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 |
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Date of reporting period: | July 31, 2010 |
Item 1. Reports to Stockholders
Fidelity Advisor
Focus Funds®
Class A, Class T, Class B and Class C
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 Technology Fund
Fidelity Advisor Utilities Fund
Annual Report
July 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Note to shareholders | An explanation of the changes to the fund. | |
Fidelity Advisor Biotechnology Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Communications Equipment Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Consumer Discretionary Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Electronics Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Energy Fund | Performance | |
| Management's Discussion of Fund Performance | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Financial Services Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Health Care Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Industrials Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Technology Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Utilities Fund | Performance | |
| Management's Discussion of Fund Performance | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
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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/proxyvotingresults 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 funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets reversed course in late April 2010 when investor sentiment turned bearish due in great measure to concern that Europe's debt crisis would expand and slow or derail economic recovery. However, a bounceback in July helped to recover some of the ground that was lost. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the 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 can be tax advantages and cost benefits to consider as well. 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 saving plans).
A third 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 "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 by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders:
In January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Advisor Focus Funds. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | -9.42% | -0.15% | -4.02% |
Class T (incl. 3.50% sales charge) | -7.49% | 0.06% | -4.03% |
Class B (incl. contingent deferred sales charge) B | -9.40% | -0.11% | -3.96% |
Class C (incl. contingent deferred sales charge) C | -5.44% | 0.27% | -4.15% |
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.
Annual Report
Fidelity Advisor Biotechnology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned -3.89%, -4.13%, -4.64% and -4.48%, respectively (excluding sales charges), trailing the S&P 500® but roughly in line with the -4.50% mark of the MSCI® U.S. IM Biotechnology 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock selection in the biotechnology category, where roughly 93% of the fund's net assets were positioned at period end, aided relative performance. At the stock level, underweighting two major benchmark components that performed poorly, Gilead Sciences and Amgen, bolstered the fund's relative performance, although they curbed its absolute return by a considerable margin. Alexion Pharmaceuticals also had a positive impact on relative performance, as did Acorda Therapeutics and a small out-of-index position in Delcath Systems, which makes equipment that facilitates delivering high doses of cancer drugs directly to the liver with minimal side effects. Given the stock's sizable advance, I sold Delcath Systems to nail down profits. Conversely, our out-of-index exposure to the pharmaceuticals group, which represented a little more than 6% of net assets at period end, detracted from performance. The largest relative detractor was primarily a story from the first six months: an unrewarding out-of-index stake in Antigenics. The stock lost more than half of its value in October, after the company was denied marketing approval for its kidney cancer drug, Oncophage. Auxilium Pharmaceuticals slumped due to a slow product launch, as well as investor concern about the limited size of the market for XIAFLEX, the company's drug for an uncommon hand deformity called Dupuytren's contracture. Underweighting major index constituent Genzyme held back performance, given the stock's strong showing, and a large underweighting in Celgene, a sizable index component that modestly outperformed the MSCI index, also detracted.
