconductor Equipment - 0.3% |
EMCORE Corp. (a) | 4,600 | | 22,632 |
Semiconductors - 3.7% |
Actel Corp. (a) | 451 | | 6,201 |
Applied Micro Circuits Corp. (a) | 2,758 | | 21,402 |
Conexant Systems, Inc. (a) | 1,280 | | 6,106 |
Cree, Inc. (a) | 1,100 | | 21,340 |
Exar Corp. (a) | 143 | | 1,101 |
Hittite Microwave Corp. (a) | 600 | | 19,152 |
Infineon Technologies AG sponsored ADR (a) | 4,300 | | 32,336 |
Microsemi Corp. (a) | 449 | | 11,656 |
Mindspeed Technologies, Inc. (a) | 2,501 | | 9,429 |
MIPS Technologies, Inc. (a) | 1,398 | | 5,312 |
ON Semiconductor Corp. (a) | 6,785 | | 63,711 |
Pericom Semiconductor Corp. (a) | 1,700 | | 24,242 |
Pixelplus Co. Ltd. ADR (a) | 900 | | 468 |
PLX Technology, Inc. (a) | 1,400 | | 7,700 |
PMC-Sierra, Inc. (a) | 3,100 | | 22,444 |
Silicon Storage Technology, Inc. (a) | 1,200 | | 3,828 |
Transmeta Corp. (a) | 290 | | 4,228 |
| | 260,656 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 283,288 |
SOFTWARE - 3.6% |
Application Software - 2.5% |
Smith Micro Software, Inc. (a) | 6,700 | | 48,240 |
Synchronoss Technologies, Inc. (a) | 500 | | 5,860 |
Taleo Corp. Class A (a) | 100 | | 1,874 |
Ulticom, Inc. (a) | 17,598 | | 123,186 |
| | 179,160 |
Home Entertainment Software - 1.1% |
Ubisoft Entertainment SA (a) | 800 | | 78,735 |
Systems Software - 0.0% |
Allot Communications Ltd. (a) | 300 | | 795 |
TOTAL SOFTWARE | | 258,690 |
WIRELESS TELECOMMUNICATION SERVICES - 0.3% |
Wireless Telecommunication Services - 0.3% |
SBA Communications Corp. Class A (a) | 500 | | 18,945 |
TOTAL COMMON STOCKS (Cost $7,517,850) | 6,392,431 |
Convertible Bonds - 0.2% |
| Principal Amount | | Value |
COMMUNICATIONS EQUIPMENT - 0.2% |
Communications Equipment - 0.2% |
Ciena Corp. 0.25% 5/1/13
(Cost $20,000) | | $ 20,000 | | $ 15,550 |
Money Market Funds - 10.4% |
| Shares | | |
Fidelity Cash Central Fund, 2.35% (b)
(Cost $743,047) | 743,047 | | 743,047 |
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $8,280,897) | | 7,151,028 |
NET OTHER ASSETS - (0.1)% | | (9,248) |
NET ASSETS - 100% | $ 7,141,780 |
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. |
Affiliated Central Fund |
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 | $ 10,921 |
| |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.8% |
Canada | 9.5% |
Taiwan | 4.7% |
France | 2.1% |
Israel | 1.3% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $207,917 all of which will expire on July 31, 2016. |
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, 2008 |
Assets | | |
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $7,537,850) | $ 6,407,981 | |
Fidelity Central Funds (cost $743,047) | 743,047 | |
Total Investments (cost $8,280,897) | | $ 7,151,028 |
Cash | | 13,692 |
Receivable for investments sold | | 375,032 |
Receivable for fund shares sold | | 6,110 |
Dividends receivable | | 15,416 |
Interest receivable | | 12 |
Distributions receivable from Fidelity Central Funds | | 454 |
Prepaid expenses | | 13 |
Receivable from investment adviser for expense reductions | | 3,471 |
Other receivables | | 261 |
Total assets | | 7,565,489 |
| | |
Liabilities | | |
Payable for investments purchased | $ 317,230 | |
Payable for fund shares redeemed | 60,880 | |
Accrued management fee | 3,347 | |
Distribution fees payable | 3,350 | |
Other affiliated payables | 2,276 | |
Other payables and accrued expenses | 36,626 | |
Total liabilities | | 423,709 |
| | |
Net Assets | | $ 7,141,780 |
Net Assets consist of: | | |
Paid in capital | | $ 8,557,480 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (285,716) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (1,129,984) |
Net Assets | | $ 7,141,780 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($2,458,680 ÷ 314,253 shares) | | $ 7.82 |
| | |
Maximum offering price per share (100/94.25 of $7.82) | | $ 8.30 |
Class T:
Net Asset Value and redemption price per share ($2,137,660 ÷ 278,404 shares) | | $ 7.68 |
| | |
Maximum offering price per share (100/96.50 of $7.68) | | $ 7.96 |
Class B:
Net Asset Value and offering price per share ($1,218,855 ÷ 164,975 shares)A | | $ 7.39 |
| | |
Class C:
Net Asset Value and offering price per share ($1,097,352 ÷ 148,606 shares)A | | $ 7.38 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($229,233 ÷ 28,731 shares) | | $ 7.98 |
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.
Communications Equipment
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Dividends | | $ 30,594 |
Interest | | 737 |
Income from Fidelity Central Funds | | 10,921 |
Total income | | 42,252 |
| | |
Expenses | | |
Management fee | $ 48,797 | |
Transfer agent fees | 30,799 | |
Distribution fees | 51,793 | |
Accounting fees and expenses | 3,409 | |
Custodian fees and expenses | 3,042 | |
Independent trustees' compensation | 38 | |
Registration fees | 46,305 | |
Audit | 44,317 | |
Legal | 55 | |
Miscellaneous | 2,972 | |
Total expenses before reductions | 231,527 | |
Expense reductions | (79,040) | 152,487 |
Net investment income (loss) | | (110,235) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 48,934 | |
Foreign currency transactions | (3,086) | |
Total net realized gain (loss) | | 45,848 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,477,687) | |
Assets and liabilities in foreign currencies | (115) | |
Total change in net unrealized appreciation (depreciation) | | (1,477,802) |
Net gain (loss) | | (1,431,954) |
Net increase (decrease) in net assets resulting from operations | | $ (1,542,189) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (110,235) | $ (146,568) |
Net realized gain (loss) | 45,848 | 337,365 |
Change in net unrealized appreciation (depreciation) | (1,477,802) | 2,613,997 |
Net increase (decrease) in net assets resulting from operations | (1,542,189) | 2,804,794 |
Distributions to shareholders from net realized gain | (150,546) | - |
Share transactions - net increase (decrease) | (1,556,420) | (3,045,289) |
Redemption fees | 979 | 192 |
Total increase (decrease) in net assets | (3,248,176) | (240,303) |
| | |
Net Assets | | |
Beginning of period | 10,389,956 | 10,630,259 |
End of period | $ 7,141,780 | $ 10,389,956 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 | $ 5.57 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.08) | (.09) | (.09) | (.07) | (.09) |
Net realized and unrealized gain (loss) | (1.45) | 2.29 | (.32) | 1.24 | 1.01 |
Total from investment operations | (1.53) | 2.20 | (.41) | 1.17 | .92 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 |
Total Return A,B | (16.43)% | 30.18% | (5.32)% | 17.92% | 17.24% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.25% | 2.24% | 2.13% | 2.32% | 2.38% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.45% | 1.50% |
Expenses net of all reductions | 1.39% | 1.40% | 1.32% | 1.28% | 1.35% |
Net investment income (loss) | (.91)% | (1.00)% | (1.05)% | (.92)% | (1.18)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,459 | $ 2,825 | $ 3,145 | $ 2,406 | $ 3,480 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 | $ 5.54 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.10) | (.11) | (.11) | (.08) | (.10) |
Net realized and unrealized gain (loss) | (1.42) | 2.26 | (.31) | 1.21 | 1.00 |
Total from investment operations | (1.52) | 2.15 | (.42) | 1.13 | .90 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 |
Total Return A,B | (16.59)% | 29.90% | (5.52)% | 17.44% | 16.97% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.62% | 2.57% | 2.51% | 2.78% | 3.06% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.71% | 1.75% |
Expenses net of all reductions | 1.65% | 1.64% | 1.57% | 1.54% | 1.60% |
Net investment income (loss) | (1.16)% | (1.25)% | (1.30)% | (1.18)% | (1.43)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,138 | $ 3,271 | $ 2,932 | $ 3,034 | $ 3,250 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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.
Communications Equipment
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) | (.14) | (.14) | (.12) | (.13) |
Net realized and unrealized gain (loss) | (1.36) | 2.18 | (.31) | 1.20 | .98 |
Total from investment operations | (1.50) | 2.04 | (.45) | 1.08 | .85 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Total Return A,B | (16.94)% | 29.18% | (6.05)% | 16.98% | 16.27% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.03% | 3.00% | 2.94% | 3.14% | 3.48% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.20% | 2.25% |
Expenses net of all reductions | 2.15% | 2.15% | 2.07% | 2.04% | 2.11% |
Net investment income (loss) | (1.67)% | (1.75)% | (1.80)% | (1.68)% | (1.93)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,219 | $ 2,225 | $ 2,406 | $ 2,864 | $ 2,998 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 | $ 5.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) | (.14) | (.15) | (.12) | (.14) |
Net realized and unrealized gain (loss) | (1.37) | 2.18 | (.30) | 1.20 | .99 |
Total from investment operations | (1.51) | 2.04 | (.45) | 1.08 | .85 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .04 |
Net asset value, end of period | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Total Return A,B | (17.06)% | 29.18% | (6.05)% | 16.98% | 16.27% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.02% | 2.98% | 2.86% | 3.07% | 3.19% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.15% | 2.15% | 2.07% | 2.02% | 2.10% |
Net investment income (loss) | (1.67)% | (1.75)% | (1.81)% | (1.66)% | (1.93)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,097 | $ 1,745 | $ 1,768 | $ 1,846 | $ 3,180 |
Portfolio turnover rate E | 63% | 58% | 174% | 250% | 306% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 | $ 5.61 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.06) | (.07) | (.07) | (.05) | (.07) |
Net realized and unrealized gain (loss) | (1.47) | 2.33 | (.33) | 1.24 | 1.02 |
Total from investment operations | (1.53) | 2.26 | (.40) | 1.19 | .95 |
Distributions from net realized gain | (.14) | - | - | - | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | .04 |
Net asset value, end of period | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 |
Total Return A | (16.16)% | 30.58% | (5.13)% | 18.03% | 17.65% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 1.94% | 1.87% | 1.70% | 1.85% | 1.55% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.18% | 1.25% |
Expenses net of all reductions | 1.14% | 1.15% | 1.07% | 1.01% | 1.11% |
Net investment income (loss) | (.66)% | (.75)% | (.80)% | (.65)% | (.93)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 229 | $ 324 | $ 379 | $ 319 | $ 607 |
Portfolio turnover rate D | 63% | 58% | 174% | 250% | 306% |
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.
Communications Equipment
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Communications Equipment 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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 | $ 709,491 |
Unrealized depreciation | (1,910,775) |
Net unrealized appreciation (depreciation) | (1,201,284) |
Capital loss carryforward | (207,917) |
Cost for federal income tax purposes | $ 8,352,312 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Long-term Capital Gains | $ 150,546 | $ - |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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.
Communications Equipment
4. Operating Policies - continued
Repurchase Agreements - continued
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 $5,352,438 and $7,704,087, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 6,528 | $ 142 |
Class T | .25% | .25% | 13,302 | 18 |
Class B | .75% | .25% | 17,577 | 13,188 |
Class C | .75% | .25% | 14,386 | 1,592 |
| | | $ 51,793 | $ 14,940 |
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
by FDC |
Class A | $ 1,402 |
Class T | 1,763 |
Class B* | 2,291 |
Class C* | 600 |
| $ 6,056 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 8,427 | .32 |
Class T | 11,274 | .42 |
Class B | 5,695 | .32 |
Class C | 4,653 | .32 |
Institutional Class | 750 | .25 |
| $ 30,799 | |
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 $247 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 $22 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
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 22,308 |
Class T | 1.65% | 25,918 |
Class B | 2.15% | 15,397 |
Class C | 2.15% | 12,534 |
Institutional Class | 1.15% | 2,344 |
| | $ 78,501 |
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 $539 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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
Communications Equipment
9. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $4,027 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 39,064 | $ - |
Class T | 47,716 | - |
Class B | 32,890 | - |
Class C | 26,349 | - |
Institutional Class | 4,527 | - |
Total | $ 150,546 | $ - |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 160,354 | 81,005 | $ 1,394,318 | $ 690,457 |
Reinvestment of distributions | 4,001 | - | 38,211 | - |
Shares redeemed | (147,761) | (214,792) | (1,297,098) | (1,810,328) |
Net increase (decrease) | 16,594 | (133,787) | $ 135,431 | $ (1,119,871) |
Class T | | | | |
Shares sold | 64,977 | 82,403 | $ 556,295 | $ 704,729 |
Reinvestment of distributions | 5,010 | - | 47,041 | - |
Shares redeemed | (141,880) | (139,753) | (1,263,739) | (1,173,589) |
Net increase (decrease) | (71,893) | (57,350) | $ (660,403) | $ (468,860) |
Class B | | | | |
Shares sold | 20,643 | 24,084 | $ 176,765 | $ 199,321 |
Reinvestment of distributions | 3,437 | - | 31,211 | - |
Shares redeemed | (105,422) | (121,877) | (851,909) | (1,002,926) |
Net increase (decrease) | (81,342) | (97,793) | $ (643,933) | $ (803,605) |
Class C | | | | |
Shares sold | 39,088 | 60,107 | $ 340,813 | $ 487,807 |
Reinvestment of distributions | 2,609 | - | 23,659 | - |
Shares redeemed | (86,305) | (119,863) | (711,202) | (990,194) |
Net increase (decrease) | (44,608) | (59,756) | $ (346,730) | $ (502,387) |
Institutional Class | | | | |
Shares sold | 5,041 | 1,716 | $ 45,930 | $ 15,290 |
Reinvestment of distributions | 356 | - | 3,461 | - |
Shares redeemed | (10,196) | (19,380) | (90,176) | (165,856) |
Net increase (decrease) | (4,799) | (17,664) | $ (40,785) | $ (150,566) |
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class A | -21.09% | 2.16% | 1.35% |
A Prior to October 1, 2006, Advisor Consumer Discretionary operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$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, 1998. 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.
Consumer Discretionary
Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned -21.24%, -21.41%, -21.80% and -21.77%, respectively (excluding sales charges), far shy of the S&P 500 but better than the -23.44% return of the MSCI® US Investable Market Consumer Discretionary Index. The past year was especially tough for stocks driven by discretionary consumer spending. I elected to take a "barbell" approach, owning stocks with relatively stable earnings - which might outperform in a down market - and also more-cyclical stocks that could benefit if the market rebounds from a trough in the credit cycle. Specialty stores was the fund's largest industry overweighting and largest contributor to relative performance as a result of good stock selection. Stock picking in apparel retailing also helped results, as did security selection and an underweighting in automobile manufacturers. Our out-of-index position in discounter Costco Wholesale rose in value as the company took market share from competitors. Discount office supply chain Staples aided results as well. McDonald's upgraded its menu and gained market share in the fast-food arena. I sold out of index component General Motors before its stock was crushed by a consumer stampede away from its trucks and SUVs. On the negative side, stock selection and, to a lesser extent, a relative underweighting in Internet retailers hurt performance compared with the index, as did an overweighting in casinos and gaming. Online jewelry retailer Blue Nile declined as consumers held back on expensive purchases. Shares in R.H. Donnelley, a publisher of print and online phone directories, plummeted after the company reported significant sales declines, and I sold the position. I avoided index component and sports apparel firm Nike for much of the period and missed an upturn in its share price.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned -21.09%, far shy of the S&P 500 but better than the -23.44% return of the MSCI® US Investable Market Consumer Discretionary Index. The past year was especially tough for stocks driven by discretionary consumer spending. I elected to take a "barbell" approach, owning stocks with relatively stable earnings - which might outperform in a down market - - and also more-cyclical stocks that could benefit if the market rebounds from a trough in the credit cycle. Specialty stores was the fund's largest industry overweighting and largest contributor to relative performance as a result of good stock selection. Stock picking in apparel retailing also helped results, as did security selection and an underweighting in automobile manufacturers. Our out-of-index position in discounter Costco Wholesale rose in value as the company took market share from competitors. Discount office supply chain Staples aided results as well. McDonald's upgraded its menu and gained market share in the fast-food arena. I sold out of index component General Motors before its stock was crushed by a consumer stampede away from its trucks and SUVs. On the negative side, stock selection and, to a lesser extent, a relative underweighting in Internet retailers hurt performance compared with the index, as did an overweighting in casinos and gaming. Online jewelry retailer Blue Nile declined as consumers held back on expensive purchases. Shares in R.H. Donnelley, a publisher of print and online phone directories, plummeted after the company reported significant sales declines, and I sold the position. I avoided index component and sports apparel firm Nike for much of the period and missed an upturn in its share price.
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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 875.00 | $ 6.71 |
HypotheticalA | $ 1,000.00 | $ 1,017.70 | $ 7.22 |
Class T | | | |
Actual | $ 1,000.00 | $ 873.70 | $ 7.87 |
HypotheticalA | $ 1,000.00 | $ 1,016.46 | $ 8.47 |
Class B | | | |
Actual | $ 1,000.00 | $ 871.90 | $ 10.24 |
HypotheticalA | $ 1,000.00 | $ 1,013.92 | $ 11.02 |
Class C | | | |
Actual | $ 1,000.00 | $ 872.20 | $ 10.24 |
HypotheticalA | $ 1,000.00 | $ 1,013.92 | $ 11.02 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 875.70 | $ 5.60 |
HypotheticalA | $ 1,000.00 | $ 1,018.90 | $ 6.02 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.44% |
Class T | 1.69% |
Class B | 2.20% |
Class C | 2.20% |
Institutional Class | 1.20% |
Consumer Discretionary
Advisor Consumer Discretionary Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
McDonald's Corp. | 6.4 | 5.1 |
Time Warner, Inc. | 5.9 | 5.7 |
Target Corp. | 5.8 | 6.3 |
Comcast Corp. Class A | 4.6 | 3.3 |
Lowe's Companies, Inc. | 3.9 | 3.9 |
Home Depot, Inc. | 3.8 | 4.4 |
The Walt Disney Co. | 3.7 | 2.6 |
Staples, Inc. | 3.0 | 3.2 |
Johnson Controls, Inc. | 2.7 | 2.8 |
PetSmart, Inc. | 2.4 | 2.0 |
| 42.2 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Media | 29.5% | |
| Specialty Retail | 24.6% | |
| Hotels, Restaurants
& Leisure | 14.5% | |
| Multiline Retail | 6.7% | |
| Textiles, Apparel
& Luxury Goods | 6.0% | |
| All Others* | 18.7% | |
As of January 31, 2008 |
| Media | 27.3% | |
| Specialty Retail | 24.8% | |
| Hotels, Restaurants
& Leisure | 14.0% | |
| Multiline Retail | 8.3% | |
| Food &
Staples Retailing | 4.7% | |
| All Others* | 20.9% | |
* Includes short-term investments and net other assets. |
Consumer Discretionary
Advisor Consumer Discretionary Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 100.0% |
| Shares | | Value |
AUTO COMPONENTS - 3.4% |
Auto Parts & Equipment - 3.4% |
Gentex Corp. | 13,800 | | $ 213,348 |
Johnson Controls, Inc. | 26,400 | | 796,224 |
| | 1,009,572 |
AUTOMOBILES - 0.4% |
Automobile Manufacturers - 0.4% |
Toyota Motor Corp. sponsored ADR | 1,500 | | 129,075 |
DISTRIBUTORS - 1.2% |
Distributors - 1.2% |
Li & Fung Ltd. | 106,000 | | 362,092 |
DIVERSIFIED CONSUMER SERVICES - 3.0% |
Education Services - 3.0% |
Apollo Group, Inc. Class A (non-vtg.) (a) | 9,800 | | 610,442 |
Princeton Review, Inc. (a)(d) | 9,729 | | 74,913 |
Strayer Education, Inc. | 1,000 | | 222,700 |
| | 908,055 |
FOOD & STAPLES RETAILING - 3.2% |
Drug Retail - 1.5% |
CVS Caremark Corp. | 12,000 | | 438,000 |
Food Retail - 0.8% |
Susser Holdings Corp. (a) | 19,405 | | 239,458 |
Hypermarkets & Super Centers - 0.9% |
Costco Wholesale Corp. (d) | 4,600 | | 288,328 |
TOTAL FOOD & STAPLES RETAILING | | 965,786 |
HOTELS, RESTAURANTS & LEISURE - 14.5% |
Casinos & Gaming - 3.8% |
International Game Technology | 24,100 | | 523,211 |
Las Vegas Sands Corp. (a)(d) | 9,930 | | 452,014 |
Wynn Resorts Ltd. | 1,700 | | 165,716 |
| | 1,140,941 |
Hotels, Resorts & Cruise Lines - 1.5% |
Carnival Corp. unit | 10,400 | | 384,176 |
Royal Caribbean Cruises Ltd. | 3,100 | | 78,988 |
| | 463,164 |
Leisure Facilities - 0.4% |
Life Time Fitness, Inc. (a)(d) | 3,500 | | 104,265 |
Restaurants - 8.8% |
Burger King Holdings, Inc. | 3,700 | | 99,271 |
Darden Restaurants, Inc. | 5,600 | | 182,392 |
McDonald's Corp. | 31,900 | | 1,907,301 |
Sonic Corp. (a)(d) | 20,200 | | 304,818 |
Starbucks Corp. (a) | 9,200 | | 135,148 |
| | 2,628,930 |
TOTAL HOTELS, RESTAURANTS & LEISURE | | 4,337,300 |
|
| Shares | | Value |
HOUSEHOLD DURABLES - 1.6% |
Homebuilding - 0.8% |
Centex Corp. | 3,500 | | $ 51,380 |
Lennar Corp. Class A (d) | 3,000 | | 36,300 |
Pulte Homes, Inc. | 12,400 | | 151,404 |
| | 239,084 |
Household Appliances - 0.8% |
Whirlpool Corp. (d) | 3,200 | | 242,240 |
TOTAL HOUSEHOLD DURABLES | | 481,324 |
INTERNET & CATALOG RETAIL - 3.8% |
Catalog Retail - 1.0% |
Liberty Media Corp. - Interactive
Series A (a) | 21,300 | | 298,839 |
Internet Retail - 2.8% |
Amazon.com, Inc. (a) | 9,200 | | 702,328 |
Blue Nile, Inc. (a)(d) | 3,200 | | 123,264 |
| | 825,592 |
TOTAL INTERNET & CATALOG RETAIL | | 1,124,431 |
INTERNET SOFTWARE & SERVICES - 1.4% |
Internet Software & Services - 1.4% |
Art Technology Group, Inc. (a) | 10,200 | | 37,434 |
eBay, Inc. (a) | 5,800 | | 145,986 |
Google, Inc. Class A (sub. vtg.) (a) | 500 | | 236,875 |
| | 420,295 |
LEISURE EQUIPMENT & PRODUCTS - 0.7% |
Leisure Products - 0.7% |
Hasbro, Inc. | 5,100 | | 197,472 |
MEDIA - 29.5% |
Advertising - 2.9% |
Lamar Advertising Co. Class A (a)(d) | 5,700 | | 216,486 |
Omnicom Group, Inc. | 15,600 | | 665,964 |
| | 882,450 |
Broadcasting & Cable TV - 10.1% |
Comcast Corp. Class A | 66,650 | | 1,374,323 |
Grupo Televisa SA de CV (CPO) sponsored ADR | 20,000 | | 449,800 |
Liberty Media Corp. - Entertainment Class A (a) | 15,000 | | 369,300 |
The DIRECTV Group, Inc. (a) | 22,400 | | 605,248 |
Time Warner Cable, Inc. (a) | 5,100 | | 144,993 |
Virgin Media, Inc. | 6,700 | | 75,174 |
| | 3,018,838 |
Movies & Entertainment - 14.3% |
Cinemark Holdings, Inc. | 6,000 | | 87,960 |
Live Nation, Inc. (a)(d) | 13,233 | | 167,000 |
News Corp.: | | | |
Class A | 39,084 | | 552,257 |
Common Stocks - continued |
| Shares | | Value |
MEDIA - CONTINUED |
Movies & Entertainment - continued |
News Corp.: - continued | | | |
Class B | 4,200 | | $ 61,362 |
Regal Entertainment Group Class A (d) | 32,400 | | 539,460 |
The Walt Disney Co. | 36,300 | | 1,101,705 |
Time Warner, Inc. | 123,500 | | 1,768,520 |
| | 4,278,264 |
Publishing - 2.2% |
McGraw-Hill Companies, Inc. | 15,900 | | 646,653 |
TOTAL MEDIA | | 8,826,205 |
MULTILINE RETAIL - 6.7% |
Department Stores - 0.9% |
Nordstrom, Inc. (d) | 9,200 | | 264,408 |
General Merchandise Stores - 5.8% |
Lojas Americanas SA (PN) | 150 | | 1,132 |
Target Corp. (d) | 38,400 | | 1,736,832 |
| | 1,737,964 |
TOTAL MULTILINE RETAIL | | 2,002,372 |
SPECIALTY RETAIL - 24.6% |
Apparel Retail - 6.1% |
Abercrombie & Fitch Co. Class A (d) | 4,900 | | 270,578 |
Citi Trends, Inc. (a)(d) | 8,599 | | 198,895 |
Ross Stores, Inc. | 7,900 | | 299,884 |
The Buckle, Inc. | 2,100 | | 108,087 |
TJX Companies, Inc. (d) | 14,848 | | 500,526 |
Tween Brands, Inc. (a) | 10,400 | | 143,208 |
Urban Outfitters, Inc. (a)(d) | 5,800 | | 191,458 |
Zumiez, Inc. (a) | 7,800 | | 115,128 |
| | 1,827,764 |
Automotive Retail - 1.9% |
Advance Auto Parts, Inc. | 6,500 | | 267,085 |
AutoZone, Inc. (a) | 2,200 | | 286,638 |
| | 553,723 |
Home Improvement Retail - 8.8% |
Home Depot, Inc. (d) | 48,467 | | 1,154,969 |
Lowe's Companies, Inc. | 57,000 | | 1,158,240 |
Sherwin-Williams Co. (d) | 6,000 | | 319,500 |
| | 2,632,709 |
Homefurnishing Retail - 1.1% |
Williams-Sonoma, Inc. (d) | 18,700 | | 326,128 |
Specialty Stores - 6.7% |
Jo-Ann Stores, Inc. (a)(d) | 8,200 | | 180,154 |
|
| Shares | | Value |
PetSmart, Inc. | 31,600 | | $ 717,636 |
Staples, Inc. | 40,238 | | 905,355 |
Tiffany & Co., Inc. (d) | 5,200 | | 196,508 |
| | 1,999,653 |
TOTAL SPECIALTY RETAIL | | 7,339,977 |
TEXTILES, APPAREL & LUXURY GOODS - 6.0% |
Apparel, Accessories & Luxury Goods - 3.9% |
Coach, Inc. (a)(d) | 18,700 | | 477,037 |
G-III Apparel Group Ltd. (a) | 10,500 | | 168,315 |
Hanesbrands, Inc. (a) | 8,500 | | 182,240 |
Polo Ralph Lauren Corp. Class A | 2,200 | | 130,174 |
VF Corp. | 3,100 | | 221,898 |
| | 1,179,664 |
Footwear - 2.1% |
Iconix Brand Group, Inc. (a)(d) | 39,400 | | 472,800 |
NIKE, Inc. Class B | 2,600 | | 152,568 |
| | 625,368 |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | | 1,805,032 |
TOTAL COMMON STOCKS (Cost $34,219,950) | 29,908,988 |
Money Market Funds - 28.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 115,591 | | 115,591 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 8,339,100 | | 8,339,100 |
TOTAL MONEY MARKET FUNDS (Cost $8,454,691) | 8,454,691 |
TOTAL INVESTMENT PORTFOLIO - 128.3% (Cost $42,674,641) | 38,363,679 |
NET OTHER ASSETS - (28.3)% | | (8,451,663) |
NET ASSETS - 100% | $ 29,912,016 |
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 | $ 8,928 |
Fidelity Securities Lending Cash Central Fund | 43,806 |
Total | $ 52,734 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $2,972,883 of losses recognized during the period November 1, 2007 to July 31, 2008. |
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, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $8,068,774) - See accompanying schedule: Unaffiliated issuers (cost $34,219,950) | $ 29,908,988 | |
Fidelity Central Funds (cost $8,454,691) | 8,454,691 | |
Total Investments (cost $42,674,641) | | $ 38,363,679 |
Foreign currency held at value (cost $5) | | 5 |
Receivable for investments sold | | 188,086 |
Receivable for fund shares sold | | 13,931 |
Dividends receivable | | 11,262 |
Distributions receivable from Fidelity Central Funds | | 6,015 |
Prepaid expenses | | 59 |
Other receivables | | 8,935 |
Total assets | | 38,591,972 |
| | |
Liabilities | | |
Payable for investments purchased | $ 195,791 | |
Payable for fund shares redeemed | 71,125 | |
Accrued management fee | 13,803 | |
Distribution fees payable | 13,386 | |
Other affiliated payables | 9,298 | |
Other payables and accrued expenses | 37,453 | |
Collateral on securities loaned, at value | 8,339,100 | |
Total liabilities | | 8,679,956 |
| | |
Net Assets | | $ 29,912,016 |
Net Assets consist of: | | |
Paid in capital | | $ 37,344,116 |
Accumulated net investment loss | | (4) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (3,121,134) |
Net unrealized appreciation (depreciation) on investments | | (4,310,962) |
Net Assets | | $ 29,912,016 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($11,899,352 ÷ 1,042,475 shares) | | $ 11.41 |
| | |
Maximum offering price per share (100/94.25 of $11.41) | | $ 12.11 |
Class T:
Net Asset Value and redemption price per share ($9,095,005 ÷ 821,276 shares) | | $ 11.07 |
| | |
Maximum offering price per share (100/96.50 of $11.07) | | $ 11.47 |
Class B:
Net Asset Value and offering price per share ($5,089,764 ÷ 491,751 shares)A | | $ 10.35 |
| | |
Class C:
Net Asset Value and offering price per share ($3,429,826 ÷ 330,882 shares)A | | $ 10.37 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($398,069 ÷ 33,609 shares) | | $ 11.84 |
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, 2008 |
Investment Income | | |
Dividends | | $ 589,943 |
Interest | | 1,838 |
Income from Fidelity Central Funds (including $43,806 from security lending) | | 52,734 |
Total income | | 644,515 |
| | |
Expenses | | |
Management fee | $ 232,515 | |
Transfer agent fees | 127,100 | |
Distribution fees | 233,180 | |
Accounting and security lending fees | 17,538 | |
Custodian fees and expenses | 8,384 | |
Independent trustees' compensation | 186 | |
Registration fees | 39,640 | |
Audit | 43,252 | |
Legal | 233 | |
Miscellaneous | 10,005 | |
Total expenses before reductions | 712,033 | |
Expense reductions | (2,702) | 709,331 |
Net investment income (loss) | | (64,816) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (2,748,837) | |
Foreign currency transactions | (240) | |
Total net realized gain (loss) | | (2,749,077) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,918,273) | |
Assets and liabilities in foreign currencies | (54) | |
Total change in net unrealized appreciation (depreciation) | | (6,918,327) |
Net gain (loss) | | (9,667,404) |
Net increase (decrease) in net assets resulting from operations | | $ (9,732,220) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (64,816) | $ (126,710) |
Net realized gain (loss) | (2,749,077) | 8,083,666 |
Change in net unrealized appreciation (depreciation) | (6,918,327) | (1,699,408) |
Net increase (decrease) in net assets resulting from operations | (9,732,220) | 6,257,548 |
Distributions to shareholders from net investment income | - | (93,265) |
Distributions to shareholders from net realized gain | (4,774,547) | (7,904,219) |
Total distributions | (4,774,547) | (7,997,484) |
Share transactions - net increase (decrease) | (10,594,844) | 3,157,156 |
Redemption fees | 847 | 895 |
Total increase (decrease) in net assets | (25,100,764) | 1,418,115 |
| | |
Net Assets | | |
Beginning of period | 55,012,780 | 53,594,665 |
End of period (including accumulated net investment loss of $4 and accumulated net investment loss of $12, respectively) | $ 29,912,016 | $ 55,012,780 |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 | $ 13.71 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | .02 F | (.04) | (.07) | (.07) |
Net realized and unrealized gain (loss) | (3.09) | 1.83 | (.07) | 2.71 | .87 |
Total from investment operations | (3.07) | 1.85 | (.11) | 2.64 | .80 |
Distributions from net investment income | - | (.05) | - | - | - |
Distributions from net realized gain | (1.41) | (2.30) | (.12) | (.53) | - |
Total distributions | (1.41) | (2.35) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 |
Total Return A, B | (21.24)% | 11.67% | (.69)% | 18.85% | 5.84% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 1.40% | 1.42% | 1.42% | 1.47% | 1.55% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.44% | 1.50% |
Expenses net of all reductions | 1.40% | 1.39% | 1.39% | 1.42% | 1.45% |
Net investment income (loss) | .15% | .11% F | (.23)% | (.45)% | (.50)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 11,899 | $ 19,708 | $ 16,935 | $ 17,887 | $ 11,856 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%.
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 | $ 13.51 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.01) | (.02) F | (.07) | (.11) | (.11) |
Net realized and unrealized gain (loss) | (3.00) | 1.79 | (.07) | 2.66 | .87 |
Total from investment operations | (3.01) | 1.77 | (.14) | 2.55 | .76 |
Distributions from net investment income | - | (.03) | - | - | - |
Distributions from net realized gain | (1.39) | (2.30) | (.12) | (.53) | - |
Total distributions | (1.39) | (2.33) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 |
Total Return A, B | (21.41)% | 11.43% | (.89)% | 18.52% | 5.63% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 1.64% | 1.69% | 1.69% | 1.75% | 1.81% |
Expenses net of fee waivers, if any | 1.64% | 1.65% | 1.65% | 1.69% | 1.75% |
Expenses net of all reductions | 1.62% | 1.61% | 1.62% | 1.67% | 1.70% |
Net investment income (loss) | (.08)% | (.10)% F | (.46)% | (.70)% | (.74)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 9,095 | $ 14,787 | $ 14,267 | $ 16,782 | $ 15,555 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%.
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 | $ 13.08 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) | (.10) F | (.15) | (.17) | (.18) |
Net realized and unrealized gain (loss) | (2.81) | 1.70 | (.07) | 2.55 | .85 |
Total from investment operations | (2.88) | 1.60 | (.22) | 2.38 | .67 |
Distributions from net realized gain | (1.33) | (2.30) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 |
Total Return A, B | (21.80)% | 10.82% | (1.45)% | 17.97% | 5.12% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 2.14% | 2.20% | 2.19% | 2.24% | 2.29% |
Expenses net of fee waivers, if any | 2.14% | 2.15% | 2.15% | 2.19% | 2.25% |
Expenses net of all reductions | 2.14% | 2.15% | 2.14% | 2.16% | 2.20% |
Net investment income (loss) | (.60)% | (.64)% F | (.98)% | (1.20)% | (1.25)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,090 | $ 11,081 | $ 14,088 | $ 18,862 | $ 17,302 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 | $ 13.10 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) | (.10) F | (.15) | (.17) | (.18) |
Net realized and unrealized gain (loss) | (2.81) | 1.71 | (.07) | 2.55 | .85 |
Total from investment operations | (2.88) | 1.61 | (.22) | 2.38 | .67 |
Distributions from net realized gain | (1.34) | (2.30) | (.12) | (.53) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 |
Total Return A, B | (21.77)% | 10.88% | (1.45)% | 17.94% | 5.11% |
Ratios to Average Net Assets D, G | | | | | |
Expenses before reductions | 2.15% | 2.16% | 2.12% | 2.17% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.12% | 2.17% | 2.24% |
Expenses net of all reductions | 2.14% | 2.15% | 2.12% | 2.14% | 2.19% |
Net investment income (loss) | (.60)% | (.64)% F | (.95)% | (1.18)% | (1.24)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,430 | $ 8,051 | $ 7,160 | $ 8,505 | $ 6,992 |
Portfolio turnover rate E | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
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.
Consumer Discretionary
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 | $ 13.95 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .06 | .06 E | - | (.03) | (.04) |
Net realized and unrealized gain (loss) | (3.22) | 1.89 | (.07) | 2.76 | .90 |
Total from investment operations | (3.16) | 1.95 | (.07) | 2.73 | .86 |
Distributions from net investment income | - | (.06) | - | - | - |
Distributions from net realized gain | (1.41) | (2.30) | (.12) | (.53) | - |
Total distributions | (1.41) | (2.36) | (.12) | (.53) | - |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 |
Total Return A | (21.09)% | 12.04% | (.44)% | 19.08% | 6.16% |
Ratios to Average Net Assets C, F | | | | | |
Expenses before reductions | 1.14% | 1.15% | 1.18% | 1.26% | 1.34% |
Expenses net of fee waivers, if any | 1.14% | 1.15% | 1.15% | 1.20% | 1.25% |
Expenses net of all reductions | 1.14% | 1.14% | 1.14% | 1.17% | 1.20% |
Net investment income (loss) | .40% | .36% E | .02% | (.21)% | (.25)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 398 | $ 1,385 | $ 1,144 | $ 1,371 | $ 907 |
Portfolio turnover rate D | 63% | 164% | 81% | 66% | 152% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.07)%.
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, 2008
1. Organization.
Fidelity Advisor Consumer Discretionary 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
Consumer Discretionary
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales 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 | $ 1,853,756 |
Unrealized depreciation | (6,312,968) |
Net unrealized appreciation (depreciation) | (4,459,212) |
Cost for federal income tax purposes | $ 42,822,891 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 2,279,900 | $ 1,304,072 |
Long-term Capital Gains | 2,494,647 | 6,693,412 |
Total | $ 4,774,547 | $ 7,997,484 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Annual Report
Notes to Financial Statements - continued
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 $26,666,416 and $41,932,580, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 38,904 | $ 943 |
Class T | .25% | .25% | 59,414 | 90 |
Class B | .75% | .25% | 78,830 | 59,299 |
Class C | .75% | .25% | 56,032 | 7,087 |
| | | $ 233,180 | $ 67,419 |
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
by FDC |
Class A | $ 4,957 |
Class T | 2,602 |
Class B* | 16,498 |
Class C* | 513 |
| $ 24,570 |
* 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.
Consumer Discretionary
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 47,605 | .31 |
Class T | 35,861 | .30 |
Class B | 24,030 | .30 |
Class C | 17,126 | .31 |
Institutional Class | 2,478 | .30 |
| $ 127,100 | |
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 $2,104 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.
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 $217 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
expense reduction |
| |
Class T | $ 2,485 |
Annual Report
Notes to Financial Statements - continued
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $12,226 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
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 | $ 1,697,903 | $ 2,496,425 |
Class T | 1,304,169 | 2,054,841 |
Class B | 954,937 | 2,079,901 |
Class C | 712,594 | 1,100,868 |
Institutional Class | 104,944 | 172,184 |
Total | $ 4,774,547 | $ 7,904,219 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 231,645 | 540,609 | $ 3,074,782 | $ 8,973,622 |
Reinvestment of distributions | 104,669 | 141,640 | 1,531,841 | 2,265,680 |
Shares redeemed | (533,803) | (475,746) | (7,132,154) | (7,950,826) |
Net increase (decrease) | (197,489) | 206,503 | $ (2,525,531) | $ 3,288,476 |
Class T | | | | |
Shares sold | 113,866 | 188,336 | $ 1,488,704 | $ 3,060,088 |
Reinvestment of distributions | 84,915 | 122,934 | 1,207,897 | 1,916,483 |
Shares redeemed | (333,215) | (245,736) | (4,304,558) | (4,018,366) |
Net increase (decrease) | (134,434) | 65,534 | $ (1,607,957) | $ 958,205 |
Class B | | | | |
Shares sold | 34,749 | 83,325 | $ 420,244 | $ 1,279,468 |
Reinvestment of distributions | 65,209 | 122,770 | 871,754 | 1,810,224 |
Shares redeemed | (369,099) | (368,667) | (4,475,959) | (5,659,191) |
Net increase (decrease) | (269,141) | (162,572) | $ (3,183,961) | $ (2,569,499) |
Consumer Discretionary
12. Share Transactions - continued
Transactions for each class of shares were as follows - continued
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class C | | | | |
Shares sold | 46,115 | 183,143 | $ 563,853 | $ 2,817,553 |
Reinvestment of distributions | 37,909 | 59,948 | 507,333 | 885,827 |
Shares redeemed | (304,893) | (159,811) | (3,642,610) | (2,453,389) |
Net increase (decrease) | (220,869) | 83,280 | $ (2,571,424) | $ 1,249,991 |
Institutional Class | | | | |
Shares sold | 41,241 | 116,522 | $ 586,738 | $ 1,988,792 |
Reinvestment of distributions | 5,683 | 8,916 | 86,193 | 146,867 |
Shares redeemed | (97,732) | (109,046) | (1,378,902) | (1,905,676) |
Net increase (decrease) | (50,808) | 16,392 | $ (705,971) | $ 229,983 |
Annual Report
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of
fundA |
Institutional Class | -25.38% | 0.89% | -4.69% |
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.
Electronics
Advisor Electronics Fund
Managements' Discussion of Fund Performance
Comments from Christopher Lee and Paul Jackson, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -25.47%, -25.72%, -26.09% and -26.12%, respectively (excluding sales charges), falling short of the -20.89% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500. Versus the MSCI index, unfavorable stock picking in the semiconductor group was a significant head wind, along with poor stock selection in the life sciences tools and services segment and an underweighting in chip equipment. At the stock level, we were hurt by a large underweighting in major index component Intel. The shares of the personal computer chip maker sustained a small loss but still finished substantially ahead of the MSCI index. Chip maker Marvell Technology Group also detracted, as did MEMC Electronic Materials and Maxim Integrated Products, a producer of analog chips. Arrowhead Research, a development-stage nanotechnology company and an out-of-index holding, held back performance as well. Conversely, our picks in electrical components and equipment and in computer hardware added value. The top contributor was QUALCOMM, a maker of wireless infrastructure equipment. The settlement of a legal dispute with a key customer and a relatively strong market for high-end cellular phones boosted the stock. Other contributors included First Solar and Synaptics, which supplies chips for the touchscreens used in a variety of consumer electronics products. Underweighting DRAM memory producer Micron Technology - which we sold off entirely - helped as well. All the contributors I mentioned except for Micron were out-of-index holdings.
During the year, the fund's Institutional Class shares returned -25.38%, falling short of the -20.89% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500. Versus the MSCI index, unfavorable stock picking in the semiconductor group was a significant head wind, along with poor stock selection in the life sciences tools and services segment and an underweighting in chip equipment. At the stock level, we were hurt by a large underweighting in major index component Intel. The shares of the personal computer chip maker sustained a small loss but still finished substantially ahead of the MSCI index. Chip maker Marvell Technology Group also detracted, as did MEMC Electronic Materials and Maxim Integrated Products, a producer of analog chips. Arrowhead Research, a development-stage nanotechnology company and an out-of-index holding, held back performance as well. Conversely, our picks in electrical components and equipment and in computer hardware added value. The top contributor was QUALCOMM, a maker of wireless infrastructure equipment. The settlement of a legal dispute with a key customer and a relatively strong market for high-end cellular phones boosted the stock. Other contributors included First Solar and Synaptics, which supplies chips for the touchscreens used in a variety of consumer electronics products. Underweighting DRAM memory producer Micron Technology - which we sold off entirely - helped as well. All the contributors I mentioned except for Micron were out-of-index holdings.
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 Electronics Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 943.10 | $ 6.76 |
HypotheticalA | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class T | | | |
Actual | $ 1,000.00 | $ 940.80 | $ 7.96 |
HypotheticalA | $ 1,000.00 | $ 1,016.66 | $ 8.27 |
Class B | | | |
Actual | $ 1,000.00 | $ 940.10 | $ 10.37 |
HypotheticalA | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Class C | | | |
Actual | $ 1,000.00 | $ 938.60 | $ 10.36 |
HypotheticalA | $ 1,000.00 | $ 1,014.17 | $ 10.77 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 944.20 | $ 5.56 |
HypotheticalA | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.40% |
Class T | 1.65% |
Class B | 2.15% |
Class C | 2.15% |
Institutional Class | 1.15% |
Electronics
Advisor Electronics Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Intel Corp. | 23.7 | 19.9 |
Applied Materials, Inc. | 9.2 | 7.6 |
Texas Instruments, Inc. | 7.8 | 6.0 |
Broadcom Corp. Class A | 3.7 | 4.4 |
Xilinx, Inc. | 3.2 | 3.2 |
QUALCOMM, Inc. | 3.0 | 1.1 |
Altera Corp. | 2.4 | 2.1 |
Varian Semiconductor Equipment Associates, Inc. | 2.3 | 2.2 |
Lam Research Corp. | 2.3 | 1.6 |
NVIDIA Corp. | 2.2 | 1.5 |
| 59.8 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Semiconductors & Semiconductor Equipment | 76.0% | |
| Communications Equipment | 6.0% | |
| Electrical Equipment | 4.9% | |
| Computers & Peripherals | 4.3% | |
| Electronic
Equipment & Instruments | 2.3% | |
| All Others* | 6.5% | |
As of January 31, 2008 |
| Semiconductors & Semiconductor Equipment | 77.8% | |
| Communications Equipment | 5.1% | |
| Computers & Peripherals | 4.0% | |
| Electrical Equipment | 3.6% | |
| Electronic
Equipment & Instruments | 3.0% | |
| All Others* | 6.5% | |
* Includes short-term investments and net other assets. |
Electronics
Advisor Electronics Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 98.2% |
| Shares | | Value |
CAPITAL MARKETS - 0.3% |
Asset Management & Custody Banks - 0.3% |
Harris & Harris Group, Inc. (a) | 6,852 | | $ 46,388 |
CHEMICALS - 1.2% |
Specialty Chemicals - 1.2% |
Nanophase Technologies Corp. (a) | 11,800 | | 23,010 |
Wacker Chemie AG | 700 | | 144,187 |
| | 167,197 |
COMMERCIAL SERVICES & SUPPLIES - 0.7% |
Diversified Commercial & Professional Services - 0.7% |
Arrowhead Research Corp. (a) | 13,716 | | 28,941 |
Arrowhead Research Corp. warrants 5/21/17 (a) | 64,879 | | 79,409 |
| | 108,350 |
COMMUNICATIONS EQUIPMENT - 6.0% |
Communications Equipment - 6.0% |
Alcatel-Lucent SA sponsored ADR | 2,700 | | 16,227 |
China Techfaith Wireless Communication Technology Ltd. sponsored ADR (a) | 12,003 | | 43,691 |
Cisco Systems, Inc. (a) | 10,000 | | 219,900 |
Nokia Corp. sponsored ADR | 1,000 | | 27,320 |
QUALCOMM, Inc. | 7,800 | | 431,652 |
Research In Motion Ltd. (a) | 800 | | 98,256 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 1,500 | | 15,720 |
| | 852,766 |
COMPUTERS & PERIPHERALS - 4.3% |
Computer Hardware - 2.7% |
Apple, Inc. (a) | 900 | | 143,055 |
HTC Corp. | 15,080 | | 236,661 |
| | 379,716 |
Computer Storage & Peripherals - 1.6% |
SanDisk Corp. (a) | 7,100 | | 100,110 |
Synaptics, Inc. (a) | 2,800 | | 135,016 |
| | 235,126 |
TOTAL COMPUTERS & PERIPHERALS | | 614,842 |
ELECTRICAL EQUIPMENT - 4.9% |
Electrical Components & Equipment - 4.9% |
First Solar, Inc. (a) | 600 | | 171,066 |
JA Solar Holdings Co. Ltd. ADR (a) | 4,300 | | 65,231 |
Neo-Neon Holdings Ltd. | 58,700 | | 25,582 |
Q-Cells AG (a) | 900 | | 87,194 |
Renewable Energy Corp. AS (a) | 3,000 | | 86,879 |
SolarWorld AG | 2,800 | | 130,505 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 3,900 | | 130,494 |
| | 696,951 |
|
| Shares | | Value |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.3% |
Electronic Equipment & Instruments - 0.9% |
Everlight Electronics Co. Ltd. | 28,559 | | $ 75,583 |
Ibiden Co. Ltd. | 200 | | 5,969 |
Motech Industries, Inc. | 8,217 | | 46,723 |
| | 128,275 |
Electronic Manufacturing Services - 0.3% |
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 9,200 | | 44,460 |
Technology Distributors - 1.1% |
Avnet, Inc. (a) | 5,700 | | 155,382 |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | | 328,117 |
MEDIA - 0.1% |
Broadcasting & Cable TV - 0.1% |
JumpTV, Inc. | 14,600 | | 14,117 |
METALS & MINING - 0.5% |
Diversified Metals & Mining - 0.5% |
Timminco Ltd. (a) | 2,800 | | 66,182 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 76.0% |
Semiconductor Equipment - 19.6% |
Applied Materials, Inc. | 76,200 | | 1,319,784 |
ASML Holding NV (NY Shares) | 7,100 | | 161,809 |
Cymer, Inc. (a) | 3,400 | | 90,066 |
FormFactor, Inc. (a) | 9,250 | | 160,950 |
Global Unichip Corp. | 7,383 | | 51,168 |
KLA-Tencor Corp. | 500 | | 18,795 |
Lam Research Corp. (a) | 9,900 | | 325,611 |
MEMC Electronic Materials, Inc. (a) | 4,900 | | 226,429 |
Rubicon Technology, Inc. | 2,900 | | 37,700 |
Tessera Technologies, Inc. (a) | 4,300 | | 74,906 |
Topco Scientific Co. Ltd. | 5,840 | | 8,322 |
Varian Semiconductor Equipment Associates, Inc. (a) | 11,300 | | 330,186 |
| | 2,805,726 |
Semiconductors - 56.4% |
Advanced Analogic Technologies, Inc. (a) | 25,500 | | 105,315 |
Advanced Micro Devices, Inc. (a) | 6,900 | | 29,049 |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 22,081 | | 96,936 |
Altera Corp. | 15,500 | | 340,225 |
ARM Holdings PLC sponsored ADR | 24,500 | | 138,915 |
Atheros Communications, Inc. (a) | 4,800 | | 148,800 |
Broadcom Corp. Class A (a) | 22,100 | | 536,809 |
Cavium Networks, Inc. (a) | 1,700 | | 27,285 |
Ceva, Inc. (a) | 1,200 | | 9,756 |
Elan Microelectronics Corp. | 29,000 | | 35,686 |
Epistar Corp. | 14,153 | | 29,211 |
Himax Technologies, Inc. sponsored ADR | 13,700 | | 52,060 |
Hittite Microwave Corp. (a) | 3,000 | | 95,760 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - continued |
Infineon Technologies AG sponsored ADR (a) | 7,000 | | $ 52,640 |
Intel Corp. | 152,990 | | 3,394,847 |
Intersil Corp. Class A | 1,000 | | 24,130 |
Linear Technology Corp. | 900 | | 27,945 |
Marvell Technology Group Ltd. (a) | 5,650 | | 83,564 |
Maxim Integrated Products, Inc. | 7,100 | | 139,444 |
Microchip Technology, Inc. | 700 | | 22,351 |
NVIDIA Corp. (a) | 27,400 | | 313,456 |
PMC-Sierra, Inc. (a) | 12,700 | | 91,948 |
Qimonda AG sponsored ADR (a) | 2,700 | | 4,860 |
Richtek Technology Corp. | 14,550 | | 124,203 |
Samsung Electronics Co. Ltd. | 330 | | 182,539 |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 14,443 | | 95,757 |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 23,618 | | 224,371 |
Texas Instruments, Inc. | 45,900 | | 1,119,042 |
Xilinx, Inc. | 18,400 | | 456,872 |
Zoran Corp. (a) | 8,500 | | 70,295 |
| | 8,074,071 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 10,879,797 |
SOFTWARE - 1.9% |
Home Entertainment Software - 1.9% |
Nintendo Co. Ltd. | 600 | | 277,200 |
TOTAL COMMON STOCKS (Cost $17,632,043) | 14,051,907 |
Money Market Funds - 1.6% |
| Shares | | Value |
Fidelity Cash Central Fund, 2.35% (b)
(Cost $237,835) | 237,835 | | $ 237,835 |
Cash Equivalents - 0.3% |
| Maturity Amount | | |
Investments in repurchase agreements in a joint trading account at 2.07%, dated 7/31/08 due 8/1/08 (Collateralized by U.S. Government Obligations) #
(Cost $41,000) | $ 41,002 | 41,000 |
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $17,910,878) | 14,330,742 |
NET OTHER ASSETS - (0.1)% | (20,897) |
NET ASSETS - 100% | $ 14,309,845 |
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. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$41,000 due 8/01/08 at 2.07% |
BNP Paribas Securities Corp. | $ 14,183 |
Banc of America Securities LLC | 2,222 |
Barclays Capital, Inc. | 24,595 |
| $ 41,000 |
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 | $ 7,316 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 79.0% |
Taiwan | 7.6% |
Germany | 2.9% |
Japan | 2.0% |
Cayman Islands | 1.9% |
Korea (South) | 1.3% |
Canada | 1.3% |
Netherlands | 1.1% |
United Kingdom | 1.0% |
Others (individually less than 1%) | 1.9% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $7,629,844 of which $4,774,109, $2,265,871, $279,201 and $310,663 will expire on July 31, 2011, 2012, 2013 and 2016, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $4,004,653 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Electronics Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including repurchase agreements of $41,000) - See accompanying schedule: Unaffiliated issuers (cost $17,673,043) | $ 14,092,907 | |
Fidelity Central Funds (cost $237,835) | 237,835 | |
Total Investments (cost $17,910,878) | | $ 14,330,742 |
Foreign currency held at value (cost $6) | | 6 |
Receivable for investments sold | | 105,894 |
Receivable for fund shares sold | | 1,201 |
Dividends receivable | | 36,811 |
Distributions receivable from Fidelity Central Funds | | 339 |
Prepaid expenses | | 34 |
Receivable from investment adviser for expense reductions | | 882 |
Other receivables | | 698 |
Total assets | | 14,476,607 |
| | |
Liabilities | | |
Payable to custodian bank | $ 6,211 | |
Payable for investments purchased | 60,781 | |
Payable for fund shares redeemed | 46,867 | |
Accrued management fee | 6,845 | |
Distribution fees payable | 7,448 | |
Other affiliated payables | 4,634 | |
Other payables and accrued expenses | 33,976 | |
Total liabilities | | 166,762 |
| | |
Net Assets | | $ 14,309,845 |
Net Assets consist of: | | |
Paid in capital | | $ 29,828,530 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (11,938,437) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (3,580,248) |
Net Assets | | $ 14,309,845 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($3,970,469 ÷ 584,806 shares) | | $ 6.79 |
| | |
Maximum offering price per share (100/94.25 of $6.79) | | $ 7.20 |
Class T:
Net Asset Value and redemption price per share ($4,634,656 ÷ 694,453 shares) | | $ 6.67 |
| | |
Maximum offering price per share (100/96.50 of $6.67) | | $ 6.91 |
Class B:
Net Asset Value and offering price per share ($2,027,308 ÷ 315,307 shares)A | | $ 6.43 |
| | |
Class C:
Net Asset Value and offering price per share ($3,324,618 ÷ 517,659 shares)A | | $ 6.42 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($352,794 ÷ 50,816 shares) | | $ 6.94 |
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.
Electronics
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Dividends | | $ 295,354 |
Interest | | 1,486 |
Income from Fidelity Central Funds | | 7,316 |
Total income | | 304,156 |
| | |
Expenses | | |
Management fee | $ 123,214 | |
Transfer agent fees | 71,486 | |
Distribution fees | 141,553 | |
Accounting fees and expenses | 8,606 | |
Custodian fees and expenses | 29,850 | |
Independent trustees' compensation | 98 | |
Registration fees | 46,707 | |
Audit | 42,865 | |
Legal | 171 | |
Miscellaneous | 6,378 | |
Total expenses before reductions | 470,928 | |
Expense reductions | (76,237) | 394,691 |
Net investment income (loss) | | (90,535) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (4,341,801) | |
Foreign currency transactions | (5,774) | |
Total net realized gain (loss) | | (4,347,575) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,232,191) | |
Assets and liabilities in foreign currencies | (118) | |
Total change in net unrealized appreciation (depreciation) | | (2,232,309) |
Net gain (loss) | | (6,579,884) |
Net increase (decrease) in net assets resulting from operations | | $ (6,670,419) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (90,535) | $ (226,545) |
Net realized gain (loss) | (4,347,575) | 4,562,227 |
Change in net unrealized appreciation (depreciation) | (2,232,309) | 2,119,265 |
Net increase (decrease) in net assets resulting from operations | (6,670,419) | 6,454,947 |
Share transactions - net increase (decrease) | (8,363,960) | (7,957,827) |
Redemption fees | 266 | 878 |
Total increase (decrease) in net assets | (15,034,113) | (1,502,002) |
| | |
Net Assets | | |
Beginning of period | 29,343,958 | 30,845,960 |
End of period | $ 14,309,845 | $ 29,343,958 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 | $ 6.59 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - G | (.03) | (.04) | (.07) | (.09) |
Net realized and unrealized gain (loss) | (2.32) | 1.76 | (.62) | 1.53 | .08 |
Total from investment operations | (2.32) | 1.73 | (.66) | 1.46 | (.01) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 |
Total Return A,B | (25.47)% | 23.44% | (8.21)% | 22.19% | (.15)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.72% | 1.60% | 1.50% | 1.59% | 1.55% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.45% | 1.50% |
Expenses net of all reductions | 1.39% | 1.38% | 1.36% | 1.38% | 1.48% |
Net investment income (loss) | (.02)% | (.35)% | (.52)% | (.96)% | (1.15)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,970 | $ 7,551 | $ 7,916 | $ 11,397 | $ 8,374 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 | $ 6.56 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.02) | (.05) | (.06) | (.08) | (.11) |
Net realized and unrealized gain (loss) | (2.29) | 1.74 | (.61) | 1.51 | .08 |
Total from investment operations | (2.31) | 1.69 | (.67) | 1.43 | (.03) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 |
Total Return A,B | (25.72)% | 23.18% | (8.42)% | 21.90% | (.46)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.02% | 1.89% | 1.82% | 1.89% | 1.83% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.69% | 1.75% |
Expenses net of all reductions | 1.64% | 1.64% | 1.61% | 1.61% | 1.72% |
Net investment income (loss) | (.27)% | (.60)% | (.77)% | (1.20)% | (1.39)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 4,635 | $ 8,103 | $ 9,048 | $ 12,085 | $ 15,445 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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.
Electronics
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 | $ 6.48 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.06) | (.09) | (.10) | (.12) | (.14) |
Net realized and unrealized gain (loss) | (2.21) | 1.69 | (.58) | 1.48 | .08 |
Total from investment operations | (2.27) | 1.60 | (.68) | 1.36 | (.06) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 |
Total Return A,B | (26.09)% | 22.54% | (8.74)% | 21.18% | (.93)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.48% | 2.36% | 2.29% | 2.41% | 2.41% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.21% | 2.25% |
Expenses net of all reductions | 2.14% | 2.13% | 2.11% | 2.13% | 2.23% |
Net investment income (loss) | (.77)% | (1.10)% | (1.27)% | (1.72)% | (1.90)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,027 | $ 4,572 | $ 6,123 | $ 8,963 | $ 8,498 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 | $ 6.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.06) | (.09) | (.10) | (.11) | (.14) |
Net realized and unrealized gain (loss) | (2.21) | 1.69 | (.58) | 1.47 | .08 |
Total from investment operations | (2.27) | 1.60 | (.68) | 1.36 | (.06) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 |
Total Return A,B | (26.12)% | 22.57% | (8.75)% | 21.22% | (.93)% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.47% | 2.34% | 2.26% | 2.31% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.18% | 2.24% |
Expenses net of all reductions | 2.14% | 2.13% | 2.11% | 2.11% | 2.21% |
Net investment income (loss) | (.77)% | (1.10)% | (1.27)% | (1.69)% | (1.88)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,325 | $ 8,389 | $ 7,009 | $ 11,058 | $ 12,322 |
Portfolio turnover rate E | 93% | 97% | 95% | 128% | 84% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 | $ 6.64 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .02 | (.01) | (.02) | (.05) | (.06) |
Net realized and unrealized gain (loss) | (2.38) | 1.80 | (.62) | 1.55 | .07 |
Total from investment operations | (2.36) | 1.79 | (.64) | 1.50 | .01 |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 |
Total Return A | (25.38)% | 23.83% | (7.85)% | 22.56% | .15% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 1.47% | 1.26% | 1.11% | 1.16% | 1.12% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.11% | 1.16% | 1.12% |
Expenses net of all reductions | 1.14% | 1.13% | 1.07% | 1.08% | 1.09% |
Net investment income (loss) | .23% | (.10)% | (.23)% | (.67)% | (.76)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 353 | $ 730 | $ 750 | $ 899 | $ 687 |
Portfolio turnover rate D | 93% | 97% | 95% | 128% | 84% |
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.
Electronics
Notes to Financial Statements
For the period ended July 31, 2008
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. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), 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 | $ 421,273 | |
Unrealized depreciation | (4,305,348) | |
Net unrealized appreciation (depreciation) | (3,884,075) | |
Capital loss carryforward | (7,629,844) | |
| | |
Cost for federal income tax purposes | $ 18,214,817 | |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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.
Electronics
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $20,577,679 and $29,275,643, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 13,914 | $ 403 |
Class T | .25% | .25% | 32,168 | 336 |
Class B | .75% | .25% | 33,894 | 25,485 |
Class C | .75% | .25% | 61,577 | 8,343 |
| | | $ 141,553 | $ 34,567 |
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
by FDC |
Class A | $ 1,126 |
Class T | 1,629 |
Class B* | 5,971 |
Class C* | 258 |
| $ 8,984 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 17,260 | .31 |
Class T | 22,807 | .35 |
Class B | 10,570 | .31 |
Class C | 19,118 | .31 |
Institutional Class | 1,731 | .30 |
| $ 71,486 | |
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 $1,178 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. 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
Limitations | Reimbursement
from adviser |
| | |
Class A | 1.40% | $ 17,913 |
Class T | 1.65% | 23,708 |
Class B | 2.15% | 10,993 |
Class C | 2.15% | 19,400 |
Institutional Class | 1.15% | 1,830 |
| | $ 73,844 |
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 $2,393 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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress.
Electronics
9. Other - continued
Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $6,751, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 161,701 | 172,908 | $ 1,242,418 | $ 1,452,847 |
Shares redeemed | (405,321) | (416,578) | (3,221,767) | (3,518,739) |
Net increase (decrease) | (243,620) | (243,670) | $ (1,979,349) | $ (2,065,892) |
Class T | | | | |
Shares sold | 93,832 | 96,013 | $ 747,770 | $ 811,586 |
Shares redeemed | (301,416) | (434,383) | (2,324,905) | (3,616,000) |
Net increase (decrease) | (207,584) | (338,370) | $ (1,577,135) | $ (2,804,414) |
Class B | | | | |
Shares sold | 35,607 | 33,257 | $ 276,103 | $ 271,410 |
Shares redeemed | (246,055) | (370,189) | (1,804,727) | (3,005,497) |
Net increase (decrease) | (210,448) | (336,932) | $ (1,528,624) | $ (2,734,087) |
Class C | | | | |
Shares sold | 107,517 | 354,933 | $ 865,728 | $ 2,907,179 |
Shares redeemed | (555,338) | (378,058) | (3,939,431) | (3,063,507) |
Net increase (decrease) | (447,821) | (23,125) | $ (3,073,703) | $ (156,328) |
Institutional Class | | | | |
Shares sold | 9,123 | 23,807 | $ 82,426 | $ 203,253 |
Shares redeemed | (36,772) | (45,136) | (287,575) | (400,359) |
Net increase (decrease) | (27,649) | (21,329) | $ (205,149) | $ (197,106) |
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, if any) 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, 2008 | | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | | 11.83% | 28.82% | 16.84% |
A Prior to October 1, 2006, Advisor Energy operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Energy Fund - Institutional Class on July 31, 1998. 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 Energy Fund
Management's Discussion of Fund Performance
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned 11.52%, 11.27%, 10.62% and 10.71%, respectively (excluding sales charges), outperforming the S&P 500 and the 9.51% gain of the MSCI® US Investable Market Energy Index. Aggressive sector weightings and solid stock selection were key components of the fund's superior performance versus the MSCI index. Underweighting integrated oil stocks gave the fund a strong relative boost, as this industry lagged. A large underweighting in integrated oil company Exxon Mobil was the fund's top contributor. Overweighting the strong-performing coal industry also benefited performance, especially the fund's large stakes in U.S. coal companies CONSOL Energy and Peabody Energy. Overweighting the oil and gas exploration and production (E&P) industry contributed positively, led by an outsized position in Petrohawk, which owns land in the Haynesville shale region of North Louisiana, one of the most promising natural gas reserves in the United States. A large stake in oil-rig manufacturer National Oilwell Varco was another leading contributor, along with a non-index position in Danish wind turbine manufacturer Vestas Wind Systems. Foreign holdings benefited from currency fluctuations as well. Overweighting the oil and gas refining and marketing segment proved disappointing. The biggest detractors were U.S. oil refiners Valero Energy and Sunoco, and West Coast oil and gas refiner Tesoro. Underweighting oil and gas equipment company Schlumberger and integrated oil company Occidental Petroleum also hurt fund performance when these stocks outperformed.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned 11.83%, outperforming the S&P 500 and the 9.51% gain of the MSCI® US Investable Market Energy Index. Aggressive sector weightings and solid stock selection were key components of the fund's superior performance versus the MSCI index. Underweighting integrated oil stocks gave the fund a strong relative boost, as this industry lagged. A large underweighting in integrated oil company Exxon Mobil was the fund's top contributor. Overweighting the strong-performing coal industry also benefited performance, especially the fund's large stakes in U.S. coal companies CONSOL Energy and Peabody Energy. Overweighting the oil and gas exploration and production (E&P) industry contributed positively, led by an outsized position in Petrohawk, which owns land in the Haynesville shale region of North Louisiana, one of the most promising natural gas reserves in the United States. A large stake in oil-rig manufacturer National Oilwell Varco was another leading contributor, along with a non-index position in Danish wind turbine manufacturer Vestas Wind Systems. Foreign holdings benefited from currency fluctuations as well. Overweighting the oil and gas refining and marketing segment proved disappointing. The biggest detractors were U.S. oil refiners Valero Energy and Sunoco, and West Coast oil and gas refiner Tesoro. Underweighting oil and gas equipment company Schlumberger and integrated oil company Occidental Petroleum also hurt fund performance when these stocks outperformed.
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.
Energy
Advisor Energy 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 1,055.00 | $ 5.82 |
HypotheticalA | $ 1,000.00 | $ 1,019.19 | $ 5.72 |
Class T | | | |
Actual | $ 1,000.00 | $ 1,053.70 | $ 6.94 |
HypotheticalA | $ 1,000.00 | $ 1,018.10 | $ 6.82 |
Class B | | | |
Actual | $ 1,000.00 | $ 1,050.60 | $ 9.89 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C | | | |
Actual | $ 1,000.00 | $ 1,051.00 | $ 9.54 |
HypotheticalA | $ 1,000.00 | $ 1,015.56 | $ 9.37 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 1,056.30 | $ 4.40 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.14% |
Class T | 1.36% |
Class B | 1.94% |
Class C | 1.87% |
Institutional Class | .86% |
Annual Report
Advisor Energy Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
National Oilwell Varco, Inc. | 6.3 | 5.9 |
ConocoPhillips | 5.7 | 2.8 |
Range Resources Corp. | 4.5 | 5.2 |
Schlumberger Ltd. (NY Shares) | 4.3 | 4.3 |
Nabors Industries Ltd. | 4.1 | 0.6 |
Valero Energy Corp. | 3.7 | 6.6 |
Peabody Energy Corp. | 3.6 | 3.8 |
Ultra Petroleum Corp. | 3.2 | 3.6 |
Occidental Petroleum Corp. | 3.0 | 1.7 |
Petrohawk Energy Corp. | 2.9 | 1.3 |
| 41.3 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Oil, Gas &
Consumable Fuels | 61.9% | |
| Energy Equipment &
Services | 31.2% | |
| Electrical Equipment | 5.0% | |
| Construction & Engineering | 0.6% | |
| Gas Utilities | 0.3% | |
| All Others* | 1.0% | |
As of January 31, 2008 |
| Oil, Gas &
Consumable Fuels | 69.9% | |
| Energy Equipment &
Services | 24.9% | |
| Electrical Equipment | 3.3% | |
| Construction & Engineering | 0.7% | |
| Chemicals | 0.5% | |
| All Others* | 0.7% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Energy Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 99.8% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 0.0% |
Environmental & Facility Services - 0.0% |
Fuel Tech, Inc. (a) | 16,062 | | $ 297,629 |
CONSTRUCTION & ENGINEERING - 0.6% |
Construction & Engineering - 0.6% |
Jacobs Engineering Group, Inc. (a) | 76,900 | | 5,947,446 |
ELECTRICAL EQUIPMENT - 5.0% |
Electrical Components & Equipment - 3.9% |
Evergreen Solar, Inc. (a) | 406,119 | | 3,793,151 |
First Solar, Inc. (a) | 26,700 | | 7,612,437 |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 481,218 | | 7,300,077 |
Q-Cells AG (a)(d) | 54,693 | | 5,298,765 |
Renewable Energy Corp. AS (a) | 145,000 | | 4,199,136 |
Sunpower Corp. Class A (a)(d) | 111,498 | | 8,782,697 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 97,800 | | 3,272,388 |
| | 40,258,651 |
Heavy Electrical Equipment - 1.1% |
Vestas Wind Systems AS (a) | 91,500 | | 11,933,142 |
TOTAL ELECTRICAL EQUIPMENT | | 52,191,793 |
ENERGY EQUIPMENT & SERVICES - 31.2% |
Oil & Gas Drilling - 9.7% |
Atwood Oceanics, Inc. (a) | 190,200 | | 8,732,082 |
ENSCO International, Inc. | 122,400 | | 8,462,736 |
Helmerich & Payne, Inc. | 96,022 | | 5,677,781 |
Hercules Offshore, Inc. (a) | 250,794 | | 6,262,326 |
Nabors Industries Ltd. (a) | 1,177,554 | | 42,933,619 |
Noble Corp. | 89,500 | | 4,642,365 |
Patterson-UTI Energy, Inc. | 445,747 | | 12,668,130 |
Pride International, Inc. (a) | 99,500 | | 3,856,620 |
Rowan Companies, Inc. | 179,800 | | 7,156,040 |
Transocean, Inc. (a) | 864 | | 117,530 |
| | 100,509,229 |
Oil & Gas Equipment & Services - 21.5% |
Baker Hughes, Inc. | 33 | | 2,736 |
BJ Services Co. | 483,574 | | 14,217,076 |
Complete Production Services, Inc. (a) | 96,400 | | 3,069,376 |
Dril-Quip, Inc. (a) | 20,600 | | 1,115,284 |
Exterran Holdings, Inc. (a) | 71,675 | | 4,045,337 |
FMC Technologies, Inc. (a) | 123,800 | | 7,648,364 |
Fugro NV (Certificaten Van Aandelen) unit | 93,393 | | 6,626,115 |
Halliburton Co. | 556,460 | | 24,940,537 |
NATCO Group, Inc. Class A (a) | 25,900 | | 1,234,135 |
National Oilwell Varco, Inc. (a) | 832,157 | | 65,432,503 |
Oil States International, Inc. (a) | 48,400 | | 2,656,192 |
ProSafe ASA | 397,400 | | 3,455,926 |
Schlumberger Ltd. (NY Shares) | 443,800 | | 45,090,080 |
Smith International, Inc. | 126,327 | | 9,396,202 |
Superior Energy Services, Inc. (a) | 149,700 | | 7,100,271 |
|
| Shares | | Value |
Tenaris SA sponsored ADR | 41,300 | | $ 2,488,325 |
Tidewater, Inc. | 200 | | 11,988 |
TSC Offshore Group Ltd. (a) | 1,674,000 | | 493,514 |
Weatherford International Ltd. (a) | 666,600 | | 25,150,818 |
| | 224,174,779 |
TOTAL ENERGY EQUIPMENT & SERVICES | | 324,684,008 |
GAS UTILITIES - 0.3% |
Gas Utilities - 0.3% |
Questar Corp. | 51,300 | | 2,712,744 |
Zhongyu Gas Holdings Ltd. (a) | 6,592,000 | | 566,120 |
| | 3,278,864 |
INDUSTRIAL CONGLOMERATES - 0.3% |
Industrial Conglomerates - 0.3% |
Walter Industries, Inc. | 28,600 | | 2,999,282 |
MACHINERY - 0.3% |
Industrial Machinery - 0.3% |
Vallourec SA | 8,300 | | 2,471,319 |
METALS & MINING - 0.2% |
Diversified Metals & Mining - 0.2% |
Timminco Ltd. (a) | 81,100 | | 1,916,902 |
MULTI-UTILITIES - 0.0% |
Multi-Utilities - 0.0% |
Sempra Energy | 4 | | 225 |
OIL, GAS & CONSUMABLE FUELS - 61.9% |
Coal & Consumable Fuels - 7.1% |
Arch Coal, Inc. | 195,285 | | 10,996,498 |
CONSOL Energy, Inc. | 127,134 | | 9,457,498 |
Foundation Coal Holdings, Inc. | 128,300 | | 7,621,020 |
International Coal Group, Inc. (a) | 33,600 | | 351,792 |
Massey Energy Co. | 81,200 | | 6,029,100 |
Natural Resource Partners LP | 4,700 | | 178,177 |
Peabody Energy Corp. | 544,547 | | 36,838,605 |
PT Bumi Resources Tbk | 2,851,800 | | 2,115,922 |
| | 73,588,612 |
Integrated Oil & Gas - 15.1% |
Chevron Corp. | 38,500 | | 3,255,560 |
ConocoPhillips | 724,194 | | 59,108,714 |
Exxon Mobil Corp. | 212,843 | | 17,118,962 |
Hess Corp. | 265,400 | | 26,911,560 |
Occidental Petroleum Corp. | 401,800 | | 31,673,894 |
Petroleo Brasileiro SA - Petrobras (PN) sponsored ADR (non-vtg.) | 342,100 | | 15,681,864 |
Suncor Energy, Inc. | 70,800 | | 3,848,931 |
| | 157,599,485 |
Oil & Gas Exploration & Production - 30.5% |
American Oil & Gas, Inc. NV (a)(d) | 84,003 | | 266,290 |
Cabot Oil & Gas Corp. | 673,925 | | 29,659,439 |
Canadian Natural Resources Ltd. | 168,000 | | 13,128,564 |
Common Stocks - continued |
| Shares | | Value |
OIL, GAS & CONSUMABLE FUELS - CONTINUED |
Oil & Gas Exploration & Production - continued |
Chesapeake Energy Corp. | 353,100 | | $ 17,707,965 |
Comstock Resources, Inc. (a) | 162,998 | | 9,944,508 |
Concho Resources, Inc. | 253,498 | | 8,302,060 |
Continental Resources, Inc. (a)(d) | 151,886 | | 8,675,728 |
Denbury Resources, Inc. (a) | 387,800 | | 10,912,692 |
Encore Acquisition Co. (a) | 113,062 | | 6,995,146 |
EOG Resources, Inc. | 1,284 | | 129,081 |
EXCO Resources, Inc. (a) | 225,253 | | 5,867,841 |
Forest Oil Corp. (a) | 107,000 | | 6,102,210 |
GMX Resources, Inc. (a)(d) | 30,200 | | 1,772,740 |
Goodrich Petroleum Corp. (a) | 39,600 | | 1,815,660 |
Junex, Inc. (a) | 112,600 | | 392,618 |
Kodiak Oil & Gas Corp. (a) | 168,100 | | 561,454 |
Newfield Exploration Co. (a) | 21,800 | | 1,067,764 |
Nexen, Inc. | 189,200 | | 5,952,173 |
Northern Oil & Gas, Inc. (a)(d) | 12,300 | | 114,144 |
Oil Search Ltd. | 557,156 | | 3,006,221 |
OPTI Canada, Inc. (a) | 155,600 | | 2,954,402 |
Penn Virginia Corp. | 145,464 | | 8,836,938 |
Petrohawk Energy Corp. (a) | 894,757 | | 29,813,303 |
Petroquest Energy, Inc. (a) | 100,185 | | 2,090,861 |
Plains Exploration & Production Co. (a) | 375,680 | | 21,026,810 |
Questerre Energy Corp. (a)(d) | 121,900 | | 403,615 |
Quicksilver Resources, Inc. (a) | 428,400 | | 11,206,944 |
Range Resources Corp. | 963,888 | | 46,806,401 |
SandRidge Energy, Inc. | 102,900 | | 5,030,781 |
Southwestern Energy Co. (a) | 569,900 | | 20,693,069 |
Talisman Energy, Inc. | 135,900 | | 2,430,365 |
Ultra Petroleum Corp. (a) | 470,300 | | 33,570,014 |
Vanguard Natural Resources LLC | 5,600 | | 86,352 |
XTO Energy, Inc. | 2,225 | | 105,087 |
| | 317,429,240 |
Oil & Gas Refining & Marketing - 7.8% |
Frontier Oil Corp. | 318,914 | | 5,820,181 |
Holly Corp. | 168,979 | | 4,829,420 |
Petroplus Holdings AG | 29,887 | | 1,205,604 |
|
| Shares | | Value |
Sunoco, Inc. (d) | 531,805 | | $ 21,596,601 |
Tesoro Corp. | 532,676 | | 8,224,517 |
Valero Energy Corp. | 1,154,481 | | 38,571,210 |
Western Refining, Inc. (d) | 122,466 | | 974,829 |
| | 81,222,362 |
Oil & Gas Storage & Transport - 1.4% |
El Paso Pipeline Partners LP | 37,200 | | 725,400 |
Energy Transfer Equity LP | 76,933 | | 2,286,449 |
Williams Companies, Inc. | 348,777 | | 11,178,303 |
| | 14,190,152 |
TOTAL OIL, GAS & CONSUMABLE FUELS | | 644,029,851 |
TOTAL COMMON STOCKS (Cost $836,238,786) | 1,037,817,319 |
Money Market Funds - 3.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 4,099,123 | | 4,099,123 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 30,259,025 | | 30,259,025 |
TOTAL MONEY MARKET FUNDS (Cost $34,358,148) | 34,358,148 |
TOTAL INVESTMENT PORTFOLIO - 103.1% (Cost $870,596,934) | | 1,072,175,467 |
NET OTHER ASSETS - (3.1)% | | (31,945,552) |
NET ASSETS - 100% | $ 1,040,229,915 |
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 | $ 222,974 |
Fidelity Securities Lending Cash Central Fund | 89,431 |
Total | $ 312,405 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.3% |
Canada | 6.3% |
Netherlands Antilles | 4.3% |
Cayman Islands | 1.6% |
Brazil | 1.5% |
Denmark | 1.1% |
Others (individually less than 1%) | 2.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy
Advisor Energy Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $28,586,972) - See accompanying schedule: Unaffiliated issuers (cost $836,238,786) | $ 1,037,817,319 | |
Fidelity Central Funds (cost $34,358,148) | 34,358,148 | |
Total Investments (cost $870,596,934) | | $ 1,072,175,467 |
Receivable for investments sold | | 12,849,611 |
Receivable for fund shares sold | | 1,049,552 |
Dividends receivable | | 374,693 |
Distributions receivable from Fidelity Central Funds | | 28,591 |
Prepaid expenses | | 2,685 |
Other receivables | | 17,361 |
Total assets | | 1,086,497,960 |
| | |
Liabilities | | |
Payable for investments purchased | $ 9,364,496 | |
Payable for fund shares redeemed | 5,278,370 | |
Accrued management fee | 529,154 | |
Distribution fees payable | 501,342 | |
Other affiliated payables | 287,490 | |
Other payables and accrued expenses | 48,168 | |
Collateral on securities loaned, at value | 30,259,025 | |
Total liabilities | | 46,268,045 |
| | |
Net Assets | | $ 1,040,229,915 |
Net Assets consist of: | | |
Paid in capital | | $ 686,998,673 |
Accumulated net investment loss | | (795) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 151,653,495 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 201,578,542 |
Net Assets | | $ 1,040,229,915 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($355,199,948 ÷ 7,070,724 shares) | | $ 50.24 |
| | |
Maximum offering price per share (100/94.25 of $50.24) | | $ 53.31 |
Class T:
Net Asset Value and redemption price per share ($407,784,394 ÷ 7,934,008 shares) | | $ 51.40 |
| | |
Maximum offering price per share (100/96.50 of $51.40) | | $ 53.26 |
Class B:
Net Asset Value and offering price per share ($98,602,010 ÷ 2,039,294 shares)A | | $ 48.35 |
| | |
Class C:
Net Asset Value and offering price per share ($156,393,491 ÷ 3,216,060 shares)A | | $ 48.63 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($22,250,072 ÷ 429,842 shares) | | $ 51.76 |
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.
Energy
Statement of Operations
| Year ended July 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 8,505,753 |
Interest | | 7,120 |
Income from Fidelity Central Funds | | 312,405 |
Total income | | 8,825,278 |
| | |
Expenses | | |
Management fee | $ 6,031,676 | |
Transfer agent fees | 2,742,854 | |
Distribution fees | 5,762,200 | |
Accounting and security lending fees | 358,686 | |
Custodian fees and expenses | 62,322 | |
Independent trustees' compensation | 4,672 | |
Registration fees | 107,864 | |
Audit | 49,970 | |
Legal | 4,012 | |
Interest | 4,402 | |
Miscellaneous | 118,166 | |
Total expenses before reductions | 15,246,824 | |
Expense reductions | (36,850) | 15,209,974 |
Net investment income (loss) | | (6,384,696) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers (net of foreign taxes of $3,424) | 190,287,771 | |
Foreign currency transactions | 49,151 | |
Total net realized gain (loss) | | 190,336,922 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $37,594) | (81,040,630) | |
Assets and liabilities in foreign currencies | 7 | |
Total change in net unrealized appreciation (depreciation) | | (81,040,623) |
Net gain (loss) | | 109,296,299 |
Net increase (decrease) in net assets resulting from operations | | $ 102,911,603 |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (6,384,696) | $ (2,803,549) |
Net realized gain (loss) | 190,336,922 | 67,298,011 |
Change in net unrealized appreciation (depreciation) | (81,040,623) | 88,822,102 |
Net increase (decrease) in net assets resulting from operations | 102,911,603 | 153,316,564 |
Distributions to shareholders from net realized gain | (64,657,747) | (117,273,909) |
Share transactions - net increase (decrease) | 82,916,045 | 40,324,071 |
Redemption fees | 43,632 | 36,406 |
Total increase (decrease) in net assets | 121,213,533 | 76,403,132 |
| | |
Net Assets | | |
Beginning of period | 919,016,382 | 842,613,250 |
End of period (including accumulated net investment loss of $795 and accumulated net investment loss of $26,290, respectively) | $ 1,040,229,915 | $ 919,016,382 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 | $ 21.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.17) | (.02) F | (.04) | .06 | .07 |
Net realized and unrealized gain (loss) | 5.59 | 8.42 | 12.30 | 12.21 | 7.50 |
Total from investment operations | 5.42 | 8.40 | 12.26 | 12.27 | 7.57 |
Distributions from net investment income | - | - | - | (.06) | (.10) |
Distributions from net realized gain | (3.46) | (6.51) | (6.81) | (.41) | - |
Total distributions | (3.46) | (6.51) | (6.81) | (.47) | (.10) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 |
Total Return A,B | 11.52% | 22.08% | 32.90% | 42.69% | 35.08% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.14% | 1.19% | 1.21% | 1.25% | 1.30% |
Expenses net of fee waivers, if any | 1.14% | 1.19% | 1.21% | 1.25% | 1.30% |
Expenses net of all reductions | 1.14% | 1.19% | 1.17% | 1.19% | 1.29% |
Net investment income (loss) | (.32)% | (.05)% F | (.09)% | .19% | .28% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 355,200 | $ 268,108 | $ 204,391 | $ 90,342 | $ 44,315 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 | $ 21.97 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.29) | (.11) F | (.13) | - H | .03 |
Net realized and unrealized gain (loss) | 5.72 | 8.61 | 12.49 | 12.37 | 7.60 |
Total from investment operations | 5.43 | 8.50 | 12.36 | 12.37 | 7.63 |
Distributions from net investment income | - | - | - | (.03) | (.08) |
Distributions from net realized gain | (3.29) | (6.42) | (6.65) | (.41) | - |
Total distributions | (3.29) | (6.42) | (6.65) | (.44) | (.08) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 |
Total Return A,B | 11.27% | 21.84% | 32.60% | 42.41% | 34.82% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.36% | 1.40% | 1.42% | 1.44% | 1.48% |
Expenses net of fee waivers, if any | 1.36% | 1.40% | 1.42% | 1.44% | 1.48% |
Expenses net of all reductions | 1.35% | 1.39% | 1.38% | 1.39% | 1.47% |
Net investment income (loss) | (.54)% | (.26)% F | (.29)% | (.01)% | .10% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 407,784 | $ 382,222 | $ 362,272 | $ 280,820 | $ 201,187 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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.
Energy
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 | $ 21.28 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.56) | (.34) F | (.35) | (.18) | (.11) |
Net realized and unrealized gain (loss) | 5.41 | 8.17 | 11.98 | 11.93 | 7.37 |
Total from investment operations | 4.85 | 7.83 | 11.63 | 11.75 | 7.26 |
Distributions from net realized gain | (3.14) | (6.29) | (6.43) | (.41) | - |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 |
Total Return A,B | 10.62% | 21.18% | 31.86% | 41.66% | 34.12% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.93% | 1.96% | 1.96% | 1.98% | 2.02% |
Expenses net of fee waivers, if any | 1.93% | 1.96% | 1.96% | 1.98% | 2.02% |
Expenses net of all reductions | 1.93% | 1.95% | 1.92% | 1.93% | 2.01% |
Net investment income (loss) | (1.11)% | (.82)% F | (.84)% | (.55)% | (.44)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 98,602 | $ 116,487 | $ 130,973 | $ 102,003 | $ 68,347 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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 (.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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 | $ 21.38 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.54) | (.32) F | (.34) | (.17) | (.10) |
Net realized and unrealized gain (loss) | 5.45 | 8.20 | 12.06 | 11.99 | 7.40 |
Total from investment operations | 4.91 | 7.88 | 11.72 | 11.82 | 7.30 |
Distributions from net realized gain | (3.16) | (6.33) | (6.50) | (.41) | - |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | - H |
Net asset value, end of period | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 |
Total Return A,B | 10.71% | 21.22% | 31.96% | 41.70% | 34.14% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.87% | 1.91% | 1.92% | 1.94% | 1.99% |
Expenses net of fee waivers, if any | 1.87% | 1.91% | 1.92% | 1.94% | 1.99% |
Expenses net of all reductions | 1.87% | 1.91% | 1.88% | 1.89% | 1.97% |
Net investment income (loss) | (1.05)% | (.77)% F | (.79)% | (.51)% | (.41)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 156,393 | $ 135,072 | $ 125,424 | $ 72,832 | $ 37,206 |
Portfolio turnover rate E | 90% | 80% | 139% | 125% | 40% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 | $ 22.03 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.02) | .11 E | .12 | .19 | .18 |
Net realized and unrealized gain (loss) | 5.74 | 8.67 | 12.56 | 12.44 | 7.62 |
Total from investment operations | 5.72 | 8.78 | 12.68 | 12.63 | 7.80 |
Distributions from net investment income | - | - | - | (.11) | (.19) |
Distributions from net realized gain | (3.64) | (6.58) | (6.97) | (.41) | - |
Total distributions | (3.64) | (6.58) | (6.97) | (.52) | (.19) |
Redemption fees added to paid in capital B | - G | - G | .01 | .01 | - G |
Net asset value, end of period | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 |
Total Return A | 11.83% | 22.47% | 33.35% | 43.21% | 35.60% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .85% | .88% | .87% | .89% | .90% |
Expenses net of fee waivers, if any | .85% | .88% | .87% | .89% | .90% |
Expenses net of all reductions | .85% | .88% | .83% | .84% | .89% |
Net investment income (loss) | (.03)% | .25% E | .26% | .54% | .68% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 22,250 | $ 17,127 | $ 19,553 | $ 9,433 | $ 4,206 |
Portfolio turnover rate D | 90% | 80% | 139% | 125% | 40% |
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.
Energy
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Energy 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the
Energy
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, passive foreign investment companies (PFIC), partnerships, 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 | $ 295,540,500 |
Unrealized depreciation | (96,543,534) |
Net unrealized appreciation (depreciation) | 198,996,966 |
Undistributed ordinary income | 177,681 |
Undistributed long-term capital gain | 137,376,502 |
| |
Cost for federal income tax purposes | $ 873,178,501 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 4,772,747 | $ 36,468,176 |
Long-term Capital Gains | 59,885,000 | 80,805,733 |
Total | $ 64,657,747 | $ 117,273,909 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Annual Report
Notes to Financial Statements - continued
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 $977,150,424 and $959,895,107, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 853,464 | $ 51,049 |
Class T | .25% | .25% | 2,152,298 | 31,591 |
Class B | .75% | .25% | 1,163,814 | 874,450 |
Class C | .75% | .25% | 1,592,624 | 314,372 |
| | | $ 5,762,200 | $ 1,271,462 |
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
by FDC |
Class A | $ 332,562 |
Class T | 73,658 |
Class B* | 174,492 |
Class C* | 32,675 |
| $ 613,387 |
* 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.
Energy
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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 911,111 | .27 |
Class T | 1,002,990 | .23 |
Class B | 355,558 | .31 |
Class C | 392,013 | .25 |
Institutional Class | 81,182 | .23 |
| $ 2,742,854 | |
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 $6,069 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
Expense |
Borrower | $ 32,706,500 | 2.42% | $ 4,402 |
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 $2,404 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 $89,431.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $36,040 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 $693. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Institutional Class | $ 117 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $30,652, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 20,341,408 | $ 30,378,115 |
Class T | 25,677,389 | 48,658,927 |
Class B | 7,474,589 | 18,097,588 |
Class C | 9,397,317 | 17,464,821 |
Institutional Class | 1,767,044 | 2,674,458 |
Total | $ 64,657,747 | $ 117,273,909 |
Energy
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,202,103 | 2,409,415 | $ 169,499,687 | $ 103,800,389 |
Reinvestment of distributions | 375,188 | 718,262 | 18,473,322 | 27,810,279 |
Shares redeemed | (2,059,529) | (1,980,718) | (107,985,396) | (81,122,220) |
Net increase (decrease) | 1,517,762 | 1,146,959 | $ 79,987,613 | $ 50,488,448 |
Class T | | | | |
Shares sold | 1,610,611 | 1,250,444 | $ 87,007,613 | $ 54,473,563 |
Reinvestment of distributions | 478,816 | 1,161,034 | 24,107,280 | 45,909,961 |
Shares redeemed | (1,914,780) | (2,330,754) | (102,045,896) | (98,273,495) |
Net increase (decrease) | 174,647 | 80,724 | $ 9,068,997 | $ 2,110,029 |
Class B | | | | |
Shares sold | 504,843 | 451,905 | $ 25,728,046 | $ 18,746,589 |
Reinvestment of distributions | 135,516 | 414,158 | 6,434,106 | 15,588,355 |
Shares redeemed | (1,098,735) | (1,272,145) | (55,433,977) | (50,696,372) |
Net increase (decrease) | (458,376) | (406,082) | $ (23,271,825) | $ (16,361,428) |
Class C | | | | |
Shares sold | 993,512 | 863,338 | $ 51,238,082 | $ 36,256,164 |
Reinvestment of distributions | 161,795 | 385,215 | 7,736,565 | 14,569,142 |
Shares redeemed | (820,290) | (1,134,191) | (41,459,377) | (44,464,337) |
Net increase (decrease) | 335,017 | 114,362 | $ 17,515,270 | $ 6,360,969 |
Institutional Class | | | | |
Shares sold | 839,635 | 150,039 | $ 44,656,187 | $ 6,836,544 |
Reinvestment of distributions | 25,669 | 39,397 | 1,318,208 | 1,561,516 |
Shares redeemed | (780,213) | (256,502) | (46,358,405) | (10,672,007) |
Net increase (decrease) | 85,091 | (67,066) | $ (384,010) | $ (2,273,947) |
Annual Report
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | -31.47% | 0.20% | 1.97% |
$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, 1998. 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 Richard Manuel, Portfolio Manager of Fidelity® Advisor Financial Services Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the year, the fund's Class A, Class T, Class B and Class C shares returned -31.67%, -31.85%, -32.21% and -32.18%, respectively (excluding sales charges). These results lagged the S&P 500 and the -29.14% return of the MSCI® US Investable Market Financials Index. Unfavorable industry weightings and stock selection, especially in thrifts and mortgage finance, hurt performance relative to the MSCI index. Freddie Mac and Fannie Mae, government-sponsored mortgage lenders, sank as mounting credit losses pressured their capital ratios. Countrywide Financial, a mortgage originator, suffered from liquidity and bankruptcy concerns related to its subprime exposure. It then declined along with Bank of America, another fund holding that acquired Countrywide before period end. Elsewhere, American International Group (AIG), a multi-line insurer, plunged as mortgage-related investment losses forced it to raise additional capital. Modest gains came from an overweighting in reinsurance, a small cash position and good stock selection among regional banks and diversified banks. Standouts included State Street, an asset management and custody bank benefiting from strong business growth. An underweighting in Merrill Lynch, a troubled investment bank and broker, further aided performance.
For the year, the fund's Institutional Class shares returned -31.47%. This result lagged the S&P 500 and the -29.14% return of the MSCI® US Investable Market Financials Index. Unfavorable industry weightings and stock selection, especially in thrifts and mortgage finance, hurt performance relative to the MSCI index. Freddie Mac and Fannie Mae, government-sponsored mortgage lenders, sank as mounting credit losses pressured their capital ratios. Countrywide Financial, a mortgage originator, suffered from liquidity and bankruptcy concerns related to its subprime exposure. It then declined along with Bank of America, another fund holding that acquired Countrywide before period end. Elsewhere, American International Group (AIG), a multi-line insurer, plunged as mortgage-related investment losses forced it to raise additional capital. Modest gains came from an overweighting in reinsurance, a small cash position and good stock selection among regional banks and diversified banks. Standouts included State Street, an asset management and custody bank benefiting from strong business growth. An underweighting in Merrill Lynch, a troubled investment bank and broker, further aided performance.
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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 754.40 | $ 5.37 |
Hypothetical A | $ 1,000.00 | $ 1,018.75 | $ 6.17 |
Class T | | | |
Actual | $ 1,000.00 | $ 753.00 | $ 6.49 |
Hypothetical A | $ 1,000.00 | $ 1,017.45 | $ 7.47 |
Class B | | | |
Actual | $ 1,000.00 | $ 751.00 | $ 8.71 |
Hypothetical A | $ 1,000.00 | $ 1,014.92 | $ 10.02 |
Class C | | | |
Actual | $ 1,000.00 | $ 751.30 | $ 8.67 |
Hypothetical A | $ 1,000.00 | $ 1,014.97 | $ 9.97 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 755.50 | $ 4.06 |
Hypothetical A | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.23% |
Class T | 1.49% |
Class B | 2.00% |
Class C | 1.99% |
Institutional Class | .93% |
Annual Report
Advisor Financial Services Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Bank of America Corp. | 7.8 | 5.6 |
JPMorgan Chase & Co. | 5.8 | 6.9 |
Wells Fargo & Co. | 5.2 | 4.8 |
American International Group, Inc. | 4.0 | 6.5 |
ACE Ltd. | 3.0 | 2.9 |
Citigroup, Inc. | 2.6 | 5.2 |
PNC Financial Services Group, Inc. | 2.4 | 1.8 |
Bank of New York Mellon Corp. | 2.4 | 2.0 |
State Street Corp. | 2.2 | 2.1 |
Everest Re Group Ltd. | 2.1 | 2.3 |
| 37.5 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Insurance | 24.4% | |
| Diversified Financial Services | 19.7% | |
| Capital Markets | 18.4% | |
| Commercial Banks | 15.7% | |
| Real Estate Investment Trusts | 6.1% | |
| All Others* | 15.7% | |
|
As of January 31, 2008 |
| Insurance | 27.0% | |
| Diversified Financial Services | 20.7% | |
| Capital Markets | 18.8% | |
| Commercial Banks | 12.8% | |
| Real Estate Investment Trusts | 5.6% | |
| All Others* | 15.1% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 91.1% |
| Shares | | Value |
CAPITAL MARKETS - 18.1% |
Asset Management & Custody Banks - 10.4% |
Bank of New York Mellon Corp. | 139,700 | | $ 4,959,350 |
EFG International | 46,050 | | 1,440,635 |
Fortress Investment Group LLC (d) | 43,500 | | 515,910 |
Franklin Resources, Inc. | 32,300 | | 3,249,703 |
GLG Partners, Inc. (d) | 55,400 | | 511,342 |
Janus Capital Group, Inc. | 67,800 | | 2,057,052 |
Julius Baer Holding AG | 17,384 | | 1,102,311 |
KKR Private Equity Investors, LP | 21,200 | | 291,500 |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 34,300 | | 471,625 |
Legg Mason, Inc. | 6,000 | | 242,100 |
State Street Corp. | 63,482 | | 4,547,850 |
T. Rowe Price Group, Inc. | 23,100 | | 1,382,535 |
The Blackstone Group LP | 40,700 | | 755,799 |
| | 21,527,712 |
Investment Banking & Brokerage - 7.7% |
Charles Schwab Corp. | 134,200 | | 3,071,838 |
Goldman Sachs Group, Inc. | 23,700 | | 4,361,748 |
Lazard Ltd. Class A | 19,500 | | 795,795 |
Lehman Brothers Holdings, Inc. | 57,200 | | 991,848 |
Merrill Lynch & Co., Inc. | 121,000 | | 3,224,650 |
Morgan Stanley | 92,100 | | 3,636,108 |
| | 16,081,987 |
TOTAL CAPITAL MARKETS | | 37,609,699 |
COMMERCIAL BANKS - 15.0% |
Diversified Banks - 9.6% |
Banco Latin Americano de Exporaciones SA (BLADEX) Series E | 6,800 | | 124,712 |
ICICI Bank Ltd. sponsored ADR (d) | 10,900 | | 322,749 |
U.S. Bancorp, Delaware (d) | 141,100 | | 4,319,071 |
Wachovia Corp. (d) | 255,398 | | 4,410,723 |
Wells Fargo & Co. (d) | 354,500 | | 10,730,715 |
| | 19,907,970 |
Regional Banks - 5.4% |
Associated Banc-Corp. (d) | 91,900 | | 1,533,811 |
Boston Private Financial Holdings, Inc. | 37,000 | | 289,710 |
Cathay General Bancorp | 72,988 | | 1,163,429 |
Center Financial Corp., California | 12,000 | | 132,000 |
Huntington Bancshares, Inc. (d) | 80,100 | | 562,302 |
KeyCorp (d) | 125,300 | | 1,321,915 |
M&T Bank Corp. (d) | 14,200 | | 999,396 |
National City Corp. | 17,900 | | 84,667 |
PNC Financial Services Group, Inc. | 70,600 | | 5,033,074 |
Wintrust Financial Corp. | 4,200 | | 86,730 |
| | 11,207,034 |
TOTAL COMMERCIAL BANKS | | 31,115,004 |
|
| Shares | | Value |
CONSUMER FINANCE - 4.1% |
Consumer Finance - 4.1% |
American Express Co. | 41,400 | | $ 1,536,768 |
Capital One Financial Corp. (d) | 62,630 | | 2,621,692 |
Discover Financial Services | 103,500 | | 1,516,275 |
Dollar Financial Corp. (a) | 40,562 | | 784,469 |
SLM Corp. (a) | 117,400 | | 2,011,062 |
| | 8,470,266 |
DIVERSIFIED FINANCIAL SERVICES - 19.7% |
Other Diversifed Financial Services - 16.2% |
Bank of America Corp. | 491,040 | | 16,155,216 |
Citigroup, Inc. (d) | 294,262 | | 5,499,757 |
JPMorgan Chase & Co. | 295,894 | | 12,022,173 |
| | 33,677,146 |
Specialized Finance - 3.5% |
CIT Group, Inc. | 101,800 | | 863,264 |
CME Group, Inc. (d) | 8,325 | | 2,998,082 |
Deutsche Boerse AG | 14,700 | | 1,673,477 |
JSE Ltd. | 30,200 | | 192,446 |
KKR Financial Holdings LLC | 92,500 | | 949,975 |
MarketAxess Holdings, Inc. (a) | 55,900 | | 541,112 |
| | 7,218,356 |
TOTAL DIVERSIFIED FINANCIAL SERVICES | | 40,895,502 |
INSURANCE - 23.3% |
Insurance Brokers - 0.6% |
National Financial Partners Corp. (d) | 28,600 | | 596,310 |
Willis Group Holdings Ltd. | 19,140 | | 598,508 |
| | 1,194,818 |
Life & Health Insurance - 5.9% |
AFLAC, Inc. | 42,600 | | 2,368,986 |
MetLife, Inc. (d) | 81,500 | | 4,137,755 |
Principal Financial Group, Inc. | 53,000 | | 2,253,030 |
Prudential Financial, Inc. (d) | 50,500 | | 3,482,985 |
| | 12,242,756 |
Multi-Line Insurance - 5.9% |
American International Group, Inc. | 319,260 | | 8,316,723 |
Assurant, Inc. | 21,800 | | 1,310,616 |
Hartford Financial Services Group, Inc. | 41,300 | | 2,618,007 |
| | 12,245,346 |
Property & Casualty Insurance - 5.8% |
ACE Ltd. | 123,000 | | 6,236,100 |
Argo Group International Holdings, Ltd. (a) | 33,011 | | 1,123,694 |
Aspen Insurance Holdings Ltd. | 200 | | 5,078 |
Axis Capital Holdings Ltd. | 20,800 | | 658,944 |
Berkshire Hathaway, Inc. Class A (a) | 16 | | 1,831,200 |
LandAmerica Financial Group, Inc. (d) | 14,400 | | 165,456 |
MBIA, Inc. (d) | 37,800 | | 224,154 |
Common Stocks - continued |
| Shares | | Value |
INSURANCE - CONTINUED |
Property & Casualty Insurance - continued |
The Travelers Companies, Inc. | 29,800 | | $ 1,314,776 |
United America Indemnity Ltd.
Class A (a) | 37,900 | | 493,837 |
| | 12,053,239 |
Reinsurance - 5.1% |
Everest Re Group Ltd. | 54,200 | | 4,433,560 |
IPC Holdings Ltd. | 31,666 | | 1,016,479 |
Max Capital Group Ltd. | 55,676 | | 1,306,716 |
Montpelier Re Holdings Ltd. | 17,900 | | 281,030 |
Platinum Underwriters Holdings Ltd. | 56,300 | | 2,032,430 |
RenaissanceRe Holdings Ltd. | 30,400 | | 1,546,448 |
| | 10,616,663 |
TOTAL INSURANCE | | 48,352,822 |
IT SERVICES - 0.5% |
Data Processing & Outsourced Services - 0.5% |
Visa, Inc. | 15,100 | | 1,103,206 |
REAL ESTATE INVESTMENT TRUSTS - 6.1% |
Mortgage REITs - 1.3% |
Annaly Capital Management, Inc. | 144,500 | | 2,177,615 |
Chimera Investment Corp. | 62,000 | | 476,780 |
| | 2,654,395 |
Residential REITs - 1.5% |
Equity Lifestyle Properties, Inc. | 35,500 | | 1,704,355 |
UDR, Inc. | 57,700 | | 1,473,658 |
| | 3,178,013 |
Retail REITs - 3.3% |
CBL & Associates Properties, Inc. | 22,392 | | 434,853 |
Developers Diversified Realty Corp. | 68,900 | | 2,202,044 |
General Growth Properties, Inc. | 94,700 | | 2,595,727 |
Simon Property Group, Inc. | 17,800 | | 1,648,814 |
| | 6,881,438 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 12,713,846 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.3% |
Real Estate Management & Development - 1.3% |
Meruelo Maddux Properties, Inc. (a) | 90,300 | | 174,279 |
Mitsubishi Estate Co. Ltd. | 108,000 | | 2,600,980 |
| | 2,775,259 |
THRIFTS & MORTGAGE FINANCE - 3.0% |
Thrifts & Mortgage Finance - 3.0% |
Fannie Mae | 157,985 | | 1,816,828 |
Freddie Mac | 81,900 | | 669,123 |
Hudson City Bancorp, Inc. | 134,375 | | 2,453,688 |
IndyMac Bancorp, Inc. (d) | 33,000 | | 4,455 |
|
| Shares | | Value |
Radian Group, Inc. | 46,000 | | $ 80,040 |
Washington Mutual, Inc. (d) | 211,571 | | 1,127,673 |
| | 6,151,807 |
TOTAL COMMON STOCKS (Cost $200,227,796) | 189,187,411 |
Convertible Preferred Stocks - 2.2% |
| | | |
CAPITAL MARKETS - 0.3% |
Investment Banking & Brokerage - 0.3% |
Lehman Brothers Holdings, Inc. Series P, 7.25% | 830 | | 539,500 |
COMMERCIAL BANKS - 0.7% |
Regional Banks - 0.7% |
Huntington Bancshares, Inc. 8.50% | 900 | | 701,946 |
National City Corp. | 7 | | 662,200 |
| | 1,364,146 |
DIVERSIFIED FINANCIAL SERVICES - 0.0% |
Specialized Finance - 0.0% |
CIT Group, Inc. Series C, 8.75% | 2,000 | | 93,840 |
INSURANCE - 1.1% |
Multi-Line Insurance - 1.1% |
American International Group, Inc.
Series A, 8.50% | 39,200 | | 2,243,926 |
THRIFTS & MORTGAGE FINANCE - 0.1% |
Thrifts & Mortgage Finance - 0.1% |
Fannie Mae 8.75% | 10,500 | | 254,625 |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $5,995,000) | 4,496,037 |
Money Market Funds - 24.3% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 14,462,240 | | 14,462,240 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 35,912,105 | | 35,912,105 |
TOTAL MONEY MARKET FUNDS (Cost $50,374,345) | 50,374,345 |
TOTAL INVESTMENT PORTFOLIO - 117.6% (Cost $256,597,141) | | 244,057,793 |
NET OTHER ASSETS - (17.6)% | | (36,478,362) |
NET ASSETS - 100% | $ 207,579,431 |
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 $471,625 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 | $ 264,151 |
Fidelity Securities Lending Cash Central Fund | 208,998 |
Total | $ 473,149 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.3% |
Bermuda | 6.7% |
Switzerland | 4.2% |
Japan | 1.2% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $26,184,414 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $34,496,028) - See accompanying schedule: Unaffiliated issuers (cost $206,222,796) | $ 193,683,448 | |
Fidelity Central Funds (cost $50,374,345) | 50,374,345 | |
Total Investments (cost $256,597,141) | | $ 244,057,793 |
Receivable for investments sold | | 1,449,316 |
Receivable for fund shares sold | | 1,436,075 |
Dividends receivable | | 226,508 |
Distributions receivable from Fidelity Central Funds | | 31,146 |
Prepaid expenses | | 1,073 |
Other receivables | | 1 |
Total assets | | 247,201,912 |
| | |
Liabilities | | |
Payable for investments purchased | $ 3,085,818 | |
Payable for fund shares redeemed | 350,460 | |
Accrued management fee | 89,358 | |
Distribution fees payable | 83,369 | |
Other affiliated payables | 60,658 | |
Other payables and accrued expenses | 40,713 | |
Collateral on securities loaned, at value | 35,912,105 | |
Total liabilities | | 39,622,481 |
| | |
Net Assets | | $ 207,579,431 |
Net Assets consist of: | | |
Paid in capital | | $ 247,874,023 |
Undistributed net investment income | | 2,125,111 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (29,880,678) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (12,539,025) |
Net Assets | | $ 207,579,431 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($90,037,012 ÷ 6,833,655 shares) | | $ 13.18 |
| | |
Maximum offering price per share (100/94.25 of $13.18) | | $ 13.98 |
Class T:
Net Asset Value and redemption price per share ($53,525,842 ÷ 4,073,551 shares) | | $ 13.14 |
| | |
Maximum offering price per share (100/96.50 of $13.14) | | $ 13.62 |
Class B:
Net Asset Value and offering price per share ($20,420,273 ÷ 1,588,888 shares)A | | $ 12.85 |
| | |
Class C:
Net Asset Value and offering price per share ($37,776,918 ÷ 2,956,481 shares)A | | $ 12.78 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($5,819,386 ÷ 435,086 shares) | | $ 13.38 |
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.
Financial Services
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Dividends | | $ 7,484,663 |
Interest | | 14,126 |
Income from Fidelity Central Funds | | 473,149 |
Total income | | 7,971,938 |
| | |
Expenses | | |
Management fee | $ 1,495,035 | |
Transfer agent fees | 805,967 | |
Distribution fees | 1,465,062 | |
Accounting and security lending fees | 109,708 | |
Custodian fees and expenses | 12,212 | |
Independent trustees' compensation | 1,186 | |
Registration fees | 51,656 | |
Audit | 56,685 | |
Legal | 1,609 | |
Interest | 3,760 | |
Miscellaneous | 50,611 | |
Total expenses before reductions | 4,053,491 | |
Expense reductions | (2,391) | 4,051,100 |
Net investment income (loss) | | 3,920,838 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (25,369,015) | |
Investment not meeting investment restrictions | (938) | |
Foreign currency transactions | (4,265) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 1,287 | |
Total net realized gain (loss) | | (25,372,931) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (75,625,062) | |
Assets and liabilities in foreign currencies | 3,848 | |
Total change in net unrealized appreciation (depreciation) | | (75,621,214) |
Net gain (loss) | | (100,994,145) |
Net increase (decrease) in net assets resulting from operations | | $ (97,073,307) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 3,920,838 | $ 2,504,527 |
Net realized gain (loss) | (25,372,931) | 49,174,884 |
Change in net unrealized appreciation (depreciation) | (75,621,214) | (30,974,733) |
Net increase (decrease) in net assets resulting from operations | (97,073,307) | 20,704,678 |
Distributions to shareholders from net investment income | (2,830,191) | (1,993,507) |
Distributions to shareholders from net realized gain | (22,361,262) | (54,831,267) |
Total distributions | (25,191,453) | (56,824,774) |
Share transactions - net increase (decrease) | (845,081) | (19,915,758) |
Redemption fees | 10,552 | 2,369 |
Total increase (decrease) in net assets | (123,099,289) | (56,033,485) |
| | |
Net Assets | | |
Beginning of period | 330,678,720 | 386,712,205 |
End of period (including undistributed net investment income of $2,125,111 and undistributed net investment income of $1,282,613, respectively) | $ 207,579,431 | $ 330,678,720 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 | $ 19.98 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .30 | .23 | .20 | .19 | .14 |
Net realized and unrealized gain (loss) | (6.41) | .92 | 2.02 | 2.48 | 2.20 |
Total from investment operations | (6.11) | 1.15 | 2.22 | 2.67 | 2.34 |
Distributions from net investment income | (.27) | (.22) | (.26) | (.07) | (.15) |
Distributions from net realized gain | (1.46) | (3.25) | (1.63) | (1.76) | - |
Total distributions | (1.73) | (3.47) H | (1.89) | (1.83) | (.15) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 |
Total Return A, B | (31.67)% | 4.54% | 10.32% | 12.60% | 11.76% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.21% | 1.23% | 1.25% | 1.26% | 1.27% |
Expenses net of fee waivers, if any | 1.21% | 1.23% | 1.25% | 1.26% | 1.27% |
Expenses net of all reductions | 1.21% | 1.22% | 1.23% | 1.23% | 1.25% |
Net investment income (loss) | 1.75% | 1.01% | .87% | .88% | .63% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 90,037 | $ 106,722 | $ 85,356 | $ 68,012 | $ 58,222 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 | $ 19.90 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .26 | .18 | .15 | .14 | .09 |
Net realized and unrealized gain (loss) | (6.41) | .91 | 2.02 | 2.47 | 2.19 |
Total from investment operations | (6.15) | 1.09 | 2.17 | 2.61 | 2.28 |
Distributions from net investment income | (.19) | (.16) | (.15) | (.05) | (.11) |
Distributions from net realized gain | (1.46) | (3.25) | (1.63) | (1.76) | - |
Total distributions | (1.65) | (3.41) H | (1.78) | (1.81) | (.11) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 |
Total Return A, B | (31.85)% | 4.25% | 10.11% | 12.37% | 11.49% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.47% | 1.46% | 1.47% | 1.48% | 1.50% |
Expenses net of fee waivers, if any | 1.47% | 1.46% | 1.47% | 1.48% | 1.50% |
Expenses net of all reductions | 1.47% | 1.46% | 1.46% | 1.46% | 1.48% |
Net investment income (loss) | 1.50% | .77% | .65% | .66% | .41% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 53,526 | $ 95,426 | $ 113,344 | $ 128,388 | $ 144,887 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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.
Financial Services
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 | $ 19.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .18 | .06 | .03 | .03 | (.02) |
Net realized and unrealized gain (loss) | (6.29) | .89 | 1.97 | 2.41 | 2.16 |
Total from investment operations | (6.11) | .95 | 2.00 | 2.44 | 2.14 |
Distributions from net investment income | (.04) | (.02) | (.01) | - | (.02) |
Distributions from net realized gain | (1.44) | (3.25) | (1.57) | (1.76) | - |
Total distributions | (1.48) | (3.26) H | (1.58) | (1.76) | (.02) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 |
Total Return A, B | (32.21)% | 3.71% | 9.52% | 11.78% | 10.96% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 1.98% | 1.99% | 2.00% | 2.02% |
Expenses net of fee waivers, if any | 1.96% | 1.98% | 1.99% | 2.00% | 2.02% |
Expenses net of all reductions | 1.96% | 1.98% | 1.98% | 1.98% | 2.00% |
Net investment income (loss) | 1.01% | .25% | .13% | .14% | (.11)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 20,420 | $ 64,837 | $ 113,652 | $ 145,046 | $ 179,873 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 | $ 19.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .17 | .06 | .04 | .04 | (.01) |
Net realized and unrealized gain (loss) | (6.24) | .90 | 1.98 | 2.42 | 2.15 |
Total from investment operations | (6.07) | .96 | 2.02 | 2.46 | 2.14 |
Distributions from net investment income | (.09) | (.05) | (.02) | (.01) | (.02) |
Distributions from net realized gain | (1.46) | (3.25) | (1.60) | (1.76) | - |
Total distributions | (1.55) | (3.30) H | (1.62) | (1.77) | (.02) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 |
Total Return A, B | (32.18)% | 3.75% | 9.58% | 11.88% | 10.96% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 1.94% | 1.94% | 1.95% | 1.97% |
Expenses net of fee waivers, if any | 1.96% | 1.94% | 1.94% | 1.95% | 1.97% |
Expenses net of all reductions | 1.96% | 1.94% | 1.93% | 1.92% | 1.95% |
Net investment income (loss) | 1.01% | .29% | .18% | .19% | (.06)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 37,777 | $ 55,219 | $ 62,469 | $ 72,181 | $ 86,199 |
Portfolio turnover rate E | 48% | 53% | 33% | 61% | 74% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 | $ 20.17 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .36 | .31 | .29 | .29 | .23 |
Net realized and unrealized gain (loss) | (6.51) | .93 | 2.05 | 2.50 | 2.21 |
Total from investment operations | (6.15) | 1.24 | 2.34 | 2.79 | 2.44 |
Distributions from net investment income | (.33) | (.30) | (.37) | (.11) | (.24) |
Distributions from net realized gain | (1.46) | (3.25) | (1.63) | (1.76) | - |
Total distributions | (1.79) | (3.55) G | (2.00) | (1.87) | (.24) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 |
Total Return A | (31.47)% | 4.88% | 10.78% | 13.06% | 12.18% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .93% | .89% | .86% | .86% | .88% |
Expenses net of fee waivers, if any | .93% | .89% | .86% | .86% | .88% |
Expenses net of all reductions | .92% | .88% | .85% | .84% | .85% |
Net investment income (loss) | 2.04% | 1.34% | 1.26% | 1.28% | 1.03% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,819 | $ 8,474 | $ 11,892 | $ 12,629 | $ 13,008 |
Portfolio turnover rate D | 48% | 53% | 33% | 61% | 74% |
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.
Financial Services
Notes to Financial Statements
For the period ended July 31, 2008
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, partnerships, deferred trustees compensation, 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 | $ 30,409,453 |
Unrealized depreciation | (46,968,925) |
Net unrealized appreciation (depreciation) | (16,559,472) |
Undistributed ordinary income | 1,761,872 |
Undistributed long-term capital gain | 269,334 |
| |
Cost for federal income tax purposes | $ 260,617,265 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 3,522,419 | $ 3,815,559 |
Long-term Capital Gains | 21,669,034 | 53,009,215 |
Total | $ 25,191,453 | $ 56,824,774 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Financial Services
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 $127,065,281 and $156,248,529, respectively.
The Fund realized a gain and loss of $349 and $1,287, respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $1,287 was fully reimbursed by the Fund's investment advisor.
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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 253,057 | $ 8,460 |
Class T | .25% | .25% | 370,468 | 2,944 |
Class B | .75% | .25% | 381,499 | 286,457 |
Class C | .75% | .25% | 460,038 | 48,563 |
| | | $ 1,465,062 | $ 346,424 |
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
by FDC |
Class A | $ 78,918 |
Class T | 15,214 |
Class B* | 50,358 |
Class C* | 6,763 |
| $ 151,253 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 305,716 | .30 |
Class T | 227,098 | .31 |
Class B | 113,846 | .30 |
Class C | 135,846 | .29 |
Institutional Class | 23,461 | .26 |
| $ 805,967 | |
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 $1,206 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
Expense |
Borrower | $ 3,854,125 | 4.39% | $ 3,760 |
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 $700 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 $208,998.
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 $1,111 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
expense reduction |
Class A | $ 1,280 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $95,210, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income | | |
Class A | $ 1,429,035 | $ 867,686 |
Class T | 833,715 | 765,107 |
Class B | 103,026 | 69,445 |
Class C | 241,388 | 139,125 |
Institutional Class | 223,027 | 152,144 |
Total | $ 2,830,191 | $ 1,993,507 |
From net realized gain | | |
Class A | $ 7,599,793 | $ 12,753,057 |
Class T | 6,343,916 | 15,966,933 |
Class B | 3,935,726 | 15,271,397 |
Class C | 3,829,942 | 9,173,101 |
Institutional Class | 651,885 | 1,666,779 |
Total | $ 22,361,262 | $ 54,831,267 |
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, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,476,462 | 2,132,186 | $ 58,217,275 | $ 48,786,912 |
Reinvestment of distributions | 413,881 | 548,319 | 8,062,306 | 12,292,012 |
Shares redeemed | (2,133,725) | (1,259,845) | (36,028,050) | (28,919,491) |
Net increase (decrease) | 1,756,618 | 1,420,660 | $ 30,251,531 | $ 32,159,433 |
Class T | | | | |
Shares sold | 825,338 | 372,346 | $ 13,397,557 | $ 8,558,636 |
Reinvestment of distributions | 344,513 | 703,948 | 6,720,713 | 15,750,996 |
Shares redeemed | (1,652,503) | (1,393,386) | (28,919,771) | (31,851,718) |
Net increase (decrease) | (482,652) | (317,092) | $ (8,801,501) | $ (7,542,086) |
Class B | | | | |
Shares sold | 511,474 | 242,400 | $ 8,246,792 | $ 5,428,899 |
Reinvestment of distributions | 187,873 | 609,690 | 3,607,784 | 13,365,246 |
Shares redeemed | (2,282,248) | (2,676,523) | (40,060,805) | (59,803,637) |
Net increase (decrease) | (1,582,901) | (1,824,433) | $ (28,206,229) | $ (41,009,492) |
Class C | | | | |
Shares sold | 1,114,854 | 284,897 | $ 17,550,045 | $ 6,372,368 |
Reinvestment of distributions | 173,040 | 345,073 | 3,294,216 | 7,545,497 |
Shares redeemed | (1,038,077) | (670,985) | (17,222,702) | (14,937,683) |
Net increase (decrease) | 249,817 | (41,015) | $ 3,621,559 | $ (1,019,818) |
Institutional Class | | | | |
Shares sold | 1,075,511 | 75,332 | $ 20,129,434 | $ 1,755,195 |
Reinvestment of distributions | 36,137 | 56,949 | 687,993 | 1,292,278 |
Shares redeemed | (1,074,000) | (238,050) | (18,527,868) | (5,551,268) |
Net increase (decrease) | 37,648 | (105,769) | $ 2,289,559 | $ (2,503,795) |
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, if any) 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, 2008 | | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | | -5.36% | 6.30% | 5.24% |
$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, 1998. 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 Health Care Fund
Management's Discussion of Fund Performance
Comments from Matthew Sabel, Portfolio Manager of Fidelity® Advisor Health Care Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned -5.36%, underperforming the -1.74% return of the MSCI® US Investable Market Health Care Index but outperforming the S&P 500. The main factors behind the fund's underperformance of the MSCI index were unfavorable stock selection in pharmaceuticals, health care services and biotechnology, along with an underweighting in the last group. An out-of-benchmark stake in packaged foods and meats also hurt. Conversely, the fund benefited from an overweighting in life sciences tools and services, as well as good security selection in that group. Favorable picks in managed health care and an out-of-benchmark position in fertilizers and agricultural chemicals helped as well. Detractors included a significant underweighting in pharmaceutical firm and index heavyweight Johnson & Johnson; an underweighting in biotechnology company Amgen; an out-of-benchmark position in Brazilian drug distributor Profarma; holdings of pharmaceutical company Schering-Plough, NightHawk Radiology and managed health care provider Universal American; as well as an underweighting in biotech firm Celgene. Underweighting two index components that underperformed - pharmaceutical giant Pfizer and managed care company WellPoint - helped relative returns, as did life sciences tools and services firms Bruker BioSciences and Thermo Fisher Scientific, along with health care equipment provider Baxter International. Some stocks mentioned here were not held at period end.
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
Advisor Health Care 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 940.40 | $ 5.89 |
HypotheticalA | $ 1,000.00 | $ 1,018.80 | $ 6.12 |
Class T | | | |
Actual | $ 1,000.00 | $ 939.50 | $ 7.14 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 936.90 | $ 9.54 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Class C | | | |
Actual | $ 1,000.00 | $ 937.30 | $ 9.49 |
HypotheticalA | $ 1,000.00 | $ 1,015.07 | $ 9.87 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 941.80 | $ 4.68 |
HypotheticalA | $ 1,000.00 | $ 1,020.04 | $ 4.87 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.22% |
Class T | 1.48% |
Class B | 1.98% |
Class C | 1.97% |
Institutional Class | .97% |
Annual Report
Advisor Health Care Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Wyeth | 5.3 | 3.1 |
Abbott Laboratories | 5.3 | 4.2 |
Genentech, Inc. | 4.6 | 1.3 |
Thermo Fisher Scientific, Inc. | 4.6 | 2.9 |
Covidien Ltd. | 4.4 | 1.7 |
Baxter International, Inc. | 3.9 | 2.7 |
Amgen, Inc. | 2.7 | 1.8 |
Inverness Medical Innovations, Inc. | 2.5 | 1.7 |
UnitedHealth Group, Inc. | 2.4 | 4.8 |
Medtronic, Inc. | 2.4 | 0.6 |
| 38.1 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Health Care
Equipment & Supplies | 24.8% | |
| Pharmaceuticals | 20.8% | |
| Biotechnology | 16.4% | |
| Health Care
Providers & Services | 14.9% | |
| Life Sciences Tools
& Services | 12.1% | |
| All Others* | 11.0% | |
As of January 31, 2008 |
| Health Care
Equipment & Supplies | 20.3% | |
| Pharmaceuticals | 25.6% | |
| Biotechnology | 13.6% | |
| Health Care
Providers & Services | 19.9% | |
| Life Sciences
Tools & Services | 11.3% | |
| All Others* | 9.3% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Health Care Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 98.4% |
| Shares | | Value |
BIOTECHNOLOGY - 16.4% |
Biotechnology - 16.4% |
Alexion Pharmaceuticals, Inc. (a) | 17,900 | | $ 1,678,125 |
Alnylam Pharmaceuticals, Inc. (a) | 62,137 | | 2,161,125 |
Amgen, Inc. (a) | 221,948 | | 13,900,603 |
Biogen Idec, Inc. (a) | 135,116 | | 9,425,692 |
BioMarin Pharmaceutical, Inc. (a)(d) | 168,962 | | 5,499,713 |
Cephalon, Inc. (a) | 49,510 | | 3,622,152 |
Cepheid, Inc. (a) | 37,159 | | 636,162 |
Cougar Biotechnology, Inc. (a) | 13,326 | | 448,420 |
CSL Ltd. | 82,373 | | 2,683,802 |
Genentech, Inc. (a) | 254,387 | | 24,230,362 |
Genzyme Corp. (a) | 84,600 | | 6,484,590 |
GTx, Inc. (a)(d) | 107,417 | | 2,002,253 |
Human Genome Sciences, Inc. (a) | 42,800 | | 283,764 |
ImClone Systems, Inc. (a) | 20,200 | | 1,291,386 |
Molecular Insight Pharmaceuticals, Inc. (a) | 39,400 | | 332,536 |
Myriad Genetics, Inc. (a) | 29,066 | | 1,932,889 |
Omrix Biopharmaceuticals, Inc. (a) | 34,600 | | 643,560 |
ONYX Pharmaceuticals, Inc. (a) | 96,984 | | 3,927,852 |
PDL BioPharma, Inc. | 63,526 | | 709,585 |
RXi Pharmaceuticals Corp. (a) | 8,141 | | 59,022 |
Theravance, Inc. (a)(d) | 188,900 | | 3,018,622 |
United Therapeutics Corp. (a) | 6,800 | | 771,052 |
| | 85,743,267 |
CHEMICALS - 2.7% |
Fertilizers & Agricultural Chemicals - 2.4% |
Monsanto Co. | 89,461 | | 10,655,700 |
Syngenta AG sponsored ADR | 34,500 | | 2,004,105 |
| | 12,659,805 |
Specialty Chemicals - 0.3% |
Jubilant Organosys Ltd. | 70,122 | | 592,142 |
Sigma Aldrich Corp. | 14,300 | | 868,582 |
| | 1,460,724 |
TOTAL CHEMICALS | | 14,120,529 |
COMMERCIAL SERVICES & SUPPLIES - 0.1% |
Environmental & Facility Services - 0.1% |
American Ecology Corp. | 17,100 | | 538,821 |
DIVERSIFIED CONSUMER SERVICES - 0.5% |
Specialized Consumer Services - 0.5% |
Carriage Services, Inc. Class A (a) | 181,450 | | 1,124,990 |
Hillenbrand, Inc. | 18,200 | | 421,330 |
Stewart Enterprises, Inc. Class A | 113,884 | | 1,014,706 |
StoneMor Partners LP | 8,737 | | 158,839 |
| | 2,719,865 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.4% |
Electronic Equipment & Instruments - 1.4% |
Mettler-Toledo International, Inc. (a) | 66,567 | | 7,156,618 |
|
| Shares | | Value |
FOOD & STAPLES RETAILING - 0.7% |
Drug Retail - 0.7% |
A&D Pharma Holdings NV (Reg. S) unit | 10,900 | | $ 37,217 |
China Nepstar Chain Drugstore Ltd. ADR | 17,400 | | 135,372 |
CVS Caremark Corp. | 99,500 | | 3,631,750 |
| | 3,804,339 |
FOOD PRODUCTS - 2.7% |
Agricultural Products - 1.5% |
Archer Daniels Midland Co. | 97,800 | | 2,800,014 |
Bunge Ltd. | 51,239 | | 5,068,562 |
| | 7,868,576 |
Packaged Foods & Meats - 1.2% |
Marine Harvest ASA (a) | 642,000 | | 454,836 |
Nestle SA: | | | |
(Reg.) | 104,101 | | 4,567,041 |
sponsored ADR | 28,750 | | 1,259,250 |
| | 6,281,127 |
TOTAL FOOD PRODUCTS | | 14,149,703 |
HEALTH CARE EQUIPMENT & SUPPLIES - 24.8% |
Health Care Equipment - 20.7% |
Abaxis, Inc. (a) | 1,700 | | 33,813 |
American Medical Systems Holdings, Inc. (a)(d) | 162,094 | | 2,669,688 |
ArthroCare Corp. (a) | 9,940 | | 210,132 |
Baxter International, Inc. | 297,630 | | 20,420,394 |
Beckman Coulter, Inc. | 10,600 | | 766,804 |
Boston Scientific Corp. (a) | 774,600 | | 9,209,994 |
C.R. Bard, Inc. | 52,576 | | 4,881,156 |
China Medical Technologies, Inc. sponsored ADR (d) | 13,600 | | 651,712 |
Covidien Ltd. | 460,974 | | 22,698,360 |
Electro-Optical Sciences, Inc. (a) | 178,991 | | 1,084,685 |
Electro-Optical Sciences, Inc.: | | | |
warrants 11/2/11 (a)(f) | 60,018 | | 171,008 |
warrants 8/2/12 (a)(f) | 16,500 | | 47,699 |
Gen-Probe, Inc. (a) | 35,800 | | 1,908,856 |
Golden Meditech Co. Ltd. | 4,928,000 | | 1,579,163 |
Hill-Rom Holdings, Inc. | 18,200 | | 511,238 |
I-Flow Corp. (a) | 42,707 | | 443,299 |
IDEXX Laboratories, Inc. (a) | 21,900 | | 1,171,650 |
Integra LifeSciences Holdings Corp. (a) | 60,155 | | 2,746,677 |
Kinetic Concepts, Inc. (a) | 56,600 | | 1,978,170 |
Masimo Corp. | 21,300 | | 804,501 |
Medtronic, Inc. | 237,398 | | 12,541,736 |
Mentor Corp. | 11,000 | | 272,910 |
Meridian Bioscience, Inc. | 17,300 | | 449,973 |
Mindray Medical International Ltd. sponsored ADR | 43,700 | | 1,745,815 |
Mingyuan Medicare Development Co. Ltd. | 3,890,000 | | 513,574 |
Natus Medical, Inc. (a) | 839 | | 19,473 |
Common Stocks - continued |
| Shares | | Value |
HEALTH CARE EQUIPMENT & SUPPLIES - CONTINUED |
Health Care Equipment - continued |
Quidel Corp. (a) | 19,900 | | $ 403,174 |
Smith & Nephew PLC | 38,500 | | 411,134 |
Smith & Nephew PLC sponsored ADR | 4,100 | | 219,965 |
St. Jude Medical, Inc. (a) | 122,300 | | 5,696,734 |
Stryker Corp. | 140,300 | | 9,005,857 |
Syneron Medical Ltd. (a) | 191,199 | | 2,684,434 |
ThermoGenesis Corp. (a) | 123,934 | | 182,183 |
| | 108,135,961 |
Health Care Supplies - 4.1% |
Alcon, Inc. | 26,333 | | 4,540,599 |
Cremer SA | 30,800 | | 271,452 |
Haemonetics Corp. (a) | 5,400 | | 313,524 |
Immucor, Inc. (a) | 21,440 | | 645,987 |
InfuSystems Holdings, Inc. (a) | 453,700 | | 1,224,990 |
InfuSystems Holdings, Inc. warrants 4/11/11 (a) | 83,700 | | 16,740 |
Inverness Medical Innovations, Inc. (a)(d) | 382,244 | | 12,885,445 |
RTI Biologics, Inc. (a) | 68,800 | | 570,352 |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 656,000 | | 884,578 |
| | 21,353,667 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 129,489,628 |
HEALTH CARE PROVIDERS & SERVICES - 14.7% |
Health Care Distributors & Services - 2.8% |
Celesio AG | 900 | | 29,380 |
McKesson Corp. | 182,500 | | 10,218,175 |
Profarma Distribuidora de Produtos Farmaceuticos SA | 449,800 | | 4,308,979 |
| | 14,556,534 |
Health Care Facilities - 1.1% |
Brookdale Senior Living, Inc. | 8,500 | | 129,710 |
Community Health Systems, Inc. (a) | 21,300 | | 702,474 |
Emeritus Corp. (a) | 68,389 | | 1,152,355 |
Health Management Associates, Inc. Class A (a) | 283,798 | | 1,745,358 |
Sun Healthcare Group, Inc. (a) | 31,393 | | 448,606 |
Universal Health Services, Inc. Class B | 26,900 | | 1,630,678 |
| | 5,809,181 |
Health Care Services - 4.9% |
Apria Healthcare Group, Inc. (a) | 238,528 | | 4,582,123 |
athenahealth, Inc. | 500 | | 15,100 |
CardioNet, Inc. | 6,000 | | 165,360 |
Diagnosticos da America SA | 69,900 | | 1,665,136 |
Emergency Medical Services Corp.
Class A (a) | 100 | | 2,702 |
Express Scripts, Inc. (a) | 119,280 | | 8,414,011 |
Genoptix, Inc. | 17,900 | | 521,785 |
Health Grades, Inc. (a) | 356,798 | | 1,148,890 |
|
| Shares | | Value |
Medco Health Solutions, Inc. (a) | 109,000 | | $ 5,404,220 |
NightHawk Radiology Holdings, Inc. (a) | 398,881 | | 3,330,656 |
Rural/Metro Corp. (a) | 13,331 | | 24,529 |
Virtual Radiologic Corp. | 24,100 | | 223,166 |
| | 25,497,678 |
Managed Health Care - 5.9% |
Coventry Health Care, Inc. (a) | 30,000 | | 1,061,100 |
Health Net, Inc. (a) | 9,600 | | 268,416 |
Humana, Inc. (a) | 95,926 | | 4,212,111 |
Medial Saude SA | 72,100 | | 815,027 |
UnitedHealth Group, Inc. | 453,309 | | 12,728,917 |
Universal American Financial Corp. (a) | 318,494 | | 3,341,002 |
WellPoint, Inc. (a) | 156,100 | | 8,187,445 |
| | 30,614,018 |
TOTAL HEALTH CARE PROVIDERS & SERVICES | | 76,477,411 |
HEALTH CARE TECHNOLOGY - 0.9% |
Health Care Technology - 0.9% |
Eclipsys Corp. (a) | 99,727 | | 2,198,980 |
HLTH Corp. (a) | 177,100 | | 1,937,474 |
Phase Forward, Inc. (a) | 15,500 | | 285,200 |
| | 4,421,654 |
INTERNET SOFTWARE & SERVICES - 0.1% |
Internet Software & Services - 0.1% |
WebMD Health Corp. Class A (a)(d) | 24,789 | | 599,894 |
LIFE SCIENCES TOOLS & SERVICES - 12.1% |
Life Sciences Tools & Services - 12.1% |
AMAG Pharmaceuticals, Inc. (a)(d) | 16,810 | | 689,210 |
Applied Biosystems, Inc. | 26,174 | | 966,606 |
Bio-Rad Laboratories, Inc. Class A (a) | 6,243 | | 556,251 |
Bruker BioSciences Corp. (a) | 207,329 | | 2,865,287 |
Charles River Laboratories International, Inc. (a) | 36,700 | | 2,439,082 |
Covance, Inc. (a) | 18,676 | | 1,714,457 |
Dishman Pharmaceuticals and Chemicals Ltd. | 143,211 | | 993,765 |
Exelixis, Inc. (a) | 75,713 | | 529,991 |
Harvard Bioscience, Inc. (a) | 40,833 | | 203,348 |
Illumina, Inc. (a) | 43,772 | | 4,081,301 |
Invitrogen Corp. (a) | 31,178 | | 1,382,744 |
Lonza Group AG | 68,047 | | 9,864,472 |
PAREXEL International Corp. (a) | 54,800 | | 1,601,804 |
PerkinElmer, Inc. | 76,278 | | 2,219,690 |
Pharmaceutical Product Development, Inc. | 55,600 | | 2,120,584 |
QIAGEN NV (a) | 184,200 | | 3,461,118 |
Techne Corp. (a) | 14,535 | | 1,155,823 |
Thermo Fisher Scientific, Inc. (a) | 398,016 | | 24,087,928 |
Varian, Inc. (a) | 26,374 | | 1,302,876 |
Common Stocks - continued |
| Shares | | Value |
LIFE SCIENCES TOOLS & SERVICES - CONTINUED |
Life Sciences Tools & Services - continued |
Waters Corp. (a) | 7,794 | | $ 529,524 |
Wuxi Pharmatech Cayman, Inc. sponsored ADR (d) | 25,143 | | 455,591 |
| | 63,221,452 |
MACHINERY - 0.4% |
Industrial Machinery - 0.4% |
Pall Corp. | 56,000 | | 2,263,520 |
PERSONAL PRODUCTS - 0.1% |
Personal Products - 0.1% |
Nutraceutical International Corp. (a) | 17,300 | | 211,233 |
PHARMACEUTICALS - 20.8% |
Pharmaceuticals - 20.8% |
Abbott Laboratories | 493,000 | | 27,775,620 |
Alembic Ltd. | 17,828 | | 19,304 |
Allergan, Inc. (d) | 171,218 | | 8,891,351 |
Bristol-Myers Squibb Co. | 471,517 | | 9,958,439 |
China Shineway Pharmaceutical Group Ltd. | 1,132,000 | | 825,610 |
Eczacibasi ILAC Sanayi TAS | 82,000 | | 287,979 |
Elan Corp. PLC sponsored ADR (a) | 21,100 | | 423,055 |
Eurand NV (a) | 4,300 | | 79,077 |
Merck & Co., Inc. | 42,990 | | 1,414,371 |
Nexmed, Inc. (a) | 401,447 | | 537,939 |
Pfizer, Inc. | 657,119 | | 12,268,412 |
Piramal Healthcare Ltd. | 70,067 | | 529,088 |
Shire PLC sponsored ADR | 83,300 | | 4,193,322 |
Simcere Pharmaceutical Group sponsored ADR (a) | 26,750 | | 321,000 |
Teva Pharmaceutical Industries Ltd. sponsored ADR (d) | 276,500 | | 12,398,260 |
Wyeth | 686,142 | | 27,802,475 |
XenoPort, Inc. (a) | 17,300 | | 792,686 |
| | 108,517,988 |
TOTAL COMMON STOCKS (Cost $483,953,890) | 513,435,922 |
Nonconvertible Bonds - 0.2% |
| Principal Amount | | |
HEALTH CARE PROVIDERS & SERVICES - 0.2% |
Health Care Services - 0.2% |
DASA Finance Corp. 8.75% 5/29/18 (e)
(Cost $1,296,874) | | $ 1,280,000 | | 1,280,000 |
Money Market Funds - 5.4% |
| Shares | | Value |
Fidelity Cash Central Fund, 2.35% (b) | 2,952,758 | | $ 2,952,758 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 25,101,949 | | 25,101,949 |
TOTAL MONEY MARKET FUNDS (Cost $28,054,707) | 28,054,707 |
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $513,305,471) | 542,770,629 |
NET OTHER ASSETS - (4.0)% | (21,098,448) |
NET ASSETS - 100% | $ 521,672,181 |
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 $1,280,000 or 0.2% 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 $218,707 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 |
Electro-Optical Sciences, Inc. warrants 8/2/12 | 8/1/07 | $ 17 |
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 | $ 393,429 |
Fidelity Securities Lending Cash Central Fund | 236,988 |
Total | $ 630,417 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.7% |
Bermuda | 5.5% |
Switzerland | 4.3% |
Israel | 2.9% |
Brazil | 1.3% |
Cayman Islands | 1.0% |
Others (individually less than 1%) | 3.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Health Care Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $24,922,816) - See accompanying schedule: Unaffiliated issuers (cost $485,250,764) | $ 514,715,922 | |
Fidelity Central Funds (cost $28,054,707) | 28,054,707 | |
Total Investments (cost $513,305,471) | | $ 542,770,629 |
Foreign currency held at value (cost $421,672) | | 422,906 |
Receivable for investments sold | | 19,495,476 |
Receivable for fund shares sold | | 348,253 |
Dividends receivable | | 396,206 |
Interest receivable | | 18,978 |
Distributions receivable from Fidelity Central Funds | | 29,240 |
Prepaid expenses | | 777 |
Other receivables | | 48,965 |
Total assets | | 563,531,430 |
| | |
Liabilities | | |
Payable for investments purchased | $ 15,102,325 | |
Payable for fund shares redeemed | 986,815 | |
Accrued management fee | 239,776 | |
Distribution fees payable | 219,909 | |
Other affiliated payables | 149,189 | |
Other payables and accrued expenses | 59,286 | |
Collateral on securities loaned, at value | 25,101,949 | |
Total liabilities | | 41,859,249 |
| | |
Net Assets | | $ 521,672,181 |
Net Assets consist of: | | |
Paid in capital | | $ 482,602,604 |
Accumulated net investment loss | | (71) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 9,605,646 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 29,464,002 |
Net Assets | | $ 521,672,181 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($220,888,450 ÷ 11,199,333 shares) | | $ 19.72 |
| | |
Maximum offering price per share (100/94.25 of $19.72) | | $ 20.92 |
Class T:
Net Asset Value and redemption price per share ($143,236,790 ÷ 7,438,226 shares) | | $ 19.26 |
| | |
Maximum offering price per share (100/96.50 of $19.26) | | $ 19.96 |
Class B:
Net Asset Value and offering price per share ($55,589,075 ÷ 3,042,652 shares)A | | $ 18.27 |
| | |
Class C:
Net Asset Value and offering price per share ($83,132,688 ÷ 4,561,169 shares)A | | $ 18.23 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($18,825,178 ÷ 923,392 shares) | | $ 20.39 |
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.
Health Care
Statement of Operations
| Year ended July 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 5,768,227 |
Interest | | 56,936 |
Income from Fidelity Central Funds | | 630,417 |
Total income | | 6,455,580 |
| | |
Expenses | | |
Management fee | $ 3,392,498 | |
Transfer agent fees | 1,829,148 | |
Distribution fees | 3,260,952 | |
Accounting and security lending fees | 230,706 | |
Custodian fees and expenses | 101,998 | |
Independent trustees' compensation | 2,611 | |
Registration fees | 61,300 | |
Audit | 64,928 | |
Legal | 3,781 | |
Interest | 960 | |
Miscellaneous | 114,017 | |
Total expenses before reductions | 9,062,899 | |
Expense reductions | (51,414) | 9,011,485 |
Net investment income (loss) | | (2,555,905) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 27,586,271 | |
Foreign currency transactions | (27,526) | |
Total net realized gain (loss) | | 27,558,745 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $37,025) | (58,671,328) | |
Assets and liabilities in foreign currencies | 747 | |
Total change in net unrealized appreciation (depreciation) | | (58,670,581) |
Net gain (loss) | | (31,111,836) |
Net increase (decrease) in net assets resulting from operations | | $ (33,667,741) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (2,555,905) | $ (3,461,354) |
Net realized gain (loss) | 27,558,745 | 78,309,606 |
Change in net unrealized appreciation (depreciation) | (58,670,581) | (16,377,138) |
Net increase (decrease) in net assets resulting from operations | (33,667,741) | 58,471,114 |
Distributions to shareholders from net realized gain | (58,232,148) | (83,314,166) |
Share transactions - net increase (decrease) | (48,796,453) | (46,973,972) |
Redemption fees | 7,557 | 16,966 |
Total increase (decrease) in net assets | (140,688,785) | (71,800,058) |
| | |
Net Assets | | |
Beginning of period | 662,360,966 | 734,161,024 |
End of period (including accumulated net investment loss of $71 and accumulated net investment loss of $199, respectively) | $ 521,672,181 | $ 662,360,966 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 | $ 18.29 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) | (.03) | (.09) | (.05) | (.05) |
Net realized and unrealized gain (loss) | (1.08) | 1.91 | .96 | 4.08 | .67 |
Total from investment operations | (1.11) | 1.88 | .87 | 4.03 | .62 |
Distributions from net realized gain | (2.07) | (2.75) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 |
Total Return A, B | (5.64)% | 8.54% | 3.79% | 21.31% | 3.39% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.20% | 1.22% | 1.25% | 1.28% | 1.32% |
Expenses net of fee waivers, if any | 1.20% | 1.22% | 1.25% | 1.28% | 1.32% |
Expenses net of all reductions | 1.19% | 1.21% | 1.21% | 1.26% | 1.29% |
Net investment income (loss) | (.13)% | (.14)% | (.38)% | (.22)% | (.26)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 220,888 | $ 234,656 | $ 199,221 | $ 139,158 | $ 104,258 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
Financial Highlights - Class T
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 | $ 18.03 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.08) | (.09) | (.15) | (.09) | (.09) |
Net realized and unrealized gain (loss) | (1.06) | 1.87 | .95 | 3.99 | .66 |
Total from investment operations | (1.14) | 1.78 | .80 | 3.90 | .57 |
Distributions from net realized gain | (1.99) | (2.65) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 |
Total Return A, B | (5.86)% | 8.25% | 3.55% | 20.97% | 3.16% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.46% | 1.48% | 1.50% | 1.53% | 1.56% |
Expenses net of fee waivers, if any | 1.46% | 1.48% | 1.50% | 1.53% | 1.56% |
Expenses net of all reductions | 1.45% | 1.47% | 1.47% | 1.51% | 1.53% |
Net investment income (loss) | (.40)% | (.40)% | (.63)% | (.47)% | (.51)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 143,237 | $ 186,628 | $ 218,280 | $ 243,353 | $ 243,176 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class B
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 | $ 17.45 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.18) | (.20) | (.25) | (.19) | (.18) |
Net realized and unrealized gain (loss) | (.99) | 1.79 | .91 | 3.83 | .64 |
Total from investment operations | (1.17) | 1.59 | .66 | 3.64 | .46 |
Distributions from net realized gain | (1.85) | (2.47) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 |
Total Return A, B | (6.30)% | 7.66% | 3.06% | 20.32% | 2.64% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.95% | 1.99% | 2.01% | 2.04% | 2.06% |
Expenses net of fee waivers, if any | 1.95% | 1.99% | 2.01% | 2.04% | 2.06% |
Expenses net of all reductions | 1.94% | 1.98% | 1.98% | 2.01% | 2.03% |
Net investment income (loss) | (.89)% | (.91)% | (1.14)% | (.98)% | (1.01)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 55,589 | $ 113,384 | $ 180,364 | $ 266,319 | $ 285,299 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
Financial Highlights - Class C
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 | $ 17.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.17) | (.19) | (.24) | (.17) | (.17) |
Net realized and unrealized gain (loss) | (1.00) | 1.79 | .91 | 3.84 | .64 |
Total from investment operations | (1.17) | 1.60 | .67 | 3.67 | .47 |
Distributions from net realized gain | (1.89) | (2.55) | (.04) | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 |
Total Return A, B | (6.31)% | 7.75% | 3.10% | 20.46% | 2.69% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.94% | 1.94% | 1.94% | 1.97% | 2.00% |
Expenses net of fee waivers, if any | 1.94% | 1.94% | 1.94% | 1.97% | 2.00% |
Expenses net of all reductions | 1.94% | 1.93% | 1.91% | 1.94% | 1.97% |
Net investment income (loss) | (.88)% | (.86)% | (1.07)% | (.91)% | (.95)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 83,133 | $ 105,519 | $ 115,644 | $ 131,277 | $ 130,184 |
Portfolio turnover rate E | 134% | 141% | 99% | 71% | 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.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 | $ 18.58 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .03 | .05 | - F | .04 | .03 |
Net realized and unrealized gain (loss) | (1.12) | 1.96 | .99 | 4.16 | .67 |
Total from investment operations | (1.09) | 2.01 | .99 | 4.20 | .70 |
Distributions from net realized gain | (2.14) | (2.82) | (.04) | - | - |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 |
Total Return A | (5.36)% | 8.90% | 4.21% | 21.78% | 3.77% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .93% | .88% | .86% | .88% | .91% |
Expenses net of fee waivers, if any | .93% | .88% | .86% | .88% | .91% |
Expenses net of all reductions | .92% | .87% | .83% | .85% | .88% |
Net investment income (loss) | .14% | .19% | .01% | .18% | .14% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 18,825 | $ 22,174 | $ 20,652 | $ 19,698 | $ 20,358 |
Portfolio turnover rate D | 134% | 141% | 99% | 71% | 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.
See accompanying notes which are an integral part of the financial statements.
Health Care
Notes to Financial Statements
For the period ended July 31, 2008
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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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 | $ 59,028,671 |
Unrealized depreciation | (31,657,654) |
Net unrealized appreciation (depreciation) | 27,371,017 |
Undistributed long-term capital gain | 9,933,027 |
| |
Cost for federal income tax purposes | $ 515,399,612 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 10,044,071 | $ 9,215,258 |
Long-term Capital Gains | 48,188,077 | 74,098,908 |
Total | $ 58,232,148 | $ 83,314,166 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to 0.75% 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Health Care
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 $799,559,103 and $911,701,404, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 586,589 | $ 21,847 |
Class T | .25% | .25% | 852,634 | 7,286 |
Class B | .75% | .25% | 847,984 | 636,459 |
Class C | .75% | .25% | 973,745 | 50,133 |
| | | $ 3,260,952 | $ 715,725 |
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
by FDC |
Class A | $ 36,015 |
Class T | 20,463 |
Class B* | 115,416 |
Class C* | 5,494 |
| $ 177,388 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 704,151 | .30 |
Class T | 526,894 | .31 |
Class B | 254,540 | .30 |
Class C | 282,679 | .29 |
Institutional Class | 60,884 | .28 |
| $ 1,829,148 | |
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 $12,242 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
Expense |
Borrower | $ 6,555,000 | 5.27% | $ 960 |
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 $1,493 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 $236,988.
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 $33,610 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 $4,633.
Health Care
9. Expense Reductions - continued
During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 12,095 |
Class C | 528 |
Institutional Class | 548 |
| $ 13,171 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $196,360, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net realized gain | | |
Class A | $ 21,294,782 | $ 23,887,113 |
Class T | 16,323,384 | 24,697,844 |
Class B | 9,098,884 | 18,914,669 |
Class C | 9,241,641 | 13,345,526 |
Institutional Class | 2,273,457 | 2,469,014 |
Total | $ 58,232,148 | $ 83,314,166 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,081,992 | 3,628,491 | $ 65,718,810 | $ 84,047,399 |
Reinvestment of distributions | 845,716 | 919,326 | 18,561,495 | 20,489,356 |
Shares redeemed | (2,977,484) | (2,679,409) | (63,109,379) | (62,216,884) |
Net increase (decrease) | 950,224 | 1,868,408 | $ 21,170,926 | $ 42,319,871 |
Class T | | | | |
Shares sold | 746,344 | 811,354 | $ 15,578,653 | $ 18,411,031 |
Reinvestment of distributions | 718,829 | 1,065,004 | 15,418,473 | 23,268,418 |
Shares redeemed | (2,364,110) | (2,924,887) | (48,580,585) | (66,315,193) |
Net increase (decrease) | (898,937) | (1,048,529) | $ (17,583,459) | $ (24,635,744) |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions - continued
Transactions for each class of shares were as follows - continued
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class B | | | | |
Shares sold | 261,619 | 416,759 | $ 5,241,565 | $ 8,968,832 |
Reinvestment of distributions | 400,851 | 800,087 | 8,175,269 | 16,715,113 |
Shares redeemed | (2,945,003) | (4,028,295) | (58,341,596) | (87,078,801) |
Net increase (decrease) | (2,282,533) | (2,811,449) | $ (44,924,762) | $ (61,394,856) |
Class C | | | | |
Shares sold | 383,741 | 498,290 | $ 7,630,409 | $ 10,716,280 |
Reinvestment of distributions | 358,758 | 508,339 | 7,307,934 | 10,614,471 |
Shares redeemed | (1,138,609) | (1,249,593) | (22,157,508) | (26,990,765) |
Net increase (decrease) | (396,110) | (242,964) | $ (7,219,165) | $ (5,660,014) |
Institutional Class | | | | |
Shares sold | 423,102 | 415,448 | $ 9,559,061 | $ 10,086,881 |
Reinvestment of distributions | 64,316 | 77,688 | 1,455,613 | 1,779,821 |
Shares redeemed | (503,017) | (399,590) | (11,254,667) | (9,469,931) |
Net increase (decrease) | (15,599) | 93,546 | $ (239,993) | $ 2,396,771 |
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class A | -4.40% | 15.98% | 9.55% |
A Prior to October 1, 2006, Advisor Industrials operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Industrials Fund - Institutional Class on July 31, 1998. 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 Industrials Fund
Management's Discussion of Fund Performance
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial Average SM and the Standard & Poor's 500 SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -4.71%, -4.96%, -5.46% and -5.44%, respectively (excluding sales charges), topping the S&P 500 and the -9.98% return of the MSCI® US Investable Market Industrials Index. Versus the MSCI index, heavily underweighting industrial conglomerates was helpful, especially General Electric (GE), the fund's top contributor and the largest index component. GE missed its first-quarter earnings estimates and scaled back guidance for the balance of 2008, sending its stock price sharply lower. Stock selection also added value in the aerospace and defense group and the heavy electrical equipment segment. A combination of good stock picking and industry overweightings further helped in the industrial machinery and trucking groups. Other individual contributors included Denmark-based Vestas Wind Systems - an out-of-benchmark holding - railroad Norfolk Southern, industrial pump and valve maker Flowserve, and The Brink's Company, a provider of armored car and residential security services. Underweighting aerospace holding Boeing - which I sold off completely during the period - - helped as well. Conversely, an underweighting in the strong-performing railroad group hurt, as Burlington Northern Santa Fe and CSX - neither of which we held at period end - were the fund's largest detractors. My stock picking in automobile manufacturers and in the diversified metals and mining segment also held back performance. Specialty vehicle maker Oshkosh performed poorly, as did airline US Airways Group and Titanium Metals, an out-of-index position that was hampered by the delayed production of a key customer. All of the detractors I mentioned were sold by the end of the period.
During the year, the fund's Institutional Class shares returned -4.40%, topping the S&P 500 and the -9.98% return of the MSCI® US Investable Market Industrials Index. Versus the MSCI index, heavily underweighting industrial conglomerates was helpful, especially General Electric (GE), the fund's top contributor and the largest index component. GE missed its first-quarter earnings estimates and scaled back guidance for the balance of 2008, sending its stock price sharply lower. Stock selection also added value in the aerospace and defense group and the heavy electrical equipment segment. A combination of good stock picking and industry overweightings further helped in the industrial machinery and trucking groups. Other individual contributors included Denmark-based Vestas Wind Systems - an out-of-benchmark holding - railroad Norfolk Southern, industrial pump and valve maker Flowserve, and The Brink's Company, a provider of armored car and residential security services. Underweighting aerospace holding Boeing - which I sold off completely during the period - helped as well. Conversely, an underweighting in the strong-performing railroad group hurt, as Burlington Northern Santa Fe and CSX - neither of which we held at period end - were the fund's largest detractors. My stock picking in automobile manufacturers and in the diversified metals and mining segment also held back performance. Specialty vehicle maker Oshkosh performed poorly, as did airline US Airways Group and Titanium Metals, an out-of-index position that was hampered by the delayed production of a key customer. All the detractors I mentioned were sold off by the end of the period.
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
Advisor Industrials 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 991.00 | $ 5.79 |
HypotheticalA | $ 1,000.00 | $ 1,019.05 | $ 5.87 |
Class T | | | |
Actual | $ 1,000.00 | $ 989.50 | $ 7.02 |
HypotheticalA | $ 1,000.00 | $ 1,017.80 | $ 7.12 |
Class B | | | |
Actual | $ 1,000.00 | $ 987.10 | $ 9.63 |
HypotheticalA | $ 1,000.00 | $ 1,015.17 | $ 9.77 |
Class C | | | |
Actual | $ 1,000.00 | $ 987.20 | $ 9.49 |
HypotheticalA | $ 1,000.00 | $ 1,015.32 | $ 9.62 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 992.60 | $ 4.36 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.17% |
Class T | 1.42% |
Class B | 1.95% |
Class C | 1.92% |
Institutional Class | .88% |
Annual Report
Advisor Industrials Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
General Electric Co. | 5.6 | 9.1 |
United Technologies Corp. | 5.2 | 5.8 |
Honeywell International, Inc. | 4.6 | 5.0 |
United Parcel Service, Inc. Class B | 4.2 | 0.0 |
Lockheed Martin Corp. | 3.7 | 3.7 |
Union Pacific Corp. | 3.7 | 1.1 |
Norfolk Southern Corp. | 3.7 | 1.0 |
Cummins, Inc. | 3.5 | 1.5 |
Caterpillar, Inc. | 3.4 | 0.0 |
Danaher Corp. | 3.3 | 2.8 |
| 40.9 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Machinery | 23.2% | |
| Aerospace & Defense | 16.4% | |
| Electrical Equipment | 11.7% | |
| Industrial Conglomerates | 10.7% | |
| Road & Rail | 10.0% | |
| All Others* | 28.0% | |
As of January 31, 2008 |
| Machinery | 20.7% | |
| Aerospace & Defense | 19.6% | |
| Industrial Conglomerates | 13.3% | |
| Commercial Services & Supplies | 11.3% | |
| Electrical Equipment | 9.2% | |
| All Others* | 25.9% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Industrials Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.3% |
| Shares | | Value |
AEROSPACE & DEFENSE - 16.4% |
Aerospace & Defense - 16.4% |
Honeywell International, Inc. | 361,600 | | $ 18,383,744 |
Lockheed Martin Corp. | 144,600 | | 15,086,118 |
Precision Castparts Corp. | 7,600 | | 710,068 |
Raytheon Co. | 192,900 | | 10,981,797 |
United Technologies Corp. | 329,300 | | 21,068,614 |
| | 66,230,341 |
AIR FREIGHT & LOGISTICS - 6.6% |
Air Freight & Logistics - 6.6% |
C.H. Robinson Worldwide, Inc. | 45,700 | | 2,202,740 |
FedEx Corp. (d) | 67,000 | | 5,282,280 |
Hub Group, Inc. Class A (a) | 45,200 | | 1,756,472 |
United Parcel Service, Inc. Class B (d) | 270,400 | | 17,056,832 |
UTI Worldwide, Inc. | 30,100 | | 547,519 |
| | 26,845,843 |
AUTO COMPONENTS - 3.1% |
Auto Parts & Equipment - 3.1% |
Johnson Controls, Inc. | 333,100 | | 10,046,296 |
WABCO Holdings, Inc. | 56,500 | | 2,551,540 |
| | 12,597,836 |
BUILDING PRODUCTS - 2.1% |
Building Products - 2.1% |
Masco Corp. | 337,700 | | 5,568,673 |
Owens Corning (a) | 105,000 | | 2,731,050 |
| | 8,299,723 |
CHEMICALS - 2.6% |
Fertilizers & Agricultural Chemicals - 0.6% |
CF Industries Holdings, Inc. | 15,000 | | 2,451,900 |
Specialty Chemicals - 2.0% |
Albemarle Corp. | 92,900 | | 3,616,597 |
Nalco Holding Co. | 84,500 | | 1,985,750 |
W.R. Grace & Co. (a) | 92,900 | | 2,394,033 |
| | 7,996,380 |
TOTAL CHEMICALS | | 10,448,280 |
COMMERCIAL SERVICES & SUPPLIES - 6.6% |
Diversified Commercial & Professional Services - 2.9% |
Corrections Corp. of America (a) | 97,000 | | 2,718,910 |
Equifax, Inc. | 88,700 | | 3,112,483 |
The Brink's Co. | 85,210 | | 5,876,082 |
| | 11,707,475 |
Environmental & Facility Services - 3.2% |
Allied Waste Industries, Inc. (a) | 556,000 | | 6,727,600 |
Fuel Tech, Inc. (a)(d) | 105,879 | | 1,961,938 |
Republic Services, Inc. | 139,500 | | 4,533,750 |
| | 13,223,288 |
|
| Shares | | Value |
Office Services & Supplies - 0.5% |
Avery Dennison Corp. | 44,700 | | $ 1,967,247 |
TOTAL COMMERCIAL SERVICES & SUPPLIES | | 26,898,010 |
CONSTRUCTION & ENGINEERING - 1.1% |
Construction & Engineering - 1.1% |
Shaw Group, Inc. (a) | 79,450 | | 4,592,210 |
ELECTRICAL EQUIPMENT - 11.7% |
Electrical Components & Equipment - 8.0% |
AMETEK, Inc. | 114,900 | | 5,499,114 |
Cooper Industries Ltd. Class A | 139,000 | | 5,861,630 |
Emerson Electric Co. | 140,300 | | 6,832,610 |
First Solar, Inc. (a)(d) | 17,900 | | 5,103,469 |
Nexans SA | 16,100 | | 1,911,003 |
Roper Industries, Inc. | 38,100 | | 2,330,958 |
Saft Groupe SA | 45,000 | | 1,770,981 |
Sunpower Corp. Class A (a)(d) | 39,700 | | 3,127,169 |
| | 32,436,934 |
Heavy Electrical Equipment - 3.7% |
Alstom SA | 36,100 | | 4,040,822 |
China High Speed Transmission Equipment Group Co. Ltd. | 1,189,000 | | 2,255,589 |
Suzlon Energy Ltd. | 528,338 | | 2,774,541 |
Vestas Wind Systems AS (a) | 44,100 | | 5,751,383 |
| | 14,822,335 |
TOTAL ELECTRICAL EQUIPMENT | | 47,259,269 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.4% |
Electronic Equipment & Instruments - 1.4% |
Itron, Inc. (a) | 59,200 | | 5,465,936 |
INDUSTRIAL CONGLOMERATES - 10.7% |
Industrial Conglomerates - 10.7% |
General Electric Co. | 805,700 | | 22,793,254 |
Siemens AG sponsored ADR | 89,935 | | 10,916,310 |
Tyco International Ltd. | 219,625 | | 9,786,490 |
| | 43,496,054 |
MACHINERY - 23.2% |
Construction & Farm Machinery & Heavy Trucks - 8.8% |
Caterpillar, Inc. (d) | 199,500 | | 13,869,240 |
Cummins, Inc. | 212,632 | | 14,106,007 |
Deere & Co. | 78,000 | | 5,472,480 |
Navistar International Corp. (a) | 39,700 | | 2,223,200 |
| | 35,670,927 |
Industrial Machinery - 14.4% |
Colfax Corp. | 112,881 | | 3,080,522 |
Danaher Corp. | 165,800 | | 13,205,970 |
Eaton Corp. | 65,400 | | 4,646,016 |
Flowserve Corp. | 25,900 | | 3,453,506 |
Illinois Tool Works, Inc. | 104,200 | | 4,881,770 |
Ingersoll-Rand Co. Ltd. Class A | 129,600 | | 4,665,600 |
Common Stocks - continued |
| Shares | | Value |
MACHINERY - CONTINUED |
Industrial Machinery - continued |
Invensys PLC (a) | 314,600 | | $ 1,751,938 |
ITT Corp. | 58,500 | | 3,917,160 |
Pall Corp. | 82,000 | | 3,314,440 |
SPX Corp. | 26,600 | | 3,372,348 |
Sulzer AG (Reg.) | 53,418 | | 6,404,514 |
The Weir Group PLC | 121,900 | | 2,145,198 |
Timken Co. | 15,300 | | 505,206 |
Valmont Industries, Inc. | 28,600 | | 3,057,626 |
| | 58,401,814 |
TOTAL MACHINERY | | 94,072,741 |
MARINE - 0.3% |
Marine - 0.3% |
Safe Bulkers, Inc. | 57,000 | | 1,080,150 |
METALS & MINING - 0.4% |
Gold - 0.4% |
Agnico-Eagle Mines Ltd. | 30,200 | | 1,654,754 |
OIL, GAS & CONSUMABLE FUELS - 0.5% |
Coal & Consumable Fuels - 0.5% |
Peabody Energy Corp. | 30,200 | | 2,043,030 |
ROAD & RAIL - 10.0% |
Railroads - 7.4% |
Norfolk Southern Corp. | 205,710 | | 14,794,663 |
Union Pacific Corp. | 182,600 | | 15,053,544 |
| | 29,848,207 |
Trucking - 2.6% |
Con-way, Inc. | 93,800 | | 4,742,528 |
Landstar System, Inc. | 49,026 | | 2,479,735 |
Old Dominion Freight Lines, Inc. (a) | 60,736 | | 2,229,011 |
YRC Worldwide, Inc. (a) | 77,100 | | 1,302,990 |
| | 10,754,264 |
TOTAL ROAD & RAIL | | 40,602,471 |
|
| Shares | | Value |
TRADING COMPANIES & DISTRIBUTORS - 0.6% |
Trading Companies & Distributors - 0.6% |
Rush Enterprises, Inc. Class A (a) | 222,406 | | $ 2,510,964 |
TOTAL COMMON STOCKS (Cost $382,454,438) | 394,097,612 |
Nonconvertible Bonds - 0.0% |
| Principal Amount | | |
AIRLINES - 0.0% |
Airlines - 0.0% |
Delta Air Lines, Inc. 8.3% 12/15/29 (a)
(Cost $77,750) | | $ 2,690,000 | | 33,625 |
Money Market Funds - 10.9% |
| Shares | | |
Fidelity Cash Central Fund, 2.35% (b) | 12,519,669 | | 12,519,669 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 31,641,100 | | 31,641,100 |
TOTAL MONEY MARKET FUNDS (Cost $44,160,769) | 44,160,769 |
TOTAL INVESTMENT PORTFOLIO - 108.2% (Cost $426,692,957) | | 438,292,006 |
NET OTHER ASSETS - (8.2)% | | (33,034,299) |
NET ASSETS - 100% | $ 405,257,707 |
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 | $ 268,682 |
Fidelity Securities Lending Cash Central Fund | 336,021 |
Total | $ 604,703 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.5% |
Bermuda | 4.9% |
Germany | 2.7% |
France | 1.9% |
Switzerland | 1.6% |
Denmark | 1.4% |
Others (individually less than 1%) | 3.0% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $4,342,576 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Industrials
Advisor Industrials Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $30,348,959) - See accompanying schedule: Unaffiliated issuers (cost $382,532,188) | $ 394,131,237 | |
Fidelity Central Funds (cost $44,160,769) | 44,160,769 | |
Total Investments (cost $426,692,957) | | $ 438,292,006 |
Receivable for investments sold | | 4,900,748 |
Receivable for fund shares sold | | 821,262 |
Dividends receivable | | 405,931 |
Distributions receivable from Fidelity Central Funds | | 67,890 |
Prepaid expenses | | 450 |
Other receivables | | 6,433 |
Total assets | | 444,494,720 |
| | |
Liabilities | | |
Payable for investments purchased | $ 6,628,246 | |
Payable for fund shares redeemed | 484,527 | |
Accrued management fee | 182,939 | |
Distribution fees payable | 152,469 | |
Other affiliated payables | 105,143 | |
Other payables and accrued expenses | 42,589 | |
Collateral on securities loaned, at value | 31,641,100 | |
Total liabilities | | 39,237,013 |
| | |
Net Assets | | $ 405,257,707 |
Net Assets consist of: | | |
Paid in capital | | $ 397,364,093 |
Undistributed net investment income | | 809,200 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (4,513,832) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 11,598,246 |
Net Assets | | $ 405,257,707 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($188,858,529 ÷ 8,596,015 shares) | | $ 21.97 |
| | |
Maximum offering price per share (100/94.25 of $21.97) | | $ 23.31 |
Class T:
Net Asset Value and redemption price per share ($85,025,192 ÷ 3,923,193 shares) | | $ 21.67 |
| | |
Maximum offering price per share (100/96.50 of $21.67) | | $ 22.46 |
Class B:
Net Asset Value and offering price per share ($39,989,391 ÷ 1,927,977 shares)A | | $ 20.74 |
| | |
Class C:
Net Asset Value and offering price per share ($57,742,210 ÷ 2,776,992 shares)A | | $ 20.79 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($33,642,385 ÷ 1,481,000 shares) | | $ 22.72 |
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.
Industrials
Statement of Operations
| Year ended July 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 5,671,028 |
Interest | | 1,372 |
Income from Fidelity Central Funds (including $336,021 from security lending) | | 604,703 |
Total income | | 6,277,103 |
| | |
Expenses | | |
Management fee | $ 2,155,526 | |
Transfer agent fees | 1,036,611 | |
Distribution fees | 1,865,868 | |
Accounting and security lending fees | 154,618 | |
Custodian fees and expenses | 25,367 | |
Independent trustees' compensation | 1,605 | |
Registration fees | 67,586 | |
Audit | 52,544 | |
Legal | 1,437 | |
Miscellaneous | 47,623 | |
Total expenses before reductions | 5,408,785 | |
Expense reductions | (12,218) | 5,396,567 |
Net investment income (loss) | | 880,536 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers (net of foreign taxes of $46,578) | 5,758,939 | |
Foreign currency transactions | (24,751) | |
Total net realized gain (loss) | | 5,734,188 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $60) | (28,846,541) | |
Assets and liabilities in foreign currencies | (803) | |
Total change in net unrealized appreciation (depreciation) | | (28,847,344) |
Net gain (loss) | | (23,113,156) |
Net increase (decrease) in net assets resulting from operations | | $ (22,232,620) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 880,536 | $ 348,138 |
Net realized gain (loss) | 5,734,188 | 35,388,071 |
Change in net unrealized appreciation (depreciation) | (28,847,344) | 31,233,909 |
Net increase (decrease) in net assets resulting from operations | (22,232,620) | 66,970,118 |
Distributions to shareholders from net investment income | - | (473,352) |
Distributions to shareholders from net realized gain | (36,229,373) | (21,383,547) |
Total distributions | (36,229,373) | (21,856,899) |
Share transactions - net increase (decrease) | 109,034,065 | 61,861,883 |
Redemption fees | 14,921 | 14,915 |
Total increase (decrease) in net assets | 50,586,993 | 106,990,017 |
| | |
Net Assets | | |
Beginning of period | 354,670,714 | 247,680,697 |
End of period (including undistributed net investment income of $809,200 and distributions in excess of net investment income of $6, respectively) | $ 405,257,707 | $ 354,670,714 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 | $ 14.15 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .11 | .09 | .08 | .02 | (.02) |
Net realized and unrealized gain (loss) | (1.17) | 5.11 | 1.63 | 4.35 | 3.96 |
Total from investment operations | (1.06) | 5.20 | 1.71 | 4.37 | 3.94 |
Distributions from net investment income | - | (.06) | - | - | - |
Distributions from net realized gain | (2.46) | (1.81) | (1.08) | (.94) | - |
Total distributions | (2.46) | (1.87) | (1.08) | (.94) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 |
Total Return A,B | (4.71)% | 25.13% | 8.40% | 25.04% | 27.92% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.17% | 1.21% | 1.26% | 1.34% | 1.65% |
Expenses net of fee waivers, if any | 1.17% | 1.21% | 1.26% | 1.34% | 1.50% |
Expenses net of all reductions | 1.16% | 1.21% | 1.24% | 1.29% | 1.47% |
Net investment income (loss) | .46% | .38% | .34% | .09% | (.12)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 188,859 | $ 157,451 | $ 99,255 | $ 40,264 | $ 12,612 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 | $ 14.02 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .05 | .03 | .02 | (.03) | (.06) |
Net realized and unrealized gain (loss) | (1.15) | 5.05 | 1.61 | 4.31 | 3.93 |
Total from investment operations | (1.10) | 5.08 | 1.63 | 4.28 | 3.87 |
Distributions from net investment income | - | (.03) | - | - | - |
Distributions from net realized gain | (2.40) | (1.74) | (1.04) | (.91) | - |
Total distributions | (2.40) | (1.77) | (1.04) | (.91) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 |
Total Return A,B | (4.96)% | 24.82% | 8.13% | 24.78% | 27.67% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.41% | 1.46% | 1.49% | 1.57% | 1.90% |
Expenses net of fee waivers, if any | 1.41% | 1.46% | 1.49% | 1.57% | 1.75% |
Expenses net of all reductions | 1.41% | 1.46% | 1.47% | 1.52% | 1.72% |
Net investment income (loss) | .21% | .13% | .11% | (.14)% | (.36)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 85,025 | $ 75,530 | $ 55,936 | $ 40,126 | $ 13,089 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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.
Industrials
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 | $ 13.61 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) | (.09) | (.09) | (.13) | (.14) |
Net realized and unrealized gain (loss) | (1.10) | 4.87 | 1.55 | 4.17 | 3.79 |
Total from investment operations | (1.17) | 4.78 | 1.46 | 4.04 | 3.65 |
Distributions from net realized gain | (2.28) | (1.61) | (.99) | (.76) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 |
Total Return A.B | (5.46)% | 24.18% | 7.54% | 24.12% | 26.89% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.95% | 2.00% | 2.04% | 2.11% | 2.37% |
Expenses net of fee waivers, if any | 1.95% | 2.00% | 2.04% | 2.11% | 2.25% |
Expenses net of all reductions | 1.95% | 2.00% | 2.02% | 2.07% | 2.22% |
Net investment income (loss) | (.33)% | (.41)% | (.44)% | (.68)% | (.87)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 39,989 | $ 44,330 | $ 37,082 | $ 32,242 | $ 14,722 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 | $ 13.67 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.06) | (.08) | (.08) | (.12) | (.14) |
Net realized and unrealized gain (loss) | (1.11) | 4.88 | 1.56 | 4.19 | 3.82 |
Total from investment operations | (1.17) | 4.80 | 1.48 | 4.07 | 3.68 |
Distributions from net realized gain | (2.30) | (1.70) | (1.00) | (.75) | - |
Redemption fees added to paid in capital C | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 |
Total Return A,B | (5.44)% | 24.25% | 7.59% | 24.16% | 26.99% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.91% | 1.94% | 1.99% | 2.07% | 2.28% |
Expenses net of fee waivers, if any | 1.91% | 1.94% | 1.99% | 2.07% | 2.25% |
Expenses net of all reductions | 1.90% | 1.94% | 1.97% | 2.02% | 2.22% |
Net investment income (loss) | (.28)% | (.35)% | (.38)% | (.64)% | (.87)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 57,742 | $ 57,862 | $ 42,363 | $ 20,595 | $ 9,507 |
Portfolio turnover rate E | 91% | 130% | 94% | 116% | 106% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 | $ 14.41 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .18 | .16 | .16 | .07 | .02 |
Net realized and unrealized gain (loss) | (1.19) | 5.27 | 1.66 | 4.46 | 4.04 |
Total from investment operations | (1.01) | 5.43 | 1.82 | 4.53 | 4.06 |
Distributions from net investment income | - | (.13) | - | - | - |
Distributions from net realized gain | (2.53) | (1.81) | (1.11) | (.95) | - |
Total distributions | (2.53) | (1.94) | (1.11) | (.95) | - |
Redemption fees added to paid in capital B | - F | - F | - F | - F | .01 |
Net asset value, end of period | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 |
Total Return A | (4.40)% | 25.53% | 8.73% | 25.41% | 28.24% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | .88% | .92% | .91% | 1.06% | 1.38% |
Expenses net of fee waivers, if any | .88% | .92% | .91% | 1.06% | 1.25% |
Expenses net of all reductions | .87% | .91% | .89% | 1.01% | 1.22% |
Net investment income (loss) | .75% | .67% | .69% | .37% | .13% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 33,642 | $ 19,498 | $ 13,043 | $ 4,379 | $ 1,490 |
Portfolio turnover rate D | 91% | 130% | 94% | 116% | 106% |
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.
Industrials
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Industrials 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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, certain foreign taxes 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 | $ 38,085,541 |
Unrealized depreciation | (27,082,435) |
Net unrealized appreciation (depreciation) | 11,003,106 |
Undistributed ordinary income | 751,469 |
| |
Cost for federal income tax purposes | $ 427,288,900 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 17,058,178 | $ 8,244,210 |
Long-term Capital Gains | 19,171,195 | 13,612,689 |
Total | $ 36,229,373 | $ 21,856,899 |
Short-Term Trading (Redemption) Fees. Shares held in the Fund less than 30 days are subject to a redemption fee equal to 0.75% 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
Industrials
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 $415,453,956 and $348,043,940, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 444,027 | $ 35,508 |
Class T | .25% | .25% | 394,896 | 1,104 |
Class B | .75% | .25% | 431,080 | 323,649 |
Class C | .75% | .25% | 595,865 | 146,780 |
| | | $ 1,865,868 | $ 507,041 |
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
by FDC |
Class A | $ 195,375 |
Class T | 19,761 |
Class B* | 74,045 |
Class C* | 13,882 |
| $ 303,063 |
* 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. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 476,837 | .27 |
Class T | 209,485 | .27 |
Class B | 131,131 | .30 |
Class C | 155,130 | .26 |
Institutional Class | 64,028 | .23 |
| $ 1,036,611 | |
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 $5,221 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 $874 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 $8,391 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 $3,197. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 630 |
Industrials
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,115 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
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 | $ 16,681,692 | $ 9,177,798 |
Class T | 7,329,611 | 4,598,164 |
Class B | 4,260,086 | 2,897,402 |
Class C | 5,759,702 | 3,663,404 |
Institutional Class | 2,198,282 | 1,046,779 |
Total | $ 36,229,373 | $ 21,383,547 |
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, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,949,728 | 3,210,590 | $ 92,641,467 | $ 74,239,252 |
Reinvestment of distributions | 645,516 | 397,118 | 15,365,861 | 8,609,345 |
Shares redeemed | (2,176,163) | (1,910,674) | (50,202,759) | (44,327,457) |
Net increase (decrease) | 2,419,081 | 1,697,034 | $ 57,804,569 | $ 38,521,140 |
Class T | | | | |
Shares sold | 1,380,018 | 851,649 | $ 31,838,651 | $ 19,483,528 |
Reinvestment of distributions | 292,360 | 204,709 | 6,876,188 | 4,388,662 |
Shares redeemed | (750,047) | (614,792) | (16,849,781) | (14,036,675) |
Net increase (decrease) | 922,331 | 441,566 | $ 21,865,058 | $ 9,835,515 |
Class B | | | | |
Shares sold | 453,829 | 490,419 | $ 10,091,104 | $ 10,776,085 |
Reinvestment of distributions | 159,890 | 118,628 | 3,612,025 | 2,452,560 |
Shares redeemed | (518,209) | (540,505) | (11,329,079) | (11,926,256) |
Net increase (decrease) | 95,510 | 68,542 | $ 2,374,050 | $ 1,302,389 |
Class C | | | | |
Shares sold | 947,863 | 809,623 | $ 21,153,831 | $ 17,844,285 |
Reinvestment of distributions | 198,290 | 135,846 | 4,489,229 | 2,814,613 |
Shares redeemed | (754,472) | (562,223) | (16,433,752) | (12,468,615) |
Net increase (decrease) | 391,681 | 383,246 | $ 9,209,308 | $ 8,190,283 |
Institutional Class | | | | |
Shares sold | 1,095,024 | 466,987 | $ 26,168,229 | $ 11,092,441 |
Reinvestment of distributions | 66,827 | 33,033 | 1,640,412 | 737,185 |
Shares redeemed | (423,274) | (330,519) | (10,027,561) | (7,817,070) |
Net increase (decrease) | 738,577 | 169,501 | $ 17,781,080 | $ 4,012,556 |
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, if any) 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, 2008 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | -16.84% | 5.52% | 2.85% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Technology Fund - Institutional Class on July 31, 1998. 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.
Technology
Advisor Technology Fund
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%.
During the year, the fund's Class A, Class T, Class B and Class C shares returned -17.08%, -17.27%, -17.70% and -17.67%, respectively (excluding sales charges), trailing both the S&P 500 and the -8.34% return of the MSCI® US Investable Market Information Technology Index. Versus the MSCI index, my stock picking hurt in semiconductors, communications equipment and home entertainment software, although in the latter case the damage was largely offset by overweighting that strong-performing group. Overweighting communications equipment and underweighting the computer hardware and systems software segments hurt as well. Not having a stake in strong-performing major index component IBM was counterproductive. Also holding back performance was Sandvine, which makes Internet traffic-monitoring equipment; NAND flash memory supplier SanDisk; and chip maker Marvell Technology Group, which I sold. Sandvine was an out-of-index holding. Additionally, ill-timed trading in personal computer and consumer electronics maker Apple, the fund's largest holding at period end, detracted modestly. Overall, though, my picks in consumer electronics and in education services benefited the fund, as did a small cash position and the impact of currency fluctuations on our foreign holdings. Canada-based Research In Motion boosted performance amid healthy sales of its BlackBerry "smartphone." Other contributors were Tele Atlas, a Dutch provider of digital map data, which I sold, and Taiwanese contract electronics manufacturer HTC Corp. All of these contributors were out-of-index positions.
During the year, the fund's Institutional Class shares returned -16.84%, trailing both the S&P 500 and the -8.34% return of the MSCI® US Investable Market Information Technology Index. Versus the MSCI index, my stock picking hurt in semiconductors, communications equipment and home entertainment software, although in the latter case the damage was largely offset by overweighting that strong-performing group. Overweighting communications equipment and underweighting the computer hardware and systems software segments hurt as well. Not having a stake in strong-performing major index component IBM was counterproductive. Also holding back performance was Sandvine, which makes Internet traffic-monitoring equipment; NAND flash memory supplier SanDisk; and chip maker Marvell Technology Group, which I sold. Sandvine was an out-of-index holding. Additionally, ill-timed trading in personal computer and consumer electronics maker Apple, the fund's largest holding at period end, detracted modestly. Overall, though, my picks in consumer electronics and in education services benefited the fund, as did a small cash position and the impact of currency fluctuations on our foreign holdings. Canada-based Research In Motion boosted performance amid healthy sales of its BlackBerry "smartphone." Other contributors were Tele Atlas, a Dutch provider of digital map data, which I sold, and Taiwanese contract electronics manufacturer HTC Corp. All of these contributors were out-of-index positions.
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 Technology 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 981.60 | $ 6.06 |
HypotheticalA | $ 1,000.00 | $ 1,018.75 | $ 6.17 |
Class T | | | |
Actual | $ 1,000.00 | $ 980.50 | $ 7.29 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 978.20 | $ 9.79 |
HypotheticalA | $ 1,000.00 | $ 1,014.97 | $ 9.97 |
Class C | | | |
Actual | $ 1,000.00 | $ 978.30 | $ 9.74 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 983.30 | $ 4.83 |
HypotheticalA | $ 1,000.00 | $ 1,019.99 | $ 4.92 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.23% |
Class T | 1.48% |
Class B | 1.99% |
Class C | 1.98% |
Institutional Class | .98% |
Technology
Advisor Technology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Apple, Inc. | 11.2 | 3.0 |
Research In Motion Ltd. | 6.0 | 2.0 |
Nintendo Co. Ltd. | 5.3 | 7.5 |
QUALCOMM, Inc. | 5.0 | 1.0 |
Cisco Systems, Inc. | 4.3 | 10.7 |
Applied Materials, Inc. | 2.7 | 1.8 |
Cypress Semiconductor Corp. | 2.2 | 1.9 |
Visa, Inc. | 2.1 | 0.0 |
Oracle Corp. | 2.0 | 1.0 |
Mindray Medical International Ltd. sponsored ADR | 2.0 | 2.3 |
| 42.8 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Communications Equipment | 23.6% | |
| Semiconductors & Semiconductor Equipment | 18.4% | |
| Computers & Peripherals | 16.9% | |
| Software | 15.7% | |
| Health Care
Equipment & Supplies | 4.1% | |
| All Others* | 21.3% | |
As of January 31, 2008 |
| Communications Equipment | 30.0% | |
| Semiconductors & Semiconductor Equipment | 22.0% | |
| Software | 19.4% | |
| Computers & Peripherals | 8.6% | |
| Internet Software & Services | 6.6% | |
| All Others* | 13.4% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Technology Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.9% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 1.6% |
Commercial Printing - 0.3% |
Nissha Printing Co. Ltd. | 29,300 | | $ 1,474,641 |
Diversified Commercial & Professional Services - 1.3% |
China Security & Surveillance Technology, Inc. (a)(d) | 550,634 | | 7,763,939 |
TOTAL COMMERCIAL SERVICES & SUPPLIES | | 9,238,580 |
COMMUNICATIONS EQUIPMENT - 23.4% |
Communications Equipment - 23.4% |
ADC Telecommunications, Inc. (a) | 610,700 | | 5,777,222 |
ADVA AG Optical Networking (a)(d) | 442,449 | | 1,114,751 |
Aruba Networks, Inc. (a)(d) | 9,800 | | 57,134 |
AudioCodes Ltd. (a) | 396,250 | | 1,739,538 |
Balda AG (a)(d) | 111,500 | | 287,355 |
Cisco Systems, Inc. (a) | 1,134,031 | | 24,937,342 |
Cogo Group, Inc. (a)(d) | 318,475 | | 1,471,355 |
CommScope, Inc. (a) | 173,200 | | 7,722,988 |
Comverse Technology, Inc. (a) | 179,500 | | 2,688,910 |
Delta Networks, Inc. | 1,875,000 | | 528,738 |
F5 Networks, Inc. (a) | 123,600 | | 3,602,940 |
Infinera Corp. (d) | 116,200 | | 1,308,412 |
Mogem Co. Ltd. (a) | 309,043 | | 780,549 |
OZ Optics Ltd. unit (e) | 68,000 | | 821,100 |
Powerwave Technologies, Inc. (a)(d) | 1,060,700 | | 4,348,870 |
QUALCOMM, Inc. | 530,600 | | 29,363,404 |
Research In Motion Ltd. (a) | 286,610 | | 35,201,441 |
Riverbed Technology, Inc. (a)(d) | 36,100 | | 572,907 |
Sandvine Corp. (a) | 1,587,300 | | 1,472,809 |
Sandvine Corp. (U.K.) (a) | 1,078,100 | | 956,320 |
Sonus Networks, Inc. (a) | 481,360 | | 1,747,337 |
Starent Networks Corp. (a) | 738,212 | | 9,670,577 |
| | 136,171,999 |
COMPUTERS & PERIPHERALS - 16.9% |
Computer Hardware - 14.0% |
3PAR, Inc. | 5,900 | | 48,203 |
Apple, Inc. (a) | 412,055 | | 65,496,139 |
Hewlett-Packard Co. | 35,900 | | 1,608,320 |
HTC Corp. | 665,180 | | 10,439,139 |
Palm, Inc. (d) | 171,400 | | 1,127,812 |
Stratasys, Inc. (a)(d) | 175,290 | | 2,725,760 |
| | 81,445,373 |
Computer Storage & Peripherals - 2.9% |
Chicony Electronics Co. Ltd. | 189,390 | | 339,038 |
Netezza Corp. | 159,300 | | 2,070,900 |
SanDisk Corp. (a)(d) | 474,648 | | 6,692,537 |
Synaptics, Inc. (a)(d) | 156,000 | | 7,522,320 |
| | 16,624,795 |
TOTAL COMPUTERS & PERIPHERALS | | 98,070,168 |
|
| Shares | | Value |
DIVERSIFIED CONSUMER SERVICES - 1.2% |
Education Services - 1.2% |
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 100,500 | | $ 7,035,000 |
ELECTRIC UTILITIES - 0.4% |
Electric Utilities - 0.4% |
Enernoc, Inc. (a)(d) | 132,867 | | 2,144,473 |
ELECTRICAL EQUIPMENT - 3.9% |
Electrical Components & Equipment - 3.7% |
Canadian Solar, Inc. (a)(d) | 46,900 | | 1,349,313 |
Energy Conversion Devices, Inc. (a) | 28,800 | | 2,013,984 |
First Solar, Inc. (a)(d) | 20,714 | | 5,905,769 |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 226,900 | | 3,442,073 |
Neo-Neon Holdings Ltd. | 4,976,000 | | 2,168,581 |
Q-Cells AG (a) | 15,800 | | 1,530,735 |
Renewable Energy Corp. AS (a) | 63,200 | | 1,830,244 |
SolarWorld AG | 33,000 | | 1,538,098 |
Sunpower Corp. Class A (a) | 18,800 | | 1,480,876 |
| | 21,259,673 |
Heavy Electrical Equipment - 0.2% |
China High Speed Transmission Equipment Group Co. Ltd. | 769,000 | | 1,458,829 |
TOTAL ELECTRICAL EQUIPMENT | | 22,718,502 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.8% |
Electronic Equipment & Instruments - 1.2% |
Chroma ATE, Inc. | 1,191,316 | | 2,102,856 |
Comverge, Inc. (a)(d) | 108,100 | | 1,178,290 |
Coretronic Corp. | 265,000 | | 278,624 |
Cyntec Co. Ltd. | 517,226 | | 687,565 |
ENE Technology, Inc. | 66,000 | | 137,101 |
Everlight Electronics Co. Ltd. | 937,376 | | 2,480,812 |
| | 6,865,248 |
Electronic Manufacturing Services - 0.9% |
Ju Teng International Holdings Ltd. (a) | 1,328,000 | | 663,864 |
Trimble Navigation Ltd. (a) | 141,700 | | 4,704,440 |
| | 5,368,304 |
Technology Distributors - 0.7% |
Arrow Electronics, Inc. (a) | 49,800 | | 1,604,556 |
Avnet, Inc. (a) | 88,200 | | 2,404,332 |
| | 4,008,888 |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | | 16,242,440 |
ENERGY EQUIPMENT & SERVICES - 0.1% |
Oil & Gas Equipment & Services - 0.1% |
IHS, Inc. Class A (a) | 10,300 | | 640,969 |
Common Stocks - continued |
| Shares | | Value |
HEALTH CARE EQUIPMENT & SUPPLIES - 4.1% |
Health Care Equipment - 3.9% |
China Medical Technologies, Inc. sponsored ADR | 36,900 | | $ 1,768,248 |
Conceptus, Inc. (a) | 79,500 | | 1,357,065 |
Golden Meditech Co. Ltd. | 6,548,000 | | 2,098,288 |
I-Flow Corp. (a) | 107,110 | | 1,111,802 |
Mindray Medical International Ltd. sponsored ADR (d) | 292,900 | | 11,701,355 |
Mingyuan Medicare Development Co. Ltd. (d) | 33,580,000 | | 4,433,373 |
| | 22,470,131 |
Health Care Supplies - 0.2% |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 962,000 | | 1,297,201 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 23,767,332 |
HEALTH CARE PROVIDERS & SERVICES - 0.0% |
Health Care Services - 0.0% |
athenahealth, Inc. | 600 | | 18,120 |
HOTELS, RESTAURANTS & LEISURE - 1.1% |
Hotels, Resorts & Cruise Lines - 1.1% |
Ctrip.com International Ltd. sponsored ADR (d) | 139,400 | | 6,285,546 |
HOUSEHOLD DURABLES - 0.0% |
Consumer Electronics - 0.0% |
TomTom Group BV (a) | 100 | | 2,254 |
INTERNET SOFTWARE & SERVICES - 3.0% |
Internet Software & Services - 3.0% |
DealerTrack Holdings, Inc. (a) | 12,300 | | 191,634 |
Equinix, Inc. (a) | 43,500 | | 3,539,160 |
Google, Inc. Class A (sub. vtg.) (a) | 12,250 | | 5,803,438 |
Omniture, Inc. (a)(d) | 139,708 | | 2,423,934 |
Tencent Holdings Ltd. | 637,200 | | 5,680,535 |
| | 17,638,701 |
IT SERVICES - 3.3% |
Data Processing & Outsourced Services - 2.9% |
CyberSource Corp. (a) | 78,100 | | 1,386,275 |
ExlService Holdings, Inc. (a) | 99,700 | | 1,500,485 |
Visa, Inc. | 163,900 | | 11,974,534 |
WNS Holdings Ltd. ADR (a) | 114,500 | | 1,946,500 |
| | 16,807,794 |
IT Consulting & Other Services - 0.4% |
China Information Security Technology, Inc. (a)(d) | 66,500 | | 338,485 |
Yucheng Technologies Ltd. (a) | 141,100 | | 1,828,656 |
| | 2,167,141 |
TOTAL IT SERVICES | | 18,974,935 |
|
| Shares | | Value |
LIFE SCIENCES TOOLS & SERVICES - 0.1% |
Life Sciences Tools & Services - 0.1% |
QIAGEN NV (a) | 32,100 | | $ 603,159 |
MACHINERY - 0.6% |
Industrial Machinery - 0.6% |
China Fire & Security Group, Inc. (a)(d) | 177,700 | | 1,775,223 |
Hi-P International Ltd. | 2,622,000 | | 1,121,742 |
Shin Zu Shing Co. Ltd. | 148,424 | | 682,563 |
| | 3,579,528 |
MEDIA - 0.5% |
Advertising - 0.5% |
VisionChina Media, Inc. ADR (d) | 105,600 | | 2,644,224 |
METALS & MINING - 0.3% |
Diversified Metals & Mining - 0.3% |
Timminco Ltd. (a) | 70,500 | | 1,666,357 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 17.7% |
Semiconductor Equipment - 9.7% |
Advanced Energy Industries, Inc. (a) | 88,700 | | 1,225,834 |
Aixtron AG | 106,700 | | 964,100 |
Applied Materials, Inc. | 919,500 | | 15,925,740 |
ASML Holding NV (NY Shares) | 190,600 | | 4,343,774 |
Cymer, Inc. (a) | 89,400 | | 2,368,206 |
Eagle Test Systems, Inc. (a) | 200,804 | | 2,489,970 |
FormFactor, Inc. (a) | 139,300 | | 2,423,820 |
Global Unichip Corp. | 298,675 | | 2,069,966 |
Lam Research Corp. (a) | 342,700 | | 11,271,403 |
LTX Corp. (a) | 400,965 | | 874,104 |
MEMSIC, Inc. | 152,000 | | 463,600 |
Tessera Technologies, Inc. (a) | 150,300 | | 2,618,226 |
Varian Semiconductor Equipment Associates, Inc. (a) | 320,400 | | 9,362,088 |
| | 56,400,831 |
Semiconductors - 8.0% |
Advanced Micro Devices, Inc. (a)(d) | 224,936 | | 946,981 |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 338,800 | | 1,487,332 |
Applied Micro Circuits Corp. (a) | 36,050 | | 279,748 |
Atheros Communications, Inc. (a) | 222,400 | | 6,894,400 |
AuthenTec, Inc. (a) | 154,900 | | 1,183,436 |
Bright Led Electronics Corp. | 183,600 | | 248,932 |
Broadcom Corp. Class A (a) | 120,622 | | 2,929,908 |
Cavium Networks, Inc. (a)(d) | 449,231 | | 7,210,158 |
CSR PLC (a) | 282,700 | | 1,603,715 |
Cypress Semiconductor Corp. (a)(d) | 464,300 | | 12,652,175 |
Elan Microelectronics Corp. | 195,000 | | 239,958 |
Formosa Epitaxy, Inc. | 590,000 | | 494,696 |
Infineon Technologies AG sponsored ADR (a) | 412,100 | | 3,098,992 |
Intersil Corp. Class A | 2,800 | | 67,564 |
MediaTek, Inc. | 32,320 | | 335,160 |
Mindspeed Technologies, Inc. (a) | 215,163 | | 811,165 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - continued |
MoSys, Inc. (a) | 32,100 | | $ 127,758 |
NVIDIA Corp. (a) | 186,800 | | 2,136,992 |
PLX Technology, Inc. (a) | 45,400 | | 249,700 |
PMC-Sierra, Inc. (a) | 8,865 | | 64,183 |
Seoul Semiconductor Co. Ltd. | 26,639 | | 327,089 |
Spansion, Inc. Class A (a) | 212,000 | | 485,480 |
Taiwan Semiconductor Manufacturing Co. Ltd. | 4,471 | | 8,077 |
Zoran Corp. (a) | 360,300 | | 2,979,681 |
| | 46,863,280 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 103,264,111 |
SOFTWARE - 15.7% |
Application Software - 6.9% |
Adobe Systems, Inc. (a) | 42,700 | | 1,765,645 |
Autonomy Corp. PLC (a) | 160,100 | | 3,373,179 |
Callidus Software, Inc. (a) | 107,291 | | 514,997 |
Citrix Systems, Inc. (a) | 43,500 | | 1,158,840 |
Concur Technologies, Inc. (a) | 109,600 | | 4,517,712 |
Global Digital Creations Holdings Ltd. (a) | 7,908,000 | | 354,773 |
Kingdee International Software Group Co. Ltd. | 4,106,000 | | 936,818 |
Longtop Financial Technologies Ltd. ADR | 143,900 | | 2,427,593 |
Nuance Communications, Inc. (a) | 162,600 | | 2,523,552 |
Salesforce.com, Inc. (a) | 122,400 | | 7,807,896 |
Smith Micro Software, Inc. (a)(d) | 485,900 | | 3,498,480 |
SuccessFactors, Inc. | 147,400 | | 1,552,122 |
Synchronoss Technologies, Inc. (a)(d) | 255,967 | | 2,999,933 |
Taleo Corp. Class A (a) | 229,688 | | 4,304,353 |
Ulticom, Inc. (a) | 359,426 | | 2,515,982 |
| | 40,251,875 |
Home Entertainment Software - 5.3% |
Nintendo Co. Ltd. | 66,500 | | 30,723,001 |
Systems Software - 3.5% |
BMC Software, Inc. (a) | 39,200 | | 1,289,288 |
CA, Inc. | 123,600 | | 2,949,096 |
Insyde Software Corp. | 539,000 | | 1,934,324 |
McAfee, Inc. (a) | 70,600 | | 2,312,150 |
Microsoft Corp. | 11,500 | | 295,780 |
Oracle Corp. (a) | 552,400 | | 11,893,172 |
| | 20,673,810 |
TOTAL SOFTWARE | | 91,648,686 |
|
| Shares | | Value |
SPECIALTY RETAIL - 1.2% |
Computer & Electronics Retail - 1.2% |
The Game Group PLC | 1,425,700 | | $ 7,215,212 |
TOTAL COMMON STOCKS (Cost $674,720,907) | 569,570,296 |
Convertible Bonds - 0.9% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.2% |
Communications Equipment - 0.2% |
Ciena Corp. 0.25% 5/1/13 | | $ 1,270,000 | | 987,435 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.7% |
Semiconductors - 0.7% |
Advanced Micro Devices, Inc. 5.75% 8/15/12 | | 6,960,000 | | 4,350,000 |
TOTAL CONVERTIBLE BONDS (Cost $6,482,764) | 5,337,435 |
Money Market Funds - 8.9% |
| Shares | | |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c)
(Cost $51,558,323) | 51,558,323 | 51,558,323 |
TOTAL INVESTMENT PORTFOLIO - 107.7% (Cost $732,761,994) | 626,466,054 |
NET OTHER ASSETS - (7.7)% | (44,526,814) |
NET ASSETS - 100% | $ 581,939,240 |
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 $821,100 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 | $ 182,803 |
Fidelity Securities Lending Cash Central Fund | 785,470 |
Total | $ 968,273 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 67.4% |
Canada | 7.1% |
Cayman Islands | 7.1% |
Japan | 5.6% |
Taiwan | 4.2% |
United Kingdom | 2.4% |
Germany | 1.6% |
China | 1.2% |
Others (individually less than 1%) | 3.4% |
| 100.0% |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $1,389,526,620 of which $889,719,837 and $499,806,783 will expire on July 31, 2010 and 2011, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $44,009,554 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Technology
Advisor Technology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $50,060,381) - See accompanying schedule: Unaffiliated issuers (cost $681,203,671) | $ 574,907,731 | |
Fidelity Central Funds (cost $51,558,323) | 51,558,323 | |
Total Investments (cost $732,761,994) | | $ 626,466,054 |
Cash | | 424 |
Foreign currency held at value (cost $914,730) | | 914,729 |
Receivable for investments sold | | 33,831,993 |
Receivable for fund shares sold | | 396,062 |
Dividends receivable | | 739,356 |
Interest receivable | | 184,210 |
Distributions receivable from Fidelity Central Funds | | 115,659 |
Prepaid expenses | | 982 |
Other receivables | | 35,799 |
Total assets | | 662,685,268 |
| | |
Liabilities | | |
Payable for investments purchased | $ 18,770,434 | |
Payable for fund shares redeemed | 3,264,496 | |
Accrued management fee | 275,881 | |
Distribution fees payable | 227,279 | |
Notes payable | 6,396,000 | |
Other affiliated payables | 185,250 | |
Other payables and accrued expenses | 68,365 | |
Collateral on securities loaned, at value | 51,558,323 | |
Total liabilities | | 80,746,028 |
| | |
Net Assets | | $ 581,939,240 |
Net Assets consist of: | | |
Paid in capital | | $ 2,123,374,926 |
Undistributed net investment income | | 77,762 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (1,435,202,468) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (106,310,980) |
Net Assets | | $ 581,939,240 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($275,117,344 ÷ 16,141,388 shares) | | $ 17.04 |
| | |
Maximum offering price per share (100/94.25 of $17.04) | | $ 18.08 |
Class T:
Net Asset Value and redemption price per share ($173,917,330 ÷ 10,463,472 shares) | | $ 16.62 |
| | |
Maximum offering price per share (100/96.50 of $16.62) | | $ 17.22 |
Class B:
Net Asset Value and offering price per share ($47,293,576 ÷ 3,008,351 shares)A | | $ 15.72 |
| | |
Class C:
Net Asset Value and offering price per share ($63,590,308 ÷ 4,027,442 shares)A | | $ 15.79 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($22,020,682 ÷ 1,245,540 shares) | | $ 17.68 |
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.
Technology
Statement of Operations
| Year ended July 31, 2008 |
Investment Income | | |
Dividends | | $ 3,845,038 |
Interest | | 220,047 |
Income from Fidelity Central Funds (including $785,470 from security lending) | | 968,273 |
Total income | | 5,033,358 |
| | |
Expenses | | |
Management fee | $ 3,979,597 | |
Transfer agent fees | 2,175,438 | |
Distribution fees | 3,462,924 | |
Accounting and security lending fees | 260,403 | |
Custodian fees and expenses | 136,812 | |
Independent trustees' compensation | 3,055 | |
Registration fees | 58,785 | |
Audit | 57,486 | |
Legal | 5,755 | |
Interest | 13,867 | |
Miscellaneous | 178,318 | |
Total expenses before reductions | 10,332,440 | |
Expense reductions | (121,142) | 10,211,298 |
Net investment income (loss) | | (5,177,940) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (11,139,416) | |
Foreign currency transactions | (134,394) | |
Total net realized gain (loss) | | (11,273,810) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (114,724,105) | |
Assets and liabilities in foreign currencies | (16,571) | |
Total change in net unrealized appreciation (depreciation) | | (114,740,676) |
Net gain (loss) | | (126,014,486) |
Net increase (decrease) in net assets resulting from operations | | $ (131,192,426) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (5,177,940) | $ (9,596,456) |
Net realized gain (loss) | (11,273,810) | 101,139,166 |
Change in net unrealized appreciation (depreciation) | (114,740,676) | 120,841,656 |
Net increase (decrease) in net assets resulting from operations | (131,192,426) | 212,384,366 |
Share transactions - net increase (decrease) | (67,084,453) | (169,547,974) |
Redemption fees | 32,772 | 20,415 |
Total increase (decrease) in net assets | (198,244,107) | 42,856,807 |
| | |
Net Assets | | |
Beginning of period | 780,183,347 | 737,326,540 |
End of period (including undistributed net investment income of $77,762 and accumulated net investment loss of $288, respectively) | $ 581,939,240 | $ 780,183,347 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 | $ 13.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.10) | (.17) | (.15) | .02 F | (.17) |
Net realized and unrealized gain (loss) | (3.41) | 5.13 | (.42) | 2.24 | .79 |
Total from investment operations | (3.51) | 4.96 | (.57) | 2.26 | .62 |
Distributions from net investment income | - | - | - | (.08) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 |
Total Return A,B | (17.08)% | 31.82% | (3.53)% | 16.20% | 4.64% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.21% | 1.25% | 1.30% | 1.37% | 1.44% |
Expenses net of fee waivers, if any | 1.21% | 1.25% | 1.30% | 1.37% | 1.44% |
Expenses net of all reductions | 1.19% | 1.24% | 1.20% | 1.26% | 1.35% |
Net investment income (loss) | (.49)% | (.91)% | (.88)% | .12% F | (1.10)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 275,117 | $ 309,105 | $ 189,054 | $ 144,970 | $ 123,389 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 | $ 13.17 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.14) | (.21) | (.19) | (.02) F | (.19) |
Net realized and unrealized gain (loss) | (3.33) | 5.02 | (.41) | 2.21 | .78 |
Total from investment operations | (3.47) | 4.81 | (.60) | 2.19 | .59 |
Distributions from net investment income | - | - | - | (.07) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 |
Total Return A,B | (17.27)% | 31.48% | (3.78)% | 15.94% | 4.48% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.46% | 1.51% | 1.55% | 1.60% | 1.62% |
Expenses net of fee waivers, if any | 1.46% | 1.51% | 1.55% | 1.60% | 1.62% |
Expenses net of all reductions | 1.45% | 1.49% | 1.44% | 1.48% | 1.53% |
Net investment income (loss) | (.74)% | (1.16)% | (1.13)% | (.11)% F | (1.28)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 173,917 | $ 260,339 | $ 260,966 | $ 315,930 | $ 363,399 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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.
Technology
Financial Highlights - Class B
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 | $ 12.76 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.23) | (.28) | (.27) | (.09) F | (.27) |
Net realized and unrealized gain (loss) | (3.15) | 4.79 | (.38) | 2.12 | .76 |
Total from investment operations | (3.38) | 4.51 | (.65) | 2.03 | .49 |
Distributions from net investment income | - | - | - | (.04) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 |
Total Return A,B | (17.70)% | 30.91% | (4.27)% | 15.33% | 3.84% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 2.01% | 2.05% | 2.13% | 2.21% |
Expenses net of fee waivers, if any | 1.96% | 2.01% | 2.05% | 2.13% | 2.21% |
Expenses net of all reductions | 1.94% | 2.00% | 1.94% | 2.02% | 2.12% |
Net investment income (loss) | (1.24)% | (1.67)% | (1.63)% | (.65)% F | (1.87)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 47,294 | $ 102,655 | $ 192,790 | $ 309,020 | $ 355,927 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 | $ 12.80 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.23) | (.29) | (.27) | (.08) F | (.26) |
Net realized and unrealized gain (loss) | (3.16) | 4.81 | (.38) | 2.12 | .77 |
Total from investment operations | (3.39) | 4.52 | (.65) | 2.04 | .51 |
Distributions from net investment income | - | - | - | (.04) | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 |
Total Return A,B | (17.67)% | 30.83% | (4.25)% | 15.34% | 3.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 2.01% | 2.05% | 2.10% | 2.13% |
Expenses net of fee waivers, if any | 1.96% | 2.01% | 2.05% | 2.10% | 2.13% |
Expenses net of all reductions | 1.94% | 1.99% | 1.94% | 1.99% | 2.04% |
Net investment income (loss) | (1.24)% | (1.66)% | (1.63)% | (.61)% F | (1.79)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 63,590 | $ 86,974 | $ 82,835 | $ 108,287 | $ 125,926 |
Portfolio turnover rate E | 214% | 208% | 258% | 180% | 105% |
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.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 | $ 13.61 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.04) | (.11) | (.09) | .09 E | (.09) |
Net realized and unrealized gain (loss) | (3.54) | 5.30 | (.44) | 2.30 | .80 |
Total from investment operations | (3.58) | 5.19 | (.53) | 2.39 | .71 |
Distributions from net investment income | - | - | - | (.11) | - |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 |
Total Return A | (16.84)% | 32.30% | (3.19)% | 16.73% | 5.22% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .94% | .93% | .90% | .92% | .93% |
Expenses net of fee waivers, if any | .94% | .93% | .90% | .92% | .93% |
Expenses net of all reductions | .92% | .92% | .80% | .81% | .84% |
Net investment income (loss) | (.22)% | (.59)% | (.49)% | .57% E | (.59)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 22,021 | $ 21,111 | $ 11,681 | $ 11,640 | $ 10,984 |
Portfolio turnover rate D | 214% | 208% | 258% | 180% | 105% |
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.
Technology
Notes to Financial Statements
For the period ended July 31, 2008
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, 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 | $ 27,458,788 |
Unrealized depreciation | (135,343,128) |
Net unrealized appreciation (depreciation) | (107,884,340) |
Capital loss carryforward | (1,389,526,620) |
| |
Cost for federal income tax purposes | $ 734,350,394 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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
Technology
4. Operating Policies - continued
Repurchase Agreements - continued
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 $1,533,223,630 and $1,609,484,477, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 762,718 | $ 27,500 |
Class T | .25% | .25% | 1,155,470 | 5,646 |
Class B | .75% | .25% | 755,830 | 567,417 |
Class C | .75% | .25% | 788,906 | 49,851 |
| | | $ 3,462,924 | $ 650,414 |
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
by FDC |
Class A | $ 55,710 |
Class T | 23,517 |
Class B* | 100,370 |
Class C* | 6,485 |
| $ 186,082 |
* 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.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 928,140 | .30 |
Class T | 709,949 | .31 |
Class B | 228,893 | .30 |
Class C | 239,572 | .30 |
Institutional Class | 68,884 | .29 |
| $ 2,175,438 | |
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 $35,532 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
Expense |
Borrower | $ 7,579,750 | 3.29% | $ 13,867 |
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 $1,715 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 in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $110,238 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.
Technology
9. Expense Reductions - continued
During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 7,835 |
Class B | 258 |
Class C | 1,784 |
Institutional Class | 1,027 |
| $ 10,904 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $258,686, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 5,381,278 | 7,888,385 | $ 105,720,351 | $ 145,922,304 |
Shares redeemed | (4,279,571) | (4,978,587) | (82,236,119) | (92,460,573) |
Net increase (decrease) | 1,101,707 | 2,909,798 | $ 23,484,232 | $ 53,461,731 |
Class T | | | | |
Shares sold | 2,146,310 | 1,926,573 | $ 41,674,472 | $ 34,966,338 |
Shares redeemed | (4,638,425) | (6,053,307) | (86,554,961) | (109,073,221) |
Net increase (decrease) | (2,492,115) | (4,126,734) | $ (44,880,489) | $ (74,106,883) |
Class B | | | | |
Shares sold | 406,127 | 357,014 | $ 7,558,898 | $ 6,182,320 |
Shares redeemed | (2,773,060) | (8,194,716) | (50,298,253) | (140,978,328) |
Net increase (decrease) | (2,366,933) | (7,837,702) | $ (42,739,355) | $ (134,796,008) |
Class C | | | | |
Shares sold | 550,177 | 490,290 | $ 10,400,107 | $ 8,483,174 |
Shares redeemed | (1,056,703) | (1,608,094) | (18,857,821) | (27,833,773) |
Net increase (decrease) | (506,526) | (1,117,804) | $ (8,457,714) | $ (19,350,599) |
Institutional Class | | | | |
Shares sold | 628,983 | 640,632 | $ 12,989,931 | $ 12,507,491 |
Shares redeemed | (376,415) | (374,535) | (7,481,058) | (7,263,706) |
Net increase (decrease) | 252,568 | 266,097 | $ 5,508,873 | $ 5,243,785 |
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, if any) 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, 2008 | | Past 1
year | Past 5
years | Past 10
years |
Institutional Class A | | -0.49% | 16.39% | 5.53% |
A Prior to October 1, 2006, Advisor Utilities operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Utilities Fund - Institutional Class on July 31, 1998. 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.
Utilities
Advisor Utilities Fund
Management's Discussion of Fund Performance
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%
For the 12 months ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares returned -0.82%, -1.11%, -1.59% and -1.58%, respectively (excluding sales charges), underperforming the 2.47% return of the MSCI® US Investable Market Utilities Index but outperforming the S&P 500. Less-than-favorable stock selection and an underweighting in the gas utilities area hurt, as did an overweighting in independent power/energy traders and unsuccessful security selection among electric utilities. On the other hand, an out-of-benchmark stake in oil and gas storage/transport buoyed the fund's performance relative to the MSCI index. Detractors included gas utility Southern Union, independent power producers AES, NRG Energy and Reliant Energy, along with New Jersey-based multi-utility Public Service Enterprise Group and an underweighting in gas utility Energen. An out-of-benchmark stake in Texas-based oil and gas pipeline company Spectra Energy - no longer held - contributed, as did independent power/energy trader TXU from Texas, Sempra Energy from Southern California, and an underweighting and timely ownership of two multi-utilities, Virginia-based Dominion Resources and New Mexico-based PNM Resources, benchmark components that lagged. Some stocks mentioned here were not held at period end.
For the 12 months ending July 31, 2008, the fund's Institutional Class shares returned -0.49%, underperforming the 2.47% return of the MSCI® US Investable Market Utilities Index but outperforming the S&P 500. Less-than-favorable stock selection and an underweighting in the gas utilities area hurt, as did an overweighting in independent power/energy traders and unsuccessful security selection among electric utilities. On the other hand, an out-of-benchmark stake in oil and gas storage/transport buoyed the fund's performance relative to the MSCI index. Detractors included gas utility Southern Union, independent power producers AES, NRG Energy and Reliant Energy, along with New Jersey-based multi-utility Public Service Enterprise Group and an underweighting in gas utility Energen. An out-of-benchmark stake in Texas-based oil and gas pipeline company Spectra Energy - no longer held - contributed, as did independent power/energy trader TXU from Texas, Sempra Energy from Southern California, and an underweighting and timely ownership of two multi-utilities, Virginia-based Dominion Resources and New Mexico-based PNM Resources, benchmark components that lagged. Some stocks mentioned here were not held at period end.
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 Utilities 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, 2008 to July 31, 2008).
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 950.30 | $ 5.92 |
Hypothetical A | $ 1,000.00 | $ 1,018.80 | $ 6.12 |
Class T | | | |
Actual | $ 1,000.00 | $ 948.90 | $ 7.17 |
Hypothetical A | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 946.50 | $ 9.58 |
Hypothetical A | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Class C | | | |
Actual | $ 1,000.00 | $ 946.80 | $ 9.54 |
Hypothetical A | $ 1,000.00 | $ 1,015.07 | $ 9.87 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 951.80 | $ 4.51 |
Hypothetical A | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.22% |
Class T | 1.48% |
Class B | 1.98% |
Class C | 1.97% |
Institutional Class | .93% |
Utilities
Advisor Utilities Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
PPL Corp. | 10.9 | 9.3 |
Exelon Corp. | 9.5 | 8.8 |
FPL Group, Inc. | 7.6 | 5.3 |
Constellation Energy Group, Inc. | 6.2 | 6.0 |
Entergy Corp. | 6.0 | 5.2 |
Allegheny Energy, Inc. | 5.2 | 4.1 |
Sempra Energy | 5.0 | 4.8 |
FirstEnergy Corp. | 4.9 | 3.7 |
NRG Energy, Inc. | 4.9 | 2.7 |
Edison International | 4.2 | 4.1 |
| 64.4 | |
Top Industries (% of fund's net assets) |
As of July 31, 2008 |
| Electric Utilities | 54.3% | |
| Independent Power Producers & Energy Traders | 18.0% | |
| Multi-utilities | 14.1% | |
| Gas Utilities | 4.0% | |
| Electronic Equipment & Instruments | 0.4% | |
| All Others* | 9.2% | |
|
As of January 31, 2008 |
| Electric Utilities | 50.4% | |
| Multi-utilities | 20.6% | |
| Independent Power Producers & Energy Traders | 15.9% | |
| Gas Utilities | 4.0% | |
| Water Utilities | 0.5% | |
| All Others* | 8.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Utilities Fund
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 91.2% |
| Shares | | Value |
DIVERSIFIED FINANCIAL SERVICES - 0.2% |
Other Diversifed Financial Services - 0.2% |
Hicks Acquisition Co. I, Inc. unit | 52,100 | | $ 500,160 |
ELECTRIC UTILITIES - 54.3% |
Electric Utilities - 54.3% |
Allegheny Energy, Inc. | 240,500 | | 11,640,200 |
American Electric Power Co., Inc. | 238,300 | | 9,412,850 |
Edison International | 195,300 | | 9,440,802 |
Entergy Corp. | 126,100 | | 13,482,612 |
Exelon Corp. | 269,900 | | 21,219,538 |
FirstEnergy Corp. | 150,100 | | 11,039,855 |
FPL Group, Inc. | 261,700 | | 16,887,501 |
Great Plains Energy, Inc. | 15,322 | | 387,034 |
ITC Holdings Corp. | 27,900 | | 1,454,148 |
PPL Corp. | 517,900 | | 24,320,583 |
Sierra Pacific Resources | 183,000 | | 2,075,220 |
| | 121,360,343 |
ELECTRICAL EQUIPMENT - 0.2% |
Heavy Electrical Equipment - 0.2% |
ABB Ltd. sponsored ADR | 16,500 | | 432,630 |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.4% |
Electronic Equipment & Instruments - 0.4% |
Itron, Inc. (a) | 10,300 | | 950,999 |
GAS UTILITIES - 4.0% |
Gas Utilities - 4.0% |
Energen Corp. | 28,500 | | 1,715,700 |
Equitable Resources, Inc. | 51,500 | | 2,690,875 |
Questar Corp. | 87,200 | | 4,611,136 |
| | 9,017,711 |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 18.0% |
Independent Power Producers & Energy Traders - 18.0% |
AES Corp. (a)(d) | 274,000 | | 4,422,360 |
Calpine Corp. (a) | 43,200 | | 751,680 |
Constellation Energy Group, Inc. | 167,400 | | 13,920,984 |
Dynegy, Inc. Class A (a) | 264,600 | | 1,780,758 |
Mirant Corp. (a)(d) | 121,500 | | 3,719,115 |
|
| Shares | | Value |
NRG Energy, Inc. (a) | 299,000 | | $ 10,850,710 |
Reliant Energy, Inc. (a) | 264,300 | | 4,786,473 |
| | 40,232,080 |
MULTI-UTILITIES - 14.1% |
Multi-Utilities - 14.1% |
CenterPoint Energy, Inc. | 190,700 | | 3,007,339 |
CMS Energy Corp. | 87,400 | | 1,179,900 |
Integrys Energy Group, Inc. | 27,200 | | 1,388,832 |
PG&E Corp. | 112,686 | | 4,341,792 |
Public Service Enterprise Group, Inc. | 207,180 | | 8,660,124 |
Sempra Energy | 199,000 | | 11,175,840 |
TECO Energy, Inc. | 87,200 | | 1,617,560 |
| | 31,371,387 |
TOTAL COMMON STOCKS (Cost $202,173,358) | 203,865,310 |
Money Market Funds - 4.4% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 4,703,711 | | 4,703,711 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 5,097,000 | | 5,097,000 |
TOTAL MONEY MARKET FUNDS (Cost $9,800,711) | 9,800,711 |
TOTAL INVESTMENT PORTFOLIO - 95.6% (Cost $211,974,069) | | 213,666,021 |
NET OTHER ASSETS - 4.4% | | 9,736,799 |
NET ASSETS - 100% | $ 223,402,820 |
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 | $ 644,715 |
Fidelity Securities Lending Cash Central Fund | 43,398 |
Total | $ 688,113 |
Income Tax Information |
At July 31, 2008, the fund had a capital loss carryforward of approximately $232,998,756 of which $78,586,224 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.
Annual Report
Advisor Utilities Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $4,833,610) - See accompanying schedule: Unaffiliated issuers (cost $202,173,358) | $ 203,865,310 | |
Fidelity Central Funds (cost $9,800,711) | 9,800,711 | |
Total Investments (cost $211,974,069) | | $ 213,666,021 |
Receivable for investments sold | | 19,628,256 |
Receivable for fund shares sold | | 132,554 |
Dividends receivable | | 7,631 |
Distributions receivable from Fidelity Central Funds | | 11,345 |
Prepaid expenses | | 304 |
Other receivables | | 304 |
Total assets | | 233,446,415 |
| | |
Liabilities | | |
Payable for investments purchased | $ 4,304,233 | |
Payable for fund shares redeemed | 329,142 | |
Accrued management fee | 108,813 | |
Distribution fees payable | 97,904 | |
Other affiliated payables | 70,246 | |
Other payables and accrued expenses | 36,257 | |
Collateral on securities loaned, at value | 5,097,000 | |
Total liabilities | | 10,043,595 |
| | |
Net Assets | | $ 223,402,820 |
Net Assets consist of: | | |
Paid in capital | | $ 454,361,638 |
Undistributed net investment income | | 494,309 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (233,145,079) |
Net unrealized appreciation (depreciation) on investments | | 1,691,952 |
Net Assets | | $ 223,402,820 |
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($105,219,160 ÷ 5,189,541 shares) | | $ 20.28 |
| | |
Maximum offering price per share (100/94.25 of $20.28) | | $ 21.52 |
Class T:
Net Asset Value and redemption price per share ($54,345,622 ÷ 2,682,009 shares) | | $ 20.26 |
| | |
Maximum offering price per share (100/96.50 of $20.26) | | $ 20.99 |
Class B:
Net Asset Value and offering price per share ($20,747,369 ÷ 1,036,762 shares)A | | $ 20.01 |
| | |
Class C:
Net Asset Value and offering price per share ($37,387,082 ÷ 1,876,011 shares)A | | $ 19.93 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($5,703,587 ÷ 277,995 shares) | | $ 20.52 |
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, 2008 |
| | |
Investment Income | | |
Dividends | | $ 5,423,144 |
Interest | | 9,379 |
Income from Fidelity Central Funds | | 688,113 |
Total income | | 6,120,636 |
| | |
Expenses | | |
Management fee | $ 1,474,743 | |
Transfer agent fees | 792,649 | |
Distribution fees | 1,336,434 | |
Accounting and security lending fees | 105,377 | |
Custodian fees and expenses | 9,800 | |
Independent trustees' compensation | 1,128 | |
Registration fees | 47,983 | |
Audit | 43,851 | |
Legal | 4,846 | |
Interest | 1,860 | |
Miscellaneous | 46,066 | |
Total expenses before reductions | 3,864,737 | |
Expense reductions | (3,108) | 3,861,629 |
Net investment income (loss) | | 2,259,007 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 15,067,569 | |
Foreign currency transactions | (5,133) | |
Total net realized gain (loss) | | 15,062,436 |
Change in net unrealized appreciation (depreciation) on investment securities | | (20,022,346) |
Net gain (loss) | | (4,959,910) |
Net increase (decrease) in net assets resulting from operations | | $ (2,700,903) |
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 2,259,007 | $ 1,715,800 |
Net realized gain (loss) | 15,062,436 | 44,242,815 |
Change in net unrealized appreciation (depreciation) | (20,022,346) | (2,387,149) |
Net increase (decrease) in net assets resulting from operations | (2,700,903) | 43,571,466 |
Distributions to shareholders from net investment income | (2,837,541) | (1,795,359) |
Share transactions - net increase (decrease) | (28,461,258) | 17,609,310 |
Redemption fees | 9,517 | 19,962 |
Total increase (decrease) in net assets | (33,990,185) | 59,405,379 |
| | |
Net Assets | | |
Beginning of period | 257,393,005 | 197,987,626 |
End of period (including undistributed net investment income of $494,309 and undistributed net investment income of $1,153,544, respectively) | $ 223,402,820 | $ 257,393,005 |
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Highlights - Class A
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 | $ 10.37 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .24 | .21 | .24 | .28 F | .10 |
Net realized and unrealized gain (loss) | (.38) | 3.56 | 2.06 | 3.01 | 1.72 |
Total from investment operations | (.14) | 3.77 | 2.30 | 3.29 | 1.82 |
Distributions from net investment income | (.32) | (.23) | (.27) | (.21) | (.10) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 |
Total Return A,B | (.82)% | 22.14% | 15.38% | 27.48% | 17.67% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.21% | 1.27% | 1.34% | 1.39% | 1.51% |
Expenses net of fee waivers, if any | 1.21% | 1.27% | 1.34% | 1.39% | 1.50% |
Expenses net of all reductions | 1.21% | 1.26% | 1.32% | 1.36% | 1.45% |
Net investment income (loss) | 1.11% | 1.04% | 1.51% | 2.03% F | .87% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 105,219 | $ 94,842 | $ 40,599 | $ 29,150 | $ 21,987 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 | $ 10.33 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .18 | .15 | .19 | .24 F | .07 |
Net realized and unrealized gain (loss) | (.39) | 3.56 | 2.08 | 2.99 | 1.72 |
Total from investment operations | (.21) | 3.71 | 2.27 | 3.23 | 1.79 |
Distributions from net investment income | (.24) | (.18) | (.19) | (.17) | (.08) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 |
Total Return A,B | (1.11)% | 21.74% | 15.20% | 27.03% | 17.42% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.47% | 1.54% | 1.60% | 1.67% | 1.79% |
Expenses net of fee waivers, if any | 1.47% | 1.54% | 1.60% | 1.67% | 1.75% |
Expenses net of all reductions | 1.47% | 1.54% | 1.58% | 1.64% | 1.70% |
Net investment income (loss) | .84% | .76% | 1.25% | 1.76% F | .62% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 54,346 | $ 62,592 | $ 52,128 | $ 55,683 | $ 53,255 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 | $ 10.15 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .08 | .05 | .12 | .17 F | .01 |
Net realized and unrealized gain (loss) | (.39) | 3.52 | 2.03 | 2.95 | 1.69 |
Total from investment operations | (.31) | 3.57 | 2.15 | 3.12 | 1.70 |
Distributions from net investment income | (.08) | (.07) | (.08) | (.11) | (.03) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 |
Total Return A,B | (1.59)% | 21.18% | 14.57% | 26.51% | 16.79% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 2.04% | 2.09% | 2.14% | 2.25% |
Expenses net of fee waivers, if any | 1.96% | 2.04% | 2.09% | 2.14% | 2.25% |
Expenses net of all reductions | 1.95% | 2.03% | 2.06% | 2.11% | 2.20% |
Net investment income (loss) | .36% | .27% | .76% | 1.28% F | .12% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 20,747 | $ 43,845 | $ 65,959 | $ 82,577 | $ 84,742 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 | $ 10.16 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .08 | .06 | .13 | .18 F | .02 |
Net realized and unrealized gain (loss) | (.39) | 3.51 | 2.04 | 2.94 | 1.70 |
Total from investment operations | (.31) | 3.57 | 2.17 | 3.12 | 1.72 |
Distributions from net investment income | (.14) | (.10) | (.10) | (.12) | (.04) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 |
Total Return A,B | (1.58)% | 21.23% | 14.72% | 26.48% | 16.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.95% | 1.99% | 2.02% | 2.07% | 2.17% |
Expenses net of fee waivers, if any | 1.95% | 1.99% | 2.02% | 2.07% | 2.17% |
Expenses net of all reductions | 1.95% | 1.99% | 2.00% | 2.04% | 2.12% |
Net investment income (loss) | .36% | .32% | .83% | 1.36% F | .21% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 37,387 | $ 43,292 | $ 32,823 | $ 34,827 | $ 35,038 |
Portfolio turnover rate E | 77% | 118% | 64% | 44% | 38% |
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 .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, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 | $ 10.47 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .31 | .29 | .30 | .33 E | .15 |
Net realized and unrealized gain (loss) | (.38) | 3.58 | 2.10 | 3.03 | 1.73 |
Total from investment operations | (.07) | 3.87 | 2.40 | 3.36 | 1.88 |
Distributions from net investment income | (.36) | (.30) | (.33) | (.25) | (.15) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 |
Total Return A | (.49)% | 22.54% | 15.95% | 27.88% | 18.14% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .91% | .92% | .94% | .99% | 1.09% |
Expenses net of fee waivers, if any | .91% | .92% | .94% | .99% | 1.09% |
Expenses net of all reductions | .90% | .92% | .92% | .96% | 1.04% |
Net investment income (loss) | 1.41% | 1.39% | 1.91% | 2.44% E | 1.29% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,704 | $ 12,822 | $ 6,479 | $ 1,766 | $ 2,254 |
Portfolio turnover rate D | 77% | 118% | 64% | 44% | 38% |
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, 2008
1. Organization.
Fidelity Advisor Utilities 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 unaudited 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. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and 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
Utilities
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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, capital loss carryforwards, 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 | $ 16,668,640 |
Unrealized depreciation | (15,123,216) |
Net unrealized appreciation (depreciation) | 1,545,424 |
Undistributed ordinary income | 494,327 |
Capital loss carryforward | (232,998,756) |
| |
Cost for federal income tax purposes | $ 212,120,597 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 2,837,541 | $ 1,795,359 |
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. 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 Pronouncement. 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 results in expanded disclosures about fair value measurements.
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.
Annual Report
Notes to Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $189,408,234 and $236,387,873, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 274,288 | $ 18,467 |
Class T | .25% | .25% | 310,876 | 1,678 |
Class B | .75% | .25% | 317,442 | 238,665 |
Class C | .75% | .25% | 433,828 | 67,743 |
| | | $ 1,336,434 | $ 326,553 |
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
by FDC |
Class A | $ 63,262 |
Class T | 14,697 |
Class B* | 46,183 |
Class C* | 9,457 |
| $ 133,599 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 330,203 | .30 |
Class T | 195,807 | .31 |
Class B | 95,545 | .30 |
Class C | 126,719 | .29 |
Institutional Class | 44,375 | .25 |
| $ 792,649 | |
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.
Utilities
6. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,830 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
Expense |
Borrower | $ 7,018,500 | 2.38% | $ 1,860 |
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 $642 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 $43,398.
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 $2,154 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
expense reduction |
Class A | $ 954 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
Annual Report
Notes to Financial Statements - continued
10. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $41,180 which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2008 | 2007 |
From net investment income | | |
Class A | $ 1,513,480 | $ 644,012 |
Class T | 697,662 | 560,438 |
Class B | 116,029 | 253,871 |
Class C | 289,510 | 209,022 |
Institutional Class | 220,860 | 128,016 |
Total | $ 2,837,541 | $ 1,795,359 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 2,354,893 | 3,629,587 | $ 52,162,968 | $ 74,211,808 |
Reinvestment of distributions | 60,065 | 31,700 | 1,341,196 | 573,106 |
Shares redeemed | (1,798,285) | (1,448,205) | (38,893,897) | (30,175,903) |
Net increase (decrease) | 616,673 | 2,213,082 | $ 14,610,267 | $ 44,609,011 |
Class T | | | | |
Shares sold | 607,632 | 1,035,618 | $ 13,411,231 | $ 20,689,420 |
Reinvestment of distributions | 29,500 | 29,413 | 659,942 | 530,959 |
Shares redeemed | (977,155) | (1,078,012) | (21,255,306) | (22,011,808) |
Net increase (decrease) | (340,023) | (12,981) | $ (7,184,133) | $ (791,429) |
Class B | | | | |
Shares sold | 265,082 | 496,053 | $ 5,789,226 | $ 9,866,415 |
Reinvestment of distributions | 4,528 | 12,604 | 103,786 | 221,292 |
Shares redeemed | (1,382,108) | (2,262,406) | (29,771,682) | (44,828,420) |
Net increase (decrease) | (1,112,498) | (1,753,749) | $ (23,878,670) | $ (34,740,713) |
Class C | | | | |
Shares sold | 413,208 | 1,008,161 | $ 8,976,142 | $ 20,364,886 |
Reinvestment of distributions | 10,061 | 8,956 | 223,730 | 157,448 |
Shares redeemed | (671,632) | (834,201) | (14,302,911) | (16,902,583) |
Net increase (decrease) | (248,363) | 182,916 | $ (5,103,039) | $ 3,619,751 |
Institutional Class | | | | |
Shares sold | 1,285,993 | 1,116,023 | $ 28,765,131 | $ 24,167,100 |
Reinvestment of distributions | 7,559 | 2,016 | 173,189 | 36,805 |
Shares redeemed | (1,627,489) | (878,823) | (35,844,003) | (19,291,215) |
Net increase (decrease) | (333,937) | 239,216 | $ (6,905,683) | $ 4,912,690 |
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, Fidelity Advisor Consumer Discretionary Fund, Fidelity Advisory Electronics Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Consumer Discretionary Fund, Fidelity Advisory Electronics Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (collectively, the "Funds"), including the schedules of investments, as of July 31, 2008, 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 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, 2008, 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, Fidelity Advisor Consumer Discretionary Fund, Fidelity Advisory Electronics Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund as of July 31, 2008, 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 23, 2008
Annual Report
The Trustees, Member 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 (78) |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr.
Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 (60) |
| 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 a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and 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 AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). 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 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) |
| Year of Election or Appointment: 2008 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). |
Cornelia M. Small (64) |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), 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. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Annual Report
Advisory Board Member and Executive Officers**:
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 (64) |
| 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. |
Kenneth B. Robins (38) |
| Year of Election or Appointment: 2008 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. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-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). |
Brian B. Hogan (43) |
| Year of Election or Appointment: 2007 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. Hogan also serves as Vice President of Sector Funds (2007-present) and Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (40) |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) 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 Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) |
| Year of Election or Appointment: 2008 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. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an
employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) |
| Year of Election or Appointment: 2008 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. Ms. Laurent also serves as AML officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) |
| Year of Election or Appointment: 2008 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. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) |
| 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 Fidelity's Equity and High Income Funds (2004-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). |
Bryan A. Mehrmann (47) |
| 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). |
Adrien E. Deberghes (40) |
| Year of Election or Appointment: 2008 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. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) |
| 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 Fidelity Pricing and Cash Management Services (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 (54) |
| 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-present) and is an employee of FMR. |
Paul M. Murphy (61) |
| Year of Election or Appointment: 2007 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. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) |
| 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
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 Energy Fund | | | | |
Institutional Class | 9/15/08 | 09/12/08 | - | $6.90 |
Fidelity Advisor Financial Services Fund | | | | |
Institutional Class | 9/15/08 | 09/12/08 | $.139 | $.02 |
Fidelity Advisor Health Care Fund | | | | |
Institutional Class | 9/15/08 | 09/12/08 | - | $.37 |
Fidelity Advisor Industrials Fund | | | | |
Institutional Class | 9/15/08 | 09/12/08 | $.074 | $.02 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended July 31, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Fidelity Advisor Biotechnology Fund | $1,255,636 |
Fidelity Advisor Consumer Discretionary Fund | $321,878 |
Fidelity Advisor Energy Fund | $179,399,979 |
Fidelity Advisor Financial Services Fund | $3,949,349 |
Fidelity Advisor Health Care Fund | $23,469,350 |
Fidelity Advisor Industrials Fund | $5,579,858 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| September 2007 | December 2007 |
Fidelity Advisor Consumer Discretionary Fund | | |
Institutional Class | 12% | - |
Fidelity Advisor Energy Fund | | |
Institutional Class | 81% | 55% |
Fidelity Advisor Financial Services Fund | | |
Institutional Class | 100% | 100% |
Fidelity Advisor Health Care Fund | | |
Institutional Class | 94% | 45% |
Fidelity Advisor Industrials Fund | | |
Institutional Class | 22% | 37% |
Fidelity Advisor Utilities Fund | | |
Institutional Class | 100% | 100% |
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 2007 | December 2007 |
Fidelity Advisor Consumer Discretionary Fund | | |
Institutional Class | 15% | - |
Fidelity Advisor Energy Fund | | |
Institutional Class | 94% | 69% |
Fidelity Advisor Financial Services Fund | | |
Institutional Class | 100% | 100% |
Fidelity Advisor Health Care Fund | | |
Institutional Class | 96% | 53% |
Fidelity Advisor Industrials Fund | | |
Institutional Class | 23% | 37% |
Fidelity Advisor Utilities Fund | | |
Institutional Class | 100% | 100% |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
A special meeting of each fund's shareholders was held on April 16, 2008. 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 |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 1,843,094,379.23 | 96.319 |
Withheld | 70,445,651.74 | 3.681 |
TOTAL | 1,913,540,030.97 | 100.000 |
Dennis J. Dirks |
Affirmative | 1,844,705,271.13 | 96.403 |
Withheld | 68,834,759.84 | 3.597 |
TOTAL | 1,913,540,030.97 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 1,841,350,074.57 | 96.227 |
Withheld | 72,189,956.40 | 3.773 |
TOTAL | 1,913,540,030.97 | 100.000 |
Alan J. Lacy |
Affirmative | 1,843,985,654.20 | 96.365 |
Withheld | 69,554,376.77 | 3.635 |
TOTAL | 1,913,540,030.97 | 100.000 |
Ned C. Lautenbach |
Affirmative | 1,844,982,064.29 | 96.417 |
Withheld | 68,557,966.68 | 3.583 |
TOTAL | 1,913,540,030.97 | 100.000 |
Joseph Mauriello |
Affirmative | 1,843,252,653.53 | 96.327 |
Withheld | 70,287,377.44 | 3.673 |
TOTAL | 1,913,540,030.97 | 100.000 |
Cornelia M. Small |
Affirmative | 1,845,097,505.44 | 96.423 |
Withheld | 68,442,525.53 | 3.577 |
TOTAL | 1,913,540,030.97 | 100.000 |
William S. Stavropoulos |
Affirmative | 1,840,012,418.12 | 96.158 |
Withheld | 73,527,612.85 | 3.842 |
TOTAL | 1,913,540,030.97 | 100.000 |
David M. Thomas |
Affirmative | 1,845,597,797.69 | 96.449 |
Withheld | 67,942,233.28 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
Michael E. Wiley |
Affirmative | 1,845,590,500.21 | 96.449 |
Withheld | 67,949,530.76 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust of Fidelity Advisor Series VII to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 1,059,631,083.78 | 55.375 |
Against | 187,649,461.13 | 9.807 |
Abstain | 74,155,654.32 | 3.875 |
Broker Non-Votes | 592,103,831.74 | 30.943 |
TOTAL | 1,913,540,030.97 | 100.000 |
A Denotes trust-wide proposal and voting results.
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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. 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 each fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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' investment personnel 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 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 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 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 also 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 further considered that Fidelity voluntarily pays for market data out of its own resources.
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 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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Annual Report
Investment Performance. 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.
For each of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, and Advisor Utilities, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, 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).
For Advisor Technology, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, 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).
Advisor Biotechnology
The Board stated that the 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.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Communications Equipment
The Board stated that the 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.
Advisor Consumer Discretionary
The Board stated that the 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 Electronics
The Board stated that the investment performance of the fund was lower than its benchmark for the one- and five-year periods, although the three-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.
Advisor Energy
The Board stated that the 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 Financial Services
The Board stated that the 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 Health Care
The Board stated that the 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
Advisor Industrials
The Board stated that the 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 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 Utilities
The Board stated that the 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 6% means that 94% 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
Advisor Biotechnology
Advisor Communications Equipment
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Consumer Discretionary
Advisor Electronics
Annual Report
Advisor Energy
Advisor Financial Services
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Health Care
Advisor Industrials
Annual Report
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 2007.
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 2007, and the total expenses of Class T ranked above its competitive median for 2007.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the total expenses of each of Class A and Class C of Advisor Communications Equipment ranked below its competitive median for 2007, the total expenses of Class B ranked equal to its competitive median for 2007, and the total expenses of Class T and Institutional Class ranked above its competitive median for 2007.
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 2007, the total expenses of Institutional Class ranked equal to its competitive median for 2007, and the total expenses of Class T ranked above its competitive median for 2007.
The Board noted that the total expenses of each of Class A and Class C of Advisor Electronics ranked below its competitive median for 2007, the total expenses of Class B ranked equal to its competitive median for 2007, and the total expenses of Class T and Institutional Class ranked above its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Energy ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Financial Services ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Health Care ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Industrials ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Technology ranked below its competitive median for 2007.
The Board noted that the total expenses of each class of Advisor Utilities ranked below its competitive median for 2007.
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.
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. 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
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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
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. †
Boston, MA
State Street Bank and Trust ††
Quincy, MA
† Custodian for Fidelity Advisor Energy Fund only.
†† Custodian for Fidelity Advisor Biotechnology Fund, Fidelity Advisor
Communications Equipment Fund, and Fidelity Advisor Electronics Fund only.
AFOCI-UANNPRO-0908
1.789223.105
(Fidelity Investment logo)(registered trademark)
Fidelity® Advisor
Real Estate
Fund - Class A, Class T, Class B
and Class C
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | <Click Here> | Ned Johnson's message to shareholders. |
Performance | <Click Here> | How the fund has done over time. |
Management's Discussion | <Click Here> | The manager's review of fund performance, strategy and outlook. |
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights. |
Notes | <Click Here> | Notes to financial statements. |
Report of Independent Registered Public Accounting Firm | <Click Here> | |
Trustees and Officers | <Click Here> | |
Distributions | <Click Here> | |
Proxy Voting Results | <Click Here> | |
Board Approval of Investment Advisory Contracts and Management Fees | <Click Here> | |
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 LLC 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
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of Fund A |
Class A (incl. 5.75% sales charge) | -11.08% | 12.89% | 13.53% |
Class T (incl. 3.50% sales charge) | -9.17% | 13.11% | 13.68% |
Class B (incl. contingent deferred sales charge) B | -10.76% | 13.10% | 13.70% |
Class C (incl. contingent deferred sales charge) C | -7.23% | 13.37% | 13.82% |
A From September 12, 2002.
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 1%, 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.
Annual Report
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Advisor Real Estate Fund - Class A on September 12, 2002, when the fund started, and the current 5.75% 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.
In prior years, the performance from year to year was represented by the performance of Class T. Going forward, the fund's performance will be represented by Class A for consistency with other fund materials.
Annual Report
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%. Real estate investment trusts (REITs) also declined during the period, with the Dow Jones Wilshire Real Estate Securities IndexSM returning -5.54%.
For the year ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares fell 5.66%, 5.88%, 6.37% and 6.35%, respectively (excluding sales charges), slightly behind the Dow Jones Wilshire Real Estate Securities Index. The fund outperformed the broad stock market, as measured by the S&P 500, in part because REITs already saw big declines in 2007 and investors' growing economic worries have depressed the S&P 500. Versus the Dow Jones Wilshire index, the fund's biggest individual detractor during the year was General Growth Properties, which owns, develops and manages shopping malls. Hotel companies such as LaSalle Hotel Properties and out-of-index-stock Starwood Hotels & Resorts Worldwide lagged as well, hurt by worries about the slowing economy. On the positive side, Home Properties, an apartment REIT focused on the northeastern United States, benefited from increased demand for rental housing. Another plus was self-storage company Public Storage, whose shares rose along with its earnings estimates. Further contributing was Highwoods Properties, a suburban office and industrial REIT.
For the year ending July 31, 2008, the fund's Institutional Class shares fell 5.39%, modestly beating the Dow Jones Wilshire Real Estate Securities Index. The fund outperformed the broad stock market, as measured by the S&P 500, in part because REITs already saw big declines in 2007 and investors' growing economic worries have depressed the S&P 500. Versus the Dow Jones Wilshire index, the fund's biggest individual detractor during the year was General Growth Properties, which owns, develops and manages shopping malls. Hotel companies such as LaSalle Hotel Properties and out-of-index-stock Starwood Hotels & Resorts Worldwide lagged as well, hurt by worries about the slowing economy. On the positive side, Home Properties, an apartment REIT focused on the northeastern United States, benefited from increased demand for rental housing. Another plus was self-storage company Public Storage, whose shares rose along with its earnings estimates. Further contributing was Highwoods Properties, a suburban office and industrial REIT.
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.
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, 2008 to July 31, 2008).
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
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 992.00 | $ 6.04 |
HypotheticalA | $ 1,000.00 | $ 1,018.80 | $ 6.12 |
Class T | | | |
Actual | $ 1,000.00 | $ 990.90 | $ 7.33 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 988.70 | $ 9.79 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Class C | | | |
Actual | $ 1,000.00 | $ 988.80 | $ 9.79 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 993.80 | $ 4.66 |
HypotheticalA | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.22% |
Class T | 1.48% |
Class B | 1.98% |
Class C | 1.98% |
Institutional Class | .94% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Simon Property Group, Inc. | 7.3 | 8.4 |
ProLogis Trust | 6.5 | 7.4 |
Public Storage | 6.4 | 6.6 |
General Growth Properties, Inc. | 4.9 | 5.7 |
Vornado Realty Trust | 4.9 | 4.3 |
SL Green Realty Corp. | 4.3 | 3.0 |
Highwoods Properties, Inc. (SBI) | 4.3 | 3.6 |
Boston Properties, Inc. | 3.4 | 3.9 |
Home Properties, Inc. | 3.4 | 3.8 |
Apartment Investment & Management Co.
Class A | 3.1 | 3.4 |
| 48.5 | |
Top Five REIT Sectors as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
REITs - Apartments | 19.0 | 14.9 |
REITs - Office Buildings | 18.9 | 17.8 |
REITs - Industrial Buildings | 15.2 | 15.5 |
REITs - Malls | 12.4 | 15.1 |
REITs - Shopping Centers | 11.9 | 12.2 |
Asset Allocation (% of fund's net assets) |
As of July 31, 2008 * | As of January 31, 2008 ** |
 | Stocks 97.2% | | | Stocks 97.9% | |
 | Short-Term
Investments and
Net Other Assets 2.8% | | | Short-Term
Investments and
Net Other Assets 2.1% | |
* Foreign investments | 2.8% | | ** Foreign investments | 3.5% | |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.2% |
| Shares | | Value |
HEALTH CARE PROVIDERS & SERVICES - 1.0% |
Health Care Facilities - 1.0% |
Brookdale Senior Living, Inc. | 8,200 | | $ 125,132 |
Emeritus Corp. (a)(d) | 168,191 | | 2,834,018 |
TOTAL HEALTH CARE FACILITIES | | 2,959,150 |
HOTELS, RESTAURANTS & LEISURE - 2.6% |
Hotels, Resorts & Cruise Lines - 2.6% |
Gaylord Entertainment Co. (a)(d) | 113,400 | | 3,406,536 |
Starwood Hotels & Resorts Worldwide, Inc. | 134,100 | | 4,598,289 |
TOTAL HOTELS, RESORTS & CRUISE LINES | | 8,004,825 |
HOUSEHOLD DURABLES - 0.5% |
Homebuilding - 0.5% |
Centex Corp. | 31,100 | | 456,548 |
Pulte Homes, Inc. | 80,700 | | 985,347 |
TOTAL HOMEBUILDING | | 1,441,895 |
REAL ESTATE INVESTMENT TRUSTS - 89.6% |
REITs - Apartments - 19.0% |
American Campus Communities, Inc. | 251,400 | | 7,360,992 |
Apartment Investment & Management Co. Class A (d) | 281,761 | | 9,627,773 |
AvalonBay Communities, Inc. | 45,400 | | 4,526,834 |
BRE Properties, Inc. (d) | 100,100 | | 4,892,888 |
Camden Property Trust (SBI) | 105,000 | | 5,163,900 |
Equity Residential (SBI) | 183,300 | | 7,913,061 |
Essex Property Trust, Inc. | 17,600 | | 2,135,760 |
Home Properties, Inc. (d) | 188,100 | | 10,349,262 |
Pennsylvania Real Estate Investment Trust (SBI) | 166,800 | | 3,072,456 |
UDR, Inc. (d) | 121,100 | | 3,092,894 |
TOTAL REITS - APARTMENTS | | 58,135,820 |
REITs - Factory Outlets - 0.9% |
Tanger Factory Outlet Centers, Inc. (d) | 74,300 | | 2,774,362 |
REITs - Health Care Facilities - 6.9% |
HCP, Inc. (d) | 189,900 | | 6,849,693 |
Healthcare Realty Trust, Inc. | 279,509 | | 8,108,556 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Health Care Facilities - continued |
Medical Properties Trust, Inc. (d) | 49,000 | | $ 543,410 |
Ventas, Inc. | 126,300 | | 5,665,818 |
TOTAL REITS - HEALTH CARE FACILITIES | | 21,167,477 |
REITs - Hotels - 2.8% |
Host Hotels & Resorts, Inc. (d) | 177,794 | | 2,330,879 |
LaSalle Hotel Properties (SBI) (d) | 269,000 | | 6,108,990 |
TOTAL REITS - HOTELS | | 8,439,869 |
REITs - Industrial Buildings - 15.2% |
DCT Industrial Trust, Inc. | 467,849 | | 3,962,681 |
Liberty Property Trust (SBI) | 15,700 | | 571,480 |
ProLogis Trust | 406,523 | | 19,870,844 |
Public Storage | 238,718 | | 19,548,617 |
U-Store-It Trust | 229,800 | | 2,677,170 |
TOTAL REITS - INDUSTRIAL BUILDINGS | | 46,630,792 |
REITs - Malls - 12.4% |
General Growth Properties, Inc. | 550,199 | | 15,080,955 |
Simon Property Group, Inc. | 240,650 | | 22,291,409 |
Taubman Centers, Inc. (d) | 12,100 | | 580,800 |
TOTAL REITS - MALLS | | 37,953,164 |
REITs - Management/Investment - 1.6% |
Digital Realty Trust, Inc. (d) | 117,100 | | 5,024,761 |
REITs - Office Buildings - 18.9% |
Alexandria Real Estate Equities, Inc. | 78,400 | | 8,095,584 |
Boston Properties, Inc. (d) | 108,300 | | 10,417,377 |
Corporate Office Properties Trust (SBI) | 200,200 | | 7,783,776 |
Highwoods Properties, Inc. (SBI) | 356,000 | | 12,994,000 |
Kilroy Realty Corp. | 107,000 | | 4,901,670 |
Parkway Properties, Inc. | 18,600 | | 656,394 |
SL Green Realty Corp. (d) | 157,000 | | 13,084,380 |
TOTAL REITS - OFFICE BUILDINGS | | 57,933,181 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Shopping Centers - 11.9% |
Cedar Shopping Centers, Inc. | 155,900 | | $ 1,989,284 |
Developers Diversified Realty Corp. (d) | 280,150 | | 8,953,594 |
Inland Real Estate Corp. | 398,506 | | 5,957,665 |
Kimco Realty Corp. | 123,390 | | 4,354,433 |
Vornado Realty Trust (d) | 157,750 | | 14,997,293 |
TOTAL REITS - SHOPPING CENTERS | | 36,252,269 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 274,311,695 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.5% |
Real Estate Management & Development - 3.5% |
Brookfield Properties Corp. | 400,700 | | 7,565,217 |
CB Richard Ellis Group, Inc. Class A (a)(d) | 116,200 | | 1,632,610 |
Jones Lang LaSalle, Inc. | 11,100 | | 528,804 |
Meruelo Maddux Properties, Inc. (a) | 60,900 | | 117,537 |
Norwegian Property ASA (d) | 230,350 | | 939,315 |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | | 10,783,483 |
TOTAL COMMON STOCKS (Cost $293,622,995) | 297,501,048 |
Money Market Funds - 24.4% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 6,200,441 | | 6,200,441 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 68,354,500 | | 68,354,500 |
TOTAL MONEY MARKET FUNDS (Cost $74,554,941) | 74,554,941 |
TOTAL INVESTMENT PORTFOLIO - 121.6% (Cost $368,177,936) | 372,055,989 |
NET OTHER ASSETS - (21.6)% | (66,033,382) |
NET ASSETS - 100% | $ 306,022,607 |
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 | $ 232,883 |
Fidelity Securities Lending Cash Central Fund | 188,526 |
Total | $ 421,409 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $3,400,782 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $66,512,284) - See accompanying schedule: Unaffiliated issuers (cost $293,622,995) | $ 297,501,048 | |
Fidelity Central Funds (cost $74,554,941) | 74,554,941 | |
Total Investments (cost $368,177,936) | | $ 372,055,989 |
Foreign currency held at value (cost $26) | | 26 |
Receivable for investments sold | | 4,239,265 |
Receivable for fund shares sold | | 383,622 |
Dividends receivable | | 949,514 |
Distributions receivable from Fidelity Central Funds | | 31,189 |
Prepaid expenses | | 326 |
Other receivables | | 4,724 |
Total assets | | 377,664,655 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,923,514 | |
Payable for fund shares redeemed | 1,002,579 | |
Accrued management fee | 140,510 | |
Distribution fees payable | 89,590 | |
Other affiliated payables | 90,307 | |
Other payables and accrued expenses | 41,048 | |
Collateral on securities loaned, at value | 68,354,500 | |
Total liabilities | | 71,642,048 |
| | |
Net Assets | | $ 306,022,607 |
Net Assets consist of: | | |
Paid in capital | | $ 307,719,515 |
Undistributed net investment income | | 776,465 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (6,351,426) |
Net unrealized appreciation (depreciation) on investments | | 3,878,053 |
Net Assets | | $ 306,022,607 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($109,441,816 ÷ 6,676,943 shares) | | $ 16.39 |
| | |
Maximum offering price per share (100/94.25 of $16.39) | | $ 17.39 |
Class T:
Net Asset Value and redemption price per share ($81,937,948 ÷ 4,996,207 shares) | | $ 16.40 |
| | |
Maximum offering price per share (100/96.50 of $16.40) | | $ 16.99 |
Class B:
Net Asset Value and offering price per share ($16,878,814 ÷ 1,037,782 shares)A | | $ 16.26 |
| | |
Class C:
Net Asset Value and offering price per share ($24,984,179 ÷ 1,536,493 shares)A | | $ 16.26 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($72,779,850 ÷ 4,419,804 shares) | | $ 16.47 |
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, 2008 |
Investment Income | | |
Dividends | | $ 8,135,318 |
Interest | | 1,243 |
Income from Fidelity Central Funds | | 421,409 |
Total income | | 8,557,970 |
| | |
Expenses | | |
Management fee | $ 1,628,756 | |
Transfer agent fees | 874,565 | |
Distribution fees | 1,177,008 | |
Accounting and security lending fees | 123,019 | |
Custodian fees and expenses | 26,940 | |
Independent trustees' compensation | 1,247 | |
Registration fees | 72,141 | |
Audit | 47,679 | |
Legal | 1,460 | |
Miscellaneous | 54,264 | |
Total expenses before reductions | 4,007,079 | |
Expense reductions | (6,683) | 4,000,396 |
Net investment income (loss) | | 4,557,574 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (4,633,803) | |
Foreign currency transactions | (4,915) | |
Total net realized gain (loss) | | (4,638,718) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (14,457,116) | |
Assets and liabilities in foreign currencies | 52 | |
Total change in net unrealized appreciation (depreciation) | | (14,457,064) |
Net gain (loss) | | (19,095,782) |
Net increase (decrease) in net assets resulting from operations | | $ (14,538,208) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 4,557,574 | $ 1,890,445 |
Net realized gain (loss) | (4,638,718) | 24,132,442 |
Change in net unrealized appreciation (depreciation) | (14,457,064) | (38,960,833) |
Net increase (decrease) in net assets resulting
from operations | (14,538,208) | (12,937,946) |
Distributions to shareholders from net investment income | (3,429,631) | (1,881,167) |
Distributions to shareholders from net realized gain | (15,771,090) | (20,008,529) |
Total distributions | (19,200,721) | (21,889,696) |
Share transactions - net increase (decrease) | 47,082,496 | 80,064,090 |
Total increase (decrease) in net assets | 13,343,567 | 45,236,448 |
| | |
Net Assets | | |
Beginning of period | 292,679,040 | 247,442,592 |
End of period (including undistributed net investment income of $776,465 and undistributed net investment income of $282,432, respectively) | $ 306,022,607 | $ 292,679,040 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 | $ 11.33 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .30 | .18 | .29 | .31 | .27 |
Net realized and unrealized gain (loss) | (1.24) | (.17) | 2.85 | 5.52 | 2.03 |
Total from investment operations | (.94) | .01 | 3.14 | 5.83 | 2.30 |
Distributions from net investment income | (.26) | (.18) | (.23) | (.29) | (.30) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.34) G | (1.68) | (1.03) | (.82) | (.41) |
Net asset value, end of period | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 |
Total Return A, B | (5.66)% | (.65)% | 18.32% | 45.48% | 20.59% |
Ratios to Average Net Assets D, F | | | | |
Expenses before reductions | 1.22% | 1.25% | 1.29% | 1.31% | 1.54% |
Expenses net of fee waivers, if any | 1.22% | 1.25% | 1.25% | 1.28% | 1.54% |
Expenses net of all reductions | 1.21% | 1.25% | 1.24% | 1.25% | 1.52% |
Net investment income (loss) | 1.71% | .81% | 1.59% | 1.98% | 2.10% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 109,442 | $ 117,831 | $ 85,000 | $ 53,097 | $ 22,273 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.341 per share is comprised of distributions from net investment income of $.256 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 | $ 11.32 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .26 | .12 | .24 | .26 | .23 |
Net realized and unrealized gain (loss) | (1.24) | (.16) | 2.84 | 5.53 | 2.02 |
Total from investment operations | (.98) | (.04) | 3.08 | 5.79 | 2.25 |
Distributions from net investment income | (.17) | (.13) | (.20) | (.24) | (.25) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.26) G | (1.63) | (1.00) | (.77) | (.36) |
Net asset value, end of period | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 |
Total Return A, B | (5.88)% | (.89)% | 17.98% | 45.12% | 20.12% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.47% | 1.50% | 1.55% | 1.61% | 1.86% |
Expenses net of fee waivers, if any | 1.47% | 1.50% | 1.50% | 1.57% | 1.85% |
Expenses net of all reductions | 1.47% | 1.49% | 1.49% | 1.54% | 1.83% |
Net investment income (loss) | 1.45% | .57% | 1.34% | 1.70% | 1.80% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 81,938 | $ 100,621 | $ 91,224 | $ 66,303 | $ 26,037 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.258 per share is comprised of distributions from net investment income of $.173 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 | $ 11.29 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .17 | .01 | .15 | .18 | .16 |
Net realized and unrealized gain (loss) | (1.23) | (.16) | 2.83 | 5.50 | 2.04 |
Total from investment operations | (1.06) | (.15) | 2.98 | 5.68 | 2.20 |
Distributions from net investment income | (.10) | (.05) | (.15) | (.17) | (.20) |
Distributions from net realized gain | (1.09) | (1.48) | (.80) | (.53) | (.11) |
Total distributions | (1.19) G | (1.53) | (.95) | (.70) | (.31) |
Net asset value, end of period | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 |
Total Return A, B | (6.37)% | (1.45)% | 17.42% | 44.31% | 19.67% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 2.02% | 2.05% | 2.10% | 2.33% |
Expenses net of fee waivers, if any | 1.96% | 2.00% | 2.00% | 2.07% | 2.33% |
Expenses net of all reductions | 1.96% | 2.00% | 1.98% | 2.03% | 2.31% |
Net investment income (loss) | .96% | .07% | .84% | 1.20% | 1.31% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 16,879 | $ 25,114 | $ 27,397 | $ 26,349 | $ 12,910 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.187 per share is comprised of distributions from net investment income of $.102 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 | $ 11.29 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .17 | .01 | .15 | .19 | .17 |
Net realized and unrealized gain (loss) | (1.23) | (.16) | 2.84 | 5.50 | 2.03 |
Total from investment operations | (1.06) | (.15) | 2.99 | 5.69 | 2.20 |
Distributions from net investment income | (.11) | (.05) | (.15) | (.17) | (.20) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.19) G | (1.55) | (.95) | (.70) | (.31) |
Net asset value, end of period | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 |
Total Return A, B | (6.35)% | (1.45)% | 17.46% | 44.38% | 19.67% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 2.01% | 2.05% | 2.09% | 2.29% |
Expenses net of fee waivers, if any | 1.96% | 2.00% | 2.00% | 2.05% | 2.29% |
Expenses net of all reductions | 1.96% | 2.00% | 1.98% | 2.02% | 2.27% |
Net investment income (loss) | .96% | .06% | .84% | 1.22% | 1.35% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 24,984 | $ 36,854 | $ 36,669 | $ 29,410 | $ 13,671 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.191 per share is comprised of distributions from net investment income of $.106 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 | $ 11.35 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .34 | .24 | .35 | .36 | .32 |
Net realized and unrealized gain (loss) | (1.23) | (.17) | 2.85 | 5.56 | 2.04 |
Total from investment operations | (.89) | .07 | 3.20 | 5.92 | 2.36 |
Distributions from net investment income | (.35) | (.24) | (.26) | (.34) | (.32) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.44) F | (1.74) | (1.06) | (.87) | (.43) |
Net asset value, end of period | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 |
Total Return A | (5.39)% | (.37)% | 18.61% | 46.05% | 21.11% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .95% | .98% | .94% | .91% | 1.12% |
Expenses net of fee waivers, if any | .95% | .98% | .94% | .91% | 1.12% |
Expenses net of all reductions | .95% | .97% | .92% | .88% | 1.10% |
Net investment income (loss) | 1.97% | 1.09% | 1.90% | 2.35% | 2.53% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 72,780 | $ 12,259 | $ 7,152 | $ 4,162 | $ 2,478 |
Portfolio turnover rate D | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.437 per share is comprised of distributions from net investment income of $.352 and distributions from net realized gain of $1.085 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, 2008
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 unaudited 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 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. Actual results could differ from those estimates. 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
4:00 pm Eastern time and 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 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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, passive foreign investment companies (PFIC) 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 | $ 34,899,718 |
Unrealized depreciation | (34,579,320) |
Net unrealized appreciation (depreciation) | $ 320,398 |
Undistributed ordinary income | 776,465 |
Undistributed long-term capital gain | 601,158 |
| |
Cost for federal income tax purposes | $ 371,735,591 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 3,429,631 | $ 6,191,707 |
Long-term Capital Gains | 15,771,090 | 15,697,989 |
Total | $ 19,200,721 | $ 21,889,696 |
New Accounting Pronouncement. 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 results in expanded disclosures about fair value measurements.
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
Annual Report
4. Operating Policies - continued
Repurchase Agreements - continued
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 $283,835,526 and $248,034,854, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | .00% | .25% | $ 266,753 | $ 31,991 |
Class T | .25% | .25% | 431,286 | - |
Class B | .75% | .25% | 195,547 | 146,814 |
Class C | .75% | .25% | 283,422 | 53,191 |
| | | $ 1,177,008 | $ 231,996 |
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 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
by FDC |
Class A | $ 57,022 |
Class T | 12,428 |
Class B* | 54,578 |
Class C* | 12,730 |
| $ 136,758 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 319,374 | .30 |
Class T | 266,534 | .31 |
Class B | 58,734 | .30 |
Class C | 85,080 | .30 |
Institutional Class | 144,843 | .28 |
| $ 874,565 | |
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.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $4,712 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 $724 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 $188,526.
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 $1,900 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 $1,415.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 3,081 |
Institutional Class | 287 |
| $ 3,368 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $8,019, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Years ended July 31, |
| 2008 | 2007 |
From net investment income | | |
Class A | $ 1,522,432 | $ 910,999 |
Class T | 826,361 | 671,347 |
Class B | 112,289 | 73,434 |
Class C | 169,086 | 121,385 |
Institutional Class | 799,463 | 104,002 |
Total | $ 3,429,631 | $ 1,881,167 |
From net realized gain | | |
Class A | $ 6,384,487 | $ 7,016,390 |
Class T | 5,512,568 | 7,245,930 |
Class B | 1,322,405 | 2,110,416 |
Class C | 1,826,579 | 3,021,230 |
Institutional Class | 725,051 | 614,563 |
Total | $ 15,771,090 | $ 20,008,529 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Years ended July 31, | Years ended July 31, |
| 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,084,736 | 4,162,272 | $ 53,959,357 | $ 91,668,160 |
Reinvestment of distributions | 414,796 | 360,748 | 7,549,476 | 7,512,896 |
Shares redeemed | (3,133,970) | (2,390,088) | (55,521,726) | (51,262,823) |
Net increase (decrease) | 365,562 | 2,132,932 | $ 5,987,107 | $ 47,918,233 |
Class T | | | | |
Shares sold | 1,683,774 | 3,133,447 | $ 29,339,323 | $ 69,066,846 |
Reinvestment of distributions | 335,605 | 366,028 | 6,128,515 | 7,615,273 |
Shares redeemed | (2,420,642) | (2,592,591) | (42,866,254) | (55,812,105) |
Net increase (decrease) | (401,263) | 906,884 | $ (7,398,416) | $ 20,870,014 |
Class B | | | | |
Shares sold | 196,548 | 522,263 | $ 3,413,355 | $ 11,374,401 |
Reinvestment of distributions | 70,595 | 95,389 | 1,284,671 | 1,975,227 |
Shares redeemed | (586,018) | (618,201) | (10,346,901) | (13,210,441) |
Net increase (decrease) | (318,875) | (549) | $ (5,648,875) | $ 139,187 |
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, | Years ended July 31, |
| 2008 | 2007 | 2008 | 2007 |
Class C | | | | |
Shares sold | 442,357 | 1,257,900 | $ 7,808,076 | $ 27,435,286 |
Reinvestment of distributions | 97,814 | 135,205 | 1,779,201 | 2,802,482 |
Shares redeemed | (994,473) | (1,217,050) | (17,624,265) | (25,938,064) |
Net increase (decrease) | (454,302) | 176,055 | $ (8,036,988) | $ 4,299,704 |
Institutional Class | | | | |
Shares sold | 6,261,402 | 643,980 | $ 103,513,317 | $ 14,342,713 |
Reinvestment of distributions | 48,936 | 30,501 | 883,388 | 638,492 |
Shares redeemed | (2,542,604) | (371,732) | (42,217,037) | (8,144,253) |
Net increase (decrease) | 3,767,734 | 302,749 | $ 62,179,668 | $ 6,836,952 |
Annual Report
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, 2008, 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 five years in the period then ended. 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, 2008, 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, 2008, 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 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 22, 2008
Annual Report
The Trustees, Member 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 (78) |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-
present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 (60) |
| 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 a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and 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 AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). 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 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) |
| Year of Election or Appointment: 2008 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). |
Cornelia M. Small (64) |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), 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. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
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 (64) |
| 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. |
Kenneth B. Robins (38) |
| Year of Election or Appointment: 2008 President and Treasurer of Advisor Real Estate. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-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). |
Brian B. Hogan (43) |
| Year of Election or Appointment: 2007 Vice President of Advisor Real Estate. Mr. Hogan also serves as Vice President of Sector Funds (2007-present) and Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (40) |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Advisor Real Estate. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) |
| Year of Election or Appointment: 2008 Assistant Secretary of Advisor Real Estate. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of Advisor Real Estate. Ms. Laurent also serves as AML Officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) |
| Year of Election or Appointment: 2008 Chief Financial Officer of Advisor Real Estate. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering Officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms.
Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Real Estate. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-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). |
Bryan A. Mehrmann (47) |
| 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). |
Adrien E. Deberghes (40) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Advisor Real Estate. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-
present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) |
| 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 Fidelity Pricing and Cash Management Services (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 (54) |
| Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Real Estate. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) |
| Year of Election or Appointment: 2007 Assistant Treasurer of Advisor Real Estate. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) |
| 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
The Board of Trustees of Fidelity 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 | 09/08/08 | 09/05/08 | $0.071 | $0.03 |
Class T | 09/08/08 | 09/05/08 | $0.061 | $0.03 |
Class B | 09/08/08 | 09/05/08 | $0.041 | $0.03 |
Class C | 09/08/08 | 09/05/08 | $0.040 | $0.03 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $992,339, or, if subsequently determined to be different, the net capital gain of such year.
A total of 0.19% 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.
A percentage of the dividends distributed during the fiscal year for the fund qualifies for the dividends-received deduction for corporate shareholders:
| Class A | Class T | Class B | Class C |
March 2008 | 7% | 11% | 60% | 60% |
June 2008 | 7% | 9% | 18% | 16% |
A percentage of the dividends distributed during the fiscal year for the fund may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Class A | Class T | Class B | Class C |
September 2007 | 1% | 14% | -% | -% |
December 2007 (Ex-Date 12/21/07) | 5% | 7% | 14% | 13% |
December 2007 (Ex-Date 12/28/07) | 6% | 6% | 6% | 6% |
March 2008 | 10% | 15% | 80% | 80% |
June 2008 | 10% | 13% | 25% | 22% |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
A special meeting of the fund's shareholders was held on April 16, 2008. 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 |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 1,843,094,379.23 | 96.319 |
Withheld | 70,445,651.74 | 3.681 |
TOTAL | 1,913,540,030.97 | 100.000 |
Dennis J. Dirks |
Affirmative | 1,844,705,271.13 | 96.403 |
Withheld | 68,834,759.84 | 3.597 |
TOTAL | 1,913,540,030.97 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 1,841,350,074.57 | 96.227 |
Withheld | 72,189,956.40 | 3.773 |
TOTAL | 1,913,540,030.97 | 100.000 |
Alan J. Lacy |
Affirmative | 1,843,985,654.20 | 96.365 |
Withheld | 69,554,376.77 | 3.635 |
TOTAL | 1,913,540,030.97 | 100.000 |
Ned C. Lautenbach |
Affirmative | 1,844,982,064.29 | 96.417 |
Withheld | 68,557,966.68 | 3.583 |
TOTAL | 1,913,540,030.97 | 100.000 |
Joseph Mauriello |
Affirmative | 1,843,252,653.53 | 96.327 |
Withheld | 70,287,377.44 | 3.673 |
TOTAL | 1,913,540,030.97 | 100.000 |
Cornelia M. Small |
Affirmative | 1,845,097,505.44 | 96.423 |
Withheld | 68,442,525.53 | 3.577 |
TOTAL | 1,913,540,030.97 | 100.000 |
| # of
Votes | % of
Votes |
William S. Stavropoulos |
Affirmative | 1,840,012,418.12 | 96.158 |
Withheld | 73,527,612.85 | 3.842 |
TOTAL | 1,913,540,030.97 | 100.000 |
David M. Thomas |
Affirmative | 1,845,597,797.69 | 96.449 |
Withheld | 67,942,233.28 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
Michael E. Wiley |
Affirmative | 1,845,590,500.21 | 96.449 |
Withheld | 67,949,530.76 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust of
Fidelity Advisor Series VII to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 1,059,631,083.78 | 55.375 |
Against | 187,649,461.13 | 9.807 |
Abstain | 74,155,654.32 | 3.875 |
Broker
Non-Votes | 592,103,831.74 | 30.943 |
TOTAL | 1,913,540,030.97 | 100.000 |
A Denotes trust-wide proposal and voting results.
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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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
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 fund's investment personnel 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 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 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 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 also 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 further considered that Fidelity voluntarily pays for market data out of its own resources.
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 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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. 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. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, 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
Advisor Real Estate Fund
The Board stated that the investment performance of the fund was lower than its benchmark for the one- and five-year periods, although the three-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.
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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month 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 2007.
Annual Report
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 class ranked below its competitive median for 2007.
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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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. 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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
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
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
ARE-UANN-0908
1.789707.105
(Fidelity Investment logo)(registered trademark)
Fidelity® Advisor
Real Estate
Fund - Institutional Class
Annual Report
July 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | 4 | Ned Johnson's message to shareholders. |
Performance | 5 | How the fund has done over time. |
Management's Discussion | 6 | The manager's review of fund performance, strategy and outlook. |
Shareholder Expense Example | 7 | An example of shareholder expenses. |
Investment Changes | 9 | A summary of major shifts in the fund's investments over the past six months. |
Investments | 10 | A complete list of the fund's investments with their market values. |
Financial Statements | 14 | Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights. |
Notes | 23 | Notes to financial statements. |
Report of Independent Registered Public Accounting Firm | 33 | |
Trustees and Officers | 34 | |
Distributions | 42 | |
Proxy Voting Results | 43 | |
Board Approval of Investment Advisory Contracts and Management Fees | 44 | |
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 LLC 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
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Domestic and international securities markets have struggled thus far in 2008. High-grade fixed-income investments produced modestly positive results, but many stock benchmarks suffered double-digit losses through the first half of this year. Financial markets are always unpredictable, but 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
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, if any) 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, 2008 | Past 1
year | Past 5
years | Life of
fund A |
Institutional Class | -5.39% | 14.61% | 15.03% |
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®) 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
Grim news about the U.S. economy forced most domestic equity benchmarks into negative territory for the 12 months ending July 31, 2008. Oil prices north of $140 per barrel, gasoline prices in excess of $4 per gallon and soaring food costs drove inflation and consumer prices higher. In response, consumer discretionary spending trended lower as Main Street tightened its purse strings. Wall Street, meanwhile, struggled under the weight of massive write-downs in the financials sector, an ongoing credit crisis and bleak housing data. In an effort to staunch the bleeding, the Federal Reserve Board cut interest rates on seven occasions during the past year. Nevertheless, investors fled the equity markets, and both the Dow Jones Industrial AverageSM and the Standard & Poor's 500SM Index fell to a threshold that many believe marks the official start of a "bear market." For the 12 months overall, the Dow slid 11.71%, the S&P 500® dropped 11.09% and the technology-heavy NASDAQ Composite® Index dipped 7.98%. Real estate investment trusts (REITs) also declined during the period, with the Dow Jones Wilshire Real Estate Securities IndexSM returning -5.54%.
For the year ending July 31, 2008, the fund's Class A, Class T, Class B and Class C shares fell 5.66%, 5.88%, 6.37% and 6.35%, respectively (excluding sales charges), slightly behind the Dow Jones Wilshire Real Estate Securities Index. The fund outperformed the broad stock market, as measured by the S&P 500, in part because REITs already saw big declines in 2007 and investors' growing economic worries have depressed the S&P 500. Versus the Dow Jones Wilshire index, the fund's biggest individual detractor during the year was General Growth Properties, which owns, develops and manages shopping malls. Hotel companies such as LaSalle Hotel Properties and out-of-index-stock Starwood Hotels & Resorts Worldwide lagged as well, hurt by worries about the slowing economy. On the positive side, Home Properties, an apartment REIT focused on the northeastern United States, benefited from increased demand for rental housing. Another plus was self-storage company Public Storage, whose shares rose along with its earnings estimates. Further contributing was Highwoods Properties, a suburban office and industrial REIT.
For the year ending July 31, 2008, the fund's Institutional Class shares fell 5.39%, modestly beating the Dow Jones Wilshire Real Estate Securities Index. The fund outperformed the broad stock market, as measured by the S&P 500, in part because REITs already saw big declines in 2007 and investors' growing economic worries have depressed the S&P 500. Versus the Dow Jones Wilshire index, the fund's biggest individual detractor during the year was General Growth Properties, which owns, develops and manages shopping malls. Hotel companies such as LaSalle Hotel Properties and out-of-index-stock Starwood Hotels & Resorts Worldwide lagged as well, hurt by worries about the slowing economy. On the positive side, Home Properties, an apartment REIT focused on the northeastern United States, benefited from increased demand for rental housing. Another plus was self-storage company Public Storage, whose shares rose along with its earnings estimates. Further contributing was Highwoods Properties, a suburban office and industrial REIT.
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.
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, 2008 to July 31, 2008).
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
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
Account Value
February 1, 2008 | Ending
Account Value
July 31, 2008 | Expenses Paid
During Period*
February 1, 2008 to July 31, 2008 |
Class A | | | |
Actual | $ 1,000.00 | $ 992.00 | $ 6.04 |
HypotheticalA | $ 1,000.00 | $ 1,018.80 | $ 6.12 |
Class T | | | |
Actual | $ 1,000.00 | $ 990.90 | $ 7.33 |
HypotheticalA | $ 1,000.00 | $ 1,017.50 | $ 7.42 |
Class B | | | |
Actual | $ 1,000.00 | $ 988.70 | $ 9.79 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Class C | | | |
Actual | $ 1,000.00 | $ 988.80 | $ 9.79 |
HypotheticalA | $ 1,000.00 | $ 1,015.02 | $ 9.92 |
Institutional Class | | | |
Actual | $ 1,000.00 | $ 993.80 | $ 4.66 |
HypotheticalA | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Class A | 1.22% |
Class T | 1.48% |
Class B | 1.98% |
Class C | 1.98% |
Institutional Class | .94% |
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Simon Property Group, Inc. | 7.3 | 8.4 |
ProLogis Trust | 6.5 | 7.4 |
Public Storage | 6.4 | 6.6 |
General Growth Properties, Inc. | 4.9 | 5.7 |
Vornado Realty Trust | 4.9 | 4.3 |
SL Green Realty Corp. | 4.3 | 3.0 |
Highwoods Properties, Inc. (SBI) | 4.3 | 3.6 |
Boston Properties, Inc. | 3.4 | 3.9 |
Home Properties, Inc. | 3.4 | 3.8 |
Apartment Investment & Management Co.
Class A | 3.1 | 3.4 |
| 48.5 | |
Top Five REIT Sectors as of July 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
REITs - Apartments | 19.0 | 14.9 |
REITs - Office Buildings | 18.9 | 17.8 |
REITs - Industrial Buildings | 15.2 | 15.5 |
REITs - Malls | 12.4 | 15.1 |
REITs - Shopping Centers | 11.9 | 12.2 |
Asset Allocation (% of fund's net assets) |
As of July 31, 2008 * | As of January 31, 2008 ** |
| Stocks 97.2% | | | Stocks 97.9% | |
| Short-Term
Investments and
Net Other Assets 2.8% | | | Short-Term
Investments and
Net Other Assets 2.1% | |
* Foreign investments | 2.8% | | ** Foreign investments | 3.5% | |
Annual Report
Investments July 31, 2008
Showing Percentage of Net Assets
Common Stocks - 97.2% |
| Shares | | Value |
HEALTH CARE PROVIDERS & SERVICES - 1.0% |
Health Care Facilities - 1.0% |
Brookdale Senior Living, Inc. | 8,200 | | $ 125,132 |
Emeritus Corp. (a)(d) | 168,191 | | 2,834,018 |
TOTAL HEALTH CARE FACILITIES | | 2,959,150 |
HOTELS, RESTAURANTS & LEISURE - 2.6% |
Hotels, Resorts & Cruise Lines - 2.6% |
Gaylord Entertainment Co. (a)(d) | 113,400 | | 3,406,536 |
Starwood Hotels & Resorts Worldwide, Inc. | 134,100 | | 4,598,289 |
TOTAL HOTELS, RESORTS & CRUISE LINES | | 8,004,825 |
HOUSEHOLD DURABLES - 0.5% |
Homebuilding - 0.5% |
Centex Corp. | 31,100 | | 456,548 |
Pulte Homes, Inc. | 80,700 | | 985,347 |
TOTAL HOMEBUILDING | | 1,441,895 |
REAL ESTATE INVESTMENT TRUSTS - 89.6% |
REITs - Apartments - 19.0% |
American Campus Communities, Inc. | 251,400 | | 7,360,992 |
Apartment Investment & Management Co. Class A (d) | 281,761 | | 9,627,773 |
AvalonBay Communities, Inc. | 45,400 | | 4,526,834 |
BRE Properties, Inc. (d) | 100,100 | | 4,892,888 |
Camden Property Trust (SBI) | 105,000 | | 5,163,900 |
Equity Residential (SBI) | 183,300 | | 7,913,061 |
Essex Property Trust, Inc. | 17,600 | | 2,135,760 |
Home Properties, Inc. (d) | 188,100 | | 10,349,262 |
Pennsylvania Real Estate Investment Trust (SBI) | 166,800 | | 3,072,456 |
UDR, Inc. (d) | 121,100 | | 3,092,894 |
TOTAL REITS - APARTMENTS | | 58,135,820 |
REITs - Factory Outlets - 0.9% |
Tanger Factory Outlet Centers, Inc. (d) | 74,300 | | 2,774,362 |
REITs - Health Care Facilities - 6.9% |
HCP, Inc. (d) | 189,900 | | 6,849,693 |
Healthcare Realty Trust, Inc. | 279,509 | | 8,108,556 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Health Care Facilities - continued |
Medical Properties Trust, Inc. (d) | 49,000 | | $ 543,410 |
Ventas, Inc. | 126,300 | | 5,665,818 |
TOTAL REITS - HEALTH CARE FACILITIES | | 21,167,477 |
REITs - Hotels - 2.8% |
Host Hotels & Resorts, Inc. (d) | 177,794 | | 2,330,879 |
LaSalle Hotel Properties (SBI) (d) | 269,000 | | 6,108,990 |
TOTAL REITS - HOTELS | | 8,439,869 |
REITs - Industrial Buildings - 15.2% |
DCT Industrial Trust, Inc. | 467,849 | | 3,962,681 |
Liberty Property Trust (SBI) | 15,700 | | 571,480 |
ProLogis Trust | 406,523 | | 19,870,844 |
Public Storage | 238,718 | | 19,548,617 |
U-Store-It Trust | 229,800 | | 2,677,170 |
TOTAL REITS - INDUSTRIAL BUILDINGS | | 46,630,792 |
REITs - Malls - 12.4% |
General Growth Properties, Inc. | 550,199 | | 15,080,955 |
Simon Property Group, Inc. | 240,650 | | 22,291,409 |
Taubman Centers, Inc. (d) | 12,100 | | 580,800 |
TOTAL REITS - MALLS | | 37,953,164 |
REITs - Management/Investment - 1.6% |
Digital Realty Trust, Inc. (d) | 117,100 | | 5,024,761 |
REITs - Office Buildings - 18.9% |
Alexandria Real Estate Equities, Inc. | 78,400 | | 8,095,584 |
Boston Properties, Inc. (d) | 108,300 | | 10,417,377 |
Corporate Office Properties Trust (SBI) | 200,200 | | 7,783,776 |
Highwoods Properties, Inc. (SBI) | 356,000 | | 12,994,000 |
Kilroy Realty Corp. | 107,000 | | 4,901,670 |
Parkway Properties, Inc. | 18,600 | | 656,394 |
SL Green Realty Corp. (d) | 157,000 | | 13,084,380 |
TOTAL REITS - OFFICE BUILDINGS | | 57,933,181 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Shopping Centers - 11.9% |
Cedar Shopping Centers, Inc. | 155,900 | | $ 1,989,284 |
Developers Diversified Realty Corp. (d) | 280,150 | | 8,953,594 |
Inland Real Estate Corp. | 398,506 | | 5,957,665 |
Kimco Realty Corp. | 123,390 | | 4,354,433 |
Vornado Realty Trust (d) | 157,750 | | 14,997,293 |
TOTAL REITS - SHOPPING CENTERS | | 36,252,269 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 274,311,695 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.5% |
Real Estate Management & Development - 3.5% |
Brookfield Properties Corp. | 400,700 | | 7,565,217 |
CB Richard Ellis Group, Inc. Class A (a)(d) | 116,200 | | 1,632,610 |
Jones Lang LaSalle, Inc. | 11,100 | | 528,804 |
Meruelo Maddux Properties, Inc. (a) | 60,900 | | 117,537 |
Norwegian Property ASA (d) | 230,350 | | 939,315 |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | | 10,783,483 |
TOTAL COMMON STOCKS (Cost $293,622,995) | 297,501,048 |
Money Market Funds - 24.4% |
| | | |
Fidelity Cash Central Fund, 2.35% (b) | 6,200,441 | | 6,200,441 |
Fidelity Securities Lending Cash Central Fund, 2.37% (b)(c) | 68,354,500 | | 68,354,500 |
TOTAL MONEY MARKET FUNDS (Cost $74,554,941) | 74,554,941 |
TOTAL INVESTMENT PORTFOLIO - 121.6% (Cost $368,177,936) | 372,055,989 |
NET OTHER ASSETS - (21.6)% | (66,033,382) |
NET ASSETS - 100% | $ 306,022,607 |
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 | $ 232,883 |
Fidelity Securities Lending Cash Central Fund | 188,526 |
Total | $ 421,409 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending July 31, 2009 approximately $3,400,782 of losses recognized during the period November 1, 2007 to July 31, 2008. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2008 |
Assets | | |
Investment in securities, at value (including securities loaned of $66,512,284) - See accompanying schedule: Unaffiliated issuers (cost $293,622,995) | $ 297,501,048 | |
Fidelity Central Funds (cost $74,554,941) | 74,554,941 | |
Total Investments (cost $368,177,936) | | $ 372,055,989 |
Foreign currency held at value (cost $26) | | 26 |
Receivable for investments sold | | 4,239,265 |
Receivable for fund shares sold | | 383,622 |
Dividends receivable | | 949,514 |
Distributions receivable from Fidelity Central Funds | | 31,189 |
Prepaid expenses | | 326 |
Other receivables | | 4,724 |
Total assets | | 377,664,655 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,923,514 | |
Payable for fund shares redeemed | 1,002,579 | |
Accrued management fee | 140,510 | |
Distribution fees payable | 89,590 | |
Other affiliated payables | 90,307 | |
Other payables and accrued expenses | 41,048 | |
Collateral on securities loaned, at value | 68,354,500 | |
Total liabilities | | 71,642,048 |
| | |
Net Assets | | $ 306,022,607 |
Net Assets consist of: | | |
Paid in capital | | $ 307,719,515 |
Undistributed net investment income | | 776,465 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (6,351,426) |
Net unrealized appreciation (depreciation) on investments | | 3,878,053 |
Net Assets | | $ 306,022,607 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2008 |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($109,441,816 ÷ 6,676,943 shares) | | $ 16.39 |
| | |
Maximum offering price per share (100/94.25 of $16.39) | | $ 17.39 |
Class T:
Net Asset Value and redemption price per share ($81,937,948 ÷ 4,996,207 shares) | | $ 16.40 |
| | |
Maximum offering price per share (100/96.50 of $16.40) | | $ 16.99 |
Class B:
Net Asset Value and offering price per share ($16,878,814 ÷ 1,037,782 shares)A | | $ 16.26 |
| | |
Class C:
Net Asset Value and offering price per share ($24,984,179 ÷ 1,536,493 shares)A | | $ 16.26 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($72,779,850 ÷ 4,419,804 shares) | | $ 16.47 |
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, 2008 |
Investment Income | | |
Dividends | | $ 8,135,318 |
Interest | | 1,243 |
Income from Fidelity Central Funds | | 421,409 |
Total income | | 8,557,970 |
| | |
Expenses | | |
Management fee | $ 1,628,756 | |
Transfer agent fees | 874,565 | |
Distribution fees | 1,177,008 | |
Accounting and security lending fees | 123,019 | |
Custodian fees and expenses | 26,940 | |
Independent trustees' compensation | 1,247 | |
Registration fees | 72,141 | |
Audit | 47,679 | |
Legal | 1,460 | |
Miscellaneous | 54,264 | |
Total expenses before reductions | 4,007,079 | |
Expense reductions | (6,683) | 4,000,396 |
Net investment income (loss) | | 4,557,574 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (4,633,803) | |
Foreign currency transactions | (4,915) | |
Total net realized gain (loss) | | (4,638,718) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (14,457,116) | |
Assets and liabilities in foreign currencies | 52 | |
Total change in net unrealized appreciation (depreciation) | | (14,457,064) |
Net gain (loss) | | (19,095,782) |
Net increase (decrease) in net assets resulting from operations | | $ (14,538,208) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended
July 31,
2008 | Year ended
July 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 4,557,574 | $ 1,890,445 |
Net realized gain (loss) | (4,638,718) | 24,132,442 |
Change in net unrealized appreciation (depreciation) | (14,457,064) | (38,960,833) |
Net increase (decrease) in net assets resulting
from operations | (14,538,208) | (12,937,946) |
Distributions to shareholders from net investment income | (3,429,631) | (1,881,167) |
Distributions to shareholders from net realized gain | (15,771,090) | (20,008,529) |
Total distributions | (19,200,721) | (21,889,696) |
Share transactions - net increase (decrease) | 47,082,496 | 80,064,090 |
Total increase (decrease) in net assets | 13,343,567 | 45,236,448 |
| | |
Net Assets | | |
Beginning of period | 292,679,040 | 247,442,592 |
End of period (including undistributed net investment income of $776,465 and undistributed net investment income of $282,432, respectively) | $ 306,022,607 | $ 292,679,040 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 | $ 11.33 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .30 | .18 | .29 | .31 | .27 |
Net realized and unrealized gain (loss) | (1.24) | (.17) | 2.85 | 5.52 | 2.03 |
Total from investment operations | (.94) | .01 | 3.14 | 5.83 | 2.30 |
Distributions from net investment income | (.26) | (.18) | (.23) | (.29) | (.30) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.34) G | (1.68) | (1.03) | (.82) | (.41) |
Net asset value, end of period | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 |
Total Return A, B | (5.66)% | (.65)% | 18.32% | 45.48% | 20.59% |
Ratios to Average Net Assets D, F | | | | |
Expenses before reductions | 1.22% | 1.25% | 1.29% | 1.31% | 1.54% |
Expenses net of fee waivers, if any | 1.22% | 1.25% | 1.25% | 1.28% | 1.54% |
Expenses net of all reductions | 1.21% | 1.25% | 1.24% | 1.25% | 1.52% |
Net investment income (loss) | 1.71% | .81% | 1.59% | 1.98% | 2.10% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 109,442 | $ 117,831 | $ 85,000 | $ 53,097 | $ 22,273 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.341 per share is comprised of distributions from net investment income of $.256 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class T
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 | $ 11.32 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .26 | .12 | .24 | .26 | .23 |
Net realized and unrealized gain (loss) | (1.24) | (.16) | 2.84 | 5.53 | 2.02 |
Total from investment operations | (.98) | (.04) | 3.08 | 5.79 | 2.25 |
Distributions from net investment income | (.17) | (.13) | (.20) | (.24) | (.25) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.26) G | (1.63) | (1.00) | (.77) | (.36) |
Net asset value, end of period | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 |
Total Return A, B | (5.88)% | (.89)% | 17.98% | 45.12% | 20.12% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.47% | 1.50% | 1.55% | 1.61% | 1.86% |
Expenses net of fee waivers, if any | 1.47% | 1.50% | 1.50% | 1.57% | 1.85% |
Expenses net of all reductions | 1.47% | 1.49% | 1.49% | 1.54% | 1.83% |
Net investment income (loss) | 1.45% | .57% | 1.34% | 1.70% | 1.80% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 81,938 | $ 100,621 | $ 91,224 | $ 66,303 | $ 26,037 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.258 per share is comprised of distributions from net investment income of $.173 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 | $ 11.29 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .17 | .01 | .15 | .18 | .16 |
Net realized and unrealized gain (loss) | (1.23) | (.16) | 2.83 | 5.50 | 2.04 |
Total from investment operations | (1.06) | (.15) | 2.98 | 5.68 | 2.20 |
Distributions from net investment income | (.10) | (.05) | (.15) | (.17) | (.20) |
Distributions from net realized gain | (1.09) | (1.48) | (.80) | (.53) | (.11) |
Total distributions | (1.19) G | (1.53) | (.95) | (.70) | (.31) |
Net asset value, end of period | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 |
Total Return A, B | (6.37)% | (1.45)% | 17.42% | 44.31% | 19.67% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 2.02% | 2.05% | 2.10% | 2.33% |
Expenses net of fee waivers, if any | 1.96% | 2.00% | 2.00% | 2.07% | 2.33% |
Expenses net of all reductions | 1.96% | 2.00% | 1.98% | 2.03% | 2.31% |
Net investment income (loss) | .96% | .07% | .84% | 1.20% | 1.31% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 16,879 | $ 25,114 | $ 27,397 | $ 26,349 | $ 12,910 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.187 per share is comprised of distributions from net investment income of $.102 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class C
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 | $ 11.29 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .17 | .01 | .15 | .19 | .17 |
Net realized and unrealized gain (loss) | (1.23) | (.16) | 2.84 | 5.50 | 2.03 |
Total from investment operations | (1.06) | (.15) | 2.99 | 5.69 | 2.20 |
Distributions from net investment income | (.11) | (.05) | (.15) | (.17) | (.20) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.19) G | (1.55) | (.95) | (.70) | (.31) |
Net asset value, end of period | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 |
Total Return A, B | (6.35)% | (1.45)% | 17.46% | 44.38% | 19.67% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.96% | 2.01% | 2.05% | 2.09% | 2.29% |
Expenses net of fee waivers, if any | 1.96% | 2.00% | 2.00% | 2.05% | 2.29% |
Expenses net of all reductions | 1.96% | 2.00% | 1.98% | 2.02% | 2.27% |
Net investment income (loss) | .96% | .06% | .84% | 1.22% | 1.35% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 24,984 | $ 36,854 | $ 36,669 | $ 29,410 | $ 13,671 |
Portfolio turnover rate E | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.191 per share is comprised of distributions from net investment income of $.106 and distributions from net realized gain of $1.085 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
| | | | | |
Years ended July 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 | $ 11.35 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .34 | .24 | .35 | .36 | .32 |
Net realized and unrealized gain (loss) | (1.23) | (.17) | 2.85 | 5.56 | 2.04 |
Total from investment operations | (.89) | .07 | 3.20 | 5.92 | 2.36 |
Distributions from net investment income | (.35) | (.24) | (.26) | (.34) | (.32) |
Distributions from net realized gain | (1.09) | (1.50) | (.80) | (.53) | (.11) |
Total distributions | (1.44) F | (1.74) | (1.06) | (.87) | (.43) |
Net asset value, end of period | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 |
Total Return A | (5.39)% | (.37)% | 18.61% | 46.05% | 21.11% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .95% | .98% | .94% | .91% | ��1.12% |
Expenses net of fee waivers, if any | .95% | .98% | .94% | .91% | 1.12% |
Expenses net of all reductions | .95% | .97% | .92% | .88% | 1.10% |
Net investment income (loss) | 1.97% | 1.09% | 1.90% | 2.35% | 2.53% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 72,780 | $ 12,259 | $ 7,152 | $ 4,162 | $ 2,478 |
Portfolio turnover rate D | 86% | 84% | 65% | 62% | 52% |
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 Total distributions of $1.437 per share is comprised of distributions from net investment income of $.352 and distributions from net realized gain of $1.085 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, 2008
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 unaudited 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 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. Actual results could differ from those estimates. 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures 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.
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 per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
4:00 pm Eastern time and 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 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. 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, passive foreign investment companies (PFIC) 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 | $ 34,899,718 |
Unrealized depreciation | (34,579,320) |
Net unrealized appreciation (depreciation) | $ 320,398 |
Undistributed ordinary income | 776,465 |
Undistributed long-term capital gain | 601,158 |
| |
Cost for federal income tax purposes | $ 371,735,591 |
The tax character of distributions paid was as follows:
| July 31, 2008 | July 31, 2007 |
Ordinary Income | $ 3,429,631 | $ 6,191,707 |
Long-term Capital Gains | 15,771,090 | 15,697,989 |
Total | $ 19,200,721 | $ 21,889,696 |
New Accounting Pronouncement. 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 results in expanded disclosures about fair value measurements.
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
Annual Report
4. Operating Policies - continued
Repurchase Agreements - continued
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 $283,835,526 and $248,034,854, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | .00% | .25% | $ 266,753 | $ 31,991 |
Class T | .25% | .25% | 431,286 | - |
Class B | .75% | .25% | 195,547 | 146,814 |
Class C | .75% | .25% | 283,422 | 53,191 |
| | | $ 1,177,008 | $ 231,996 |
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 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
by FDC |
Class A | $ 57,022 |
Class T | 12,428 |
Class B* | 54,578 |
Class C* | 12,730 |
| $ 136,758 |
* 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 were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 319,374 | .30 |
Class T | 266,534 | .31 |
Class B | 58,734 | .30 |
Class C | 85,080 | .30 |
Institutional Class | 144,843 | .28 |
| $ 874,565 | |
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.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $4,712 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 $724 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 $188,526.
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 $1,900 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 $1,415.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction |
Class A | $ 3,081 |
Institutional Class | 287 |
| $ 3,368 |
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 December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed 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 was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $8,019, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Years ended July 31, |
| 2008 | 2007 |
From net investment income | | |
Class A | $ 1,522,432 | $ 910,999 |
Class T | 826,361 | 671,347 |
Class B | 112,289 | 73,434 |
Class C | 169,086 | 121,385 |
Institutional Class | 799,463 | 104,002 |
Total | $ 3,429,631 | $ 1,881,167 |
From net realized gain | | |
Class A | $ 6,384,487 | $ 7,016,390 |
Class T | 5,512,568 | 7,245,930 |
Class B | 1,322,405 | 2,110,416 |
Class C | 1,826,579 | 3,021,230 |
Institutional Class | 725,051 | 614,563 |
Total | $ 15,771,090 | $ 20,008,529 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Years ended July 31, | Years ended July 31, |
| 2008 | 2007 | 2008 | 2007 |
Class A | | | | |
Shares sold | 3,084,736 | 4,162,272 | $ 53,959,357 | $ 91,668,160 |
Reinvestment of distributions | 414,796 | 360,748 | 7,549,476 | 7,512,896 |
Shares redeemed | (3,133,970) | (2,390,088) | (55,521,726) | (51,262,823) |
Net increase (decrease) | 365,562 | 2,132,932 | $ 5,987,107 | $ 47,918,233 |
Class T | | | | |
Shares sold | 1,683,774 | 3,133,447 | $ 29,339,323 | $ 69,066,846 |
Reinvestment of distributions | 335,605 | 366,028 | 6,128,515 | 7,615,273 |
Shares redeemed | (2,420,642) | (2,592,591) | (42,866,254) | (55,812,105) |
Net increase (decrease) | (401,263) | 906,884 | $ (7,398,416) | $ 20,870,014 |
Class B | | | | |
Shares sold | 196,548 | 522,263 | $ 3,413,355 | $ 11,374,401 |
Reinvestment of distributions | 70,595 | 95,389 | 1,284,671 | 1,975,227 |
Shares redeemed | (586,018) | (618,201) | (10,346,901) | (13,210,441) |
Net increase (decrease) | (318,875) | (549) | $ (5,648,875) | $ 139,187 |
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, | Years ended July 31, |
| 2008 | 2007 | 2008 | 2007 |
Class C | | | | |
Shares sold | 442,357 | 1,257,900 | $ 7,808,076 | $ 27,435,286 |
Reinvestment of distributions | 97,814 | 135,205 | 1,779,201 | 2,802,482 |
Shares redeemed | (994,473) | (1,217,050) | (17,624,265) | (25,938,064) |
Net increase (decrease) | (454,302) | 176,055 | $ (8,036,988) | $ 4,299,704 |
Institutional Class | | | | |
Shares sold | 6,261,402 | 643,980 | $ 103,513,317 | $ 14,342,713 |
Reinvestment of distributions | 48,936 | 30,501 | 883,388 | 638,492 |
Shares redeemed | (2,542,604) | (371,732) | (42,217,037) | (8,144,253) |
Net increase (decrease) | 3,767,734 | 302,749 | $ 62,179,668 | $ 6,836,952 |
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, 2008, 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 five years in the period then ended. 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, 2008, 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, 2008, 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 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 22, 2008
Annual Report
Trustees and Officers
The Trustees, Member 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 Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 218 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 377 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 Member 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 (78) |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; 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 and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-
present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 (60) |
| 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 a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and 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 AHRC of Nassau County (2006-present). |
Alan J. Lacy (54) |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). 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 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (63) |
| Year of Election or Appointment: 2008 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). |
Cornelia M. Small (64) |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), 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. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
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 (64) |
| 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. |
Kenneth B. Robins (38) |
| Year of Election or Appointment: 2008 President and Treasurer of Advisor Real Estate. Mr. Robins also serves as President and Treasurer of Fidelity's Equity and High Income Funds (2008-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). |
Brian B. Hogan (43) |
| Year of Election or Appointment: 2007 Vice President of Advisor Real Estate. Mr. Hogan also serves as Vice President of Sector Funds (2007-present) and Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (40) |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of Advisor Real Estate. Mr. Goebel also serves as Secretary and CLO of other Fidelity funds (2008-present); General Counsel, Secretary, and Senior Vice President of FMR (2008-present); and Deputy General Counsel of FMR LLC. Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (45) |
| Year of Election or Appointment: 2008 Assistant Secretary of Advisor Real Estate. Mr. McGinty also serves as Assistant Secretary of Fidelity's other Equity and High Income Funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of Advisor Real Estate. Ms. Laurent also serves as AML Officer of other Fidelity funds (2008-present) and is an employee of FMR LLC. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (49) |
| Year of Election or Appointment: 2008 Chief Financial Officer of Advisor Real Estate. Ms. Reynolds also serves as Chief Financial Officer of other Fidelity funds (2008-present). Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering Officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms.
Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Advisor Real Estate. Mr. Rathgeber also serves as Chief Compliance Officer of Fidelity's Equity and High Income Funds (2004-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). |
Bryan A. Mehrmann (47) |
| 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). |
Adrien E. Deberghes (40) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Advisor Real Estate. Mr. Deberghes also serves as Deputy Treasurer of Fidelity's Equity and High Income Funds (2008-
present) and is an employee of FMR (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) |
| 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 Fidelity Pricing and Cash Management Services (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 (54) |
| Year of Election or Appointment: 2004 Assistant Treasurer of Advisor Real Estate. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004-present) and is an employee of FMR. |
Paul M. Murphy (61) |
| Year of Election or Appointment: 2007 Assistant Treasurer of Advisor Real Estate. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (49) |
| 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 Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Fidelity Advisor Real Estate Fund voted to pay on September 8, 2008, to shareholders of record at the opening of business on September 5, 2008, a distribution of $0.03 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.081 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended July 31, 2008, $992,339, or, if subsequently determined to be different, the net capital gain of such year.
A total of 0.19% 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 designates 5% and 6% of the dividends distributed in March and June, during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
A percentage of the dividends distributed during the fiscal year for the fund 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 2007 | 1% |
December 2007 (Ex-Date 12/21/07) | 4% |
December 2007 (Ex-Date 12/28/07) | 6% |
March 2008 | 7% |
June 2008 | 9% |
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on April 16, 2008. 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 |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 1,843,094,379.23 | 96.319 |
Withheld | 70,445,651.74 | 3.681 |
TOTAL | 1,913,540,030.97 | 100.000 |
Dennis J. Dirks |
Affirmative | 1,844,705,271.13 | 96.403 |
Withheld | 68,834,759.84 | 3.597 |
TOTAL | 1,913,540,030.97 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 1,841,350,074.57 | 96.227 |
Withheld | 72,189,956.40 | 3.773 |
TOTAL | 1,913,540,030.97 | 100.000 |
Alan J. Lacy |
Affirmative | 1,843,985,654.20 | 96.365 |
Withheld | 69,554,376.77 | 3.635 |
TOTAL | 1,913,540,030.97 | 100.000 |
Ned C. Lautenbach |
Affirmative | 1,844,982,064.29 | 96.417 |
Withheld | 68,557,966.68 | 3.583 |
TOTAL | 1,913,540,030.97 | 100.000 |
Joseph Mauriello |
Affirmative | 1,843,252,653.53 | 96.327 |
Withheld | 70,287,377.44 | 3.673 |
TOTAL | 1,913,540,030.97 | 100.000 |
Cornelia M. Small |
Affirmative | 1,845,097,505.44 | 96.423 |
Withheld | 68,442,525.53 | 3.577 |
TOTAL | 1,913,540,030.97 | 100.000 |
| # of
Votes | % of
Votes |
William S. Stavropoulos |
Affirmative | 1,840,012,418.12 | 96.158 |
Withheld | 73,527,612.85 | 3.842 |
TOTAL | 1,913,540,030.97 | 100.000 |
David M. Thomas |
Affirmative | 1,845,597,797.69 | 96.449 |
Withheld | 67,942,233.28 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
Michael E. Wiley |
Affirmative | 1,845,590,500.21 | 96.449 |
Withheld | 67,949,530.76 | 3.551 |
TOTAL | 1,913,540,030.97 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust of
Fidelity Advisor Series VII to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 1,059,631,083.78 | 55.375 |
Against | 187,649,461.13 | 9.807 |
Abstain | 74,155,654.32 | 3.875 |
Broker
Non-Votes | 592,103,831.74 | 30.943 |
TOTAL | 1,913,540,030.97 | 100.000 |
A Denotes trust-wide proposal and voting results.
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 and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the 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 a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. 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 fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its 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 agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering 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 and through the exercise of its business judgment, 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. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, 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
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 fund's investment personnel 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 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 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 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 also 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 further considered that Fidelity voluntarily pays for market data out of its own resources.
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 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 Fidelity has taken a number of actions over the previous year 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 fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. 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. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, 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
Advisor Real Estate Fund
The Board stated that the investment performance of the fund was lower than its benchmark for the one- and five-year periods, although the three-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.
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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month 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 2007.
Annual Report
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 class ranked below its competitive median for 2007.
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
Board Approval of Investment Advisory Contracts and
Management Fees - continued
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.
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. 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 certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Annual Report
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
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
AREI-UANN-0908
1.789708.105
Item 2. Code of Ethics
As of the end of the period, July 31, 2008, 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 Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Mauriello 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, 2008 and July 31, 2007, 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 | 2008A | 2007A |
Fidelity Advisor Biotechnology Fund | $34,000 | $38,000 |
Fidelity Advisor Communications Equipment Fund | $35,000 | $38,000 |
Fidelity Advisor Consumer Discretionary Fund | $34,000 | $36,000 |
Fidelity Advisor Electronics Fund | $34,000 | $38,000 |
Fidelity Advisor Energy Fund | $37,000 | $40,000 |
Fidelity Advisor Financial Services Fund | $36,000 | $39,000 |
Fidelity Advisor Health Care Fund | $36,000 | $40,000 |
Fidelity Advisor Industrials Fund | $35,000 | $37,000 |
Fidelity Advisor Real Estate Fund | $37,000 | $62,000 |
Fidelity Advisor Technology Fund | $37,000 | $40,000 |
Fidelity Advisor Utilities Fund | $34,000 | $37,000 |
All funds in the Fidelity Group of Funds audited by Deloitte Entities | $6,800,000 | $7,100,000 |
A | Aggregate amounts may reflect rounding. |
(b) Audit-Related Fees.
In each of the fiscal years ended July 31, 2008 and July 31, 2007 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 | 2008A | 2007A |
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, 2008 and July 31, 2007, 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 | 2008A | 2007A |
Deloitte Entities | $410,000 | $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, 2008 and July 31, 2007, 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 | 2008A | 2007A |
Fidelity Advisor Biotechnology Fund | $4,500 | $4,200 |
Fidelity Advisor Communications Equipment Fund | $4,500 | $4,200 |
Fidelity Advisor Consumer Discretionary Fund | $5,600 | $5,200 |
Fidelity Advisor Electronics Fund | $4,500 | $4,200 |
Fidelity Advisor Energy Fund | $5,600 | $5,200 |
Fidelity Advisor Financial Services Fund | $5,600 | $5,200 |
Fidelity Advisor Health Care Fund | $5,600 | $5,200 |
Fidelity Advisor Industrials Fund | $5,600 | $5,200 |
Fidelity Advisor Real Estate Fund | $5,600 | $5,200 |
Fidelity Advisor Technology Fund | $5,600 | $5,200 |
Fidelity Advisor Utilities Fund | $5,600 | $5,200 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended July 31, 2008 and July 31, 2007, 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 | 2008A | 2007A |
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, 2008 and July 31, 2007, 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 | 2008A | 2007A |
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, 2008 and July 31, 2007, 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 | 2008A | 2007A,B |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
B | Reflects current period presentation. |
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, 2008 and July 31, 2007 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, 2008 and July 31, 2007 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, 2008 and July 31, 2007 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, 2008 and July 31, 2007 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, 2008 and July 31, 2007 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, 2008 and July 31, 2007 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, 2008 and July 31, 2007, the aggregate fees billed by Deloitte Entities of $1,130,000A and $610,000A 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.
| 2008A | 2007A,B |
Covered Services | $470,000 | $55,000 |
Non-Covered Services | $660,000 | $555,000 |
A | Aggregate amounts may reflect rounding. |
B | Reflects current period presentation. |
(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. Investments
(a) Not applicable.
(b) 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/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
| |
Date: | September 29, 2008 |
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/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
| |
Date: | September 29, 2008 |
By: | /s/Jeffrey Christian |
| Jeffrey Christian |
| Chief Financial Officer |
| |
Date: | September 29, 2008 |