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund: During the past year, the fund's Institutional Class shares returned -3.51%, trailing the S&P 500® but ahead of the -4.50% mark of the MSCI® U.S. IM Biotechnology 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock selection in the biotechnology category, where roughly 93% of the fund's net assets were positioned at period end, aided relative performance. At the stock level, underweighting two major benchmark components that performed poorly, Gilead Sciences and Amgen, bolstered the fund's relative performance, although they curbed its absolute return by a considerable margin. Alexion Pharmaceuticals also had a positive impact on relative performance, as did Acorda Therapeutics and a small out-of-index position in Delcath Systems, which makes equipment that facilitates delivering high doses of cancer drugs directly to the liver with minimal side effects. Given the stock's sizable advance, I sold Delcath Systems to nail down profits. Conversely, our out-of-index exposure to the pharmaceuticals group, which represented a little more than 6% of net assets at period end, detracted from performance. The largest relative detractor was primarily a story from the first six months: an unrewarding out-of-index stake in Antigenics. The stock lost more than half of its value in October, after the company was denied marketing approval for its kidney cancer drug, Oncophage. Auxilium Pharmaceuticals slumped due to a slow product launch, as well as investor concern about the limited size of the market for XIAFLEX, the company's drug for an uncommon hand deformity called Dupuytren's contracture. Underweighting major index constituent Genzyme held back performance, given the stock's strong showing, and a large underweighting in Celgene, a sizable index component that modestly outperformed the MSCI index, also detracted.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.38% |
|
|
|
Actual |
| $ 1,000.00 | $ 959.70 | $ 6.71 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.95 | $ 6.90 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 958.70 | $ 8.01 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.13% |
|
|
|
Actual |
| $ 1,000.00 | $ 955.10 | $ 10.33 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.23 | $ 10.64 |
Class C | 2.13% |
|
|
|
Actual |
| $ 1,000.00 | $ 956.70 | $ 10.33 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.23 | $ 10.64 |
Institutional Class | 1.04% |
|
|
|
Actual |
| $ 1,000.00 | $ 960.80 | $ 5.06 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.64 | $ 5.21 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Fidelity Advisor Biotechnology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Amgen, Inc. | 14.3 | 20.9 |
Gilead Sciences, Inc. | 10.6 | 6.8 |
Alexion Pharmaceuticals, Inc. | 6.9 | 6.0 |
Genzyme Corp. | 6.3 | 4.2 |
Acorda Therapeutics, Inc. | 4.9 | 4.3 |
United Therapeutics Corp. | 3.7 | 4.3 |
Vertex Pharmaceuticals, Inc. | 3.4 | 4.4 |
Celgene Corp. | 2.8 | 2.5 |
Dendreon Corp. | 2.7 | 3.2 |
Human Genome Sciences, Inc. | 2.6 | 2.8 |
| 58.2 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
 | Biotechnology | 92.8% |
|
 | Pharmaceuticals | 6.2% |
|
 | Health Care Equipment & Supplies | 0.1% |
|
 | All Others* | 0.9% |
|
As of January 31, 2010 | |||
| Biotechnology | 93.1% |
|
| Pharmaceuticals | 6.7% |
|
| Health Care Equipment & Supplies | 0.5% |
|
 | All Others † | (0.3)% |
|
* Includes short-term investments and net other assets. † Short-term investments and net other assets are not included in the pie chart. |
Annual Report
Fidelity Advisor Biotechnology Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
BIOTECHNOLOGY - 92.8% | |||
Biotechnology - 92.8% | |||
Acadia Pharmaceuticals, Inc. (a) | 9,074 | $ 11,070 | |
Acorda Therapeutics, Inc. (a) | 80,016 | 2,587,717 | |
Affymax, Inc. (a) | 4,506 | 28,974 | |
Alexion Pharmaceuticals, Inc. (a) | 66,408 | 3,609,939 | |
Alkermes, Inc. (a) | 37,161 | 479,377 | |
Allos Therapeutics, Inc. (a)(d) | 118,231 | 569,873 | |
Alnylam Pharmaceuticals, Inc. (a)(d) | 13,498 | 207,194 | |
AMAG Pharmaceuticals, Inc. (a)(d) | 12,800 | 402,944 | |
Amgen, Inc. (a) | 137,989 | 7,524,539 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 37,784 | 714,873 | |
Antigenics, Inc. (a)(d) | 21,100 | 17,939 | |
Antigenics, Inc. warrants 1/9/18 (a)(e) | 452,000 | 307,198 | |
Arena Pharmaceuticals, Inc. (a)(d) | 57,520 | 457,284 | |
ArQule, Inc. (a) | 14,866 | 63,478 | |
AVEO Pharmaceuticals, Inc. | 2,400 | 18,576 | |
Biogen Idec, Inc. (a) | 22,826 | 1,275,517 | |
BioMarin Pharmaceutical, Inc. (a) | 60,073 | 1,312,595 | |
Celera Corp. (a) | 5,000 | 33,450 | |
Celgene Corp. (a) | 26,715 | 1,473,332 | |
Cephalon, Inc. (a) | 21,294 | 1,208,435 | |
Cepheid, Inc. (a) | 23,700 | 392,235 | |
Clinical Data, Inc. (a)(d) | 32,584 | 454,221 | |
Cubist Pharmaceuticals, Inc. (a) | 992 | 21,407 | |
Dendreon Corp. (a)(d) | 43,283 | 1,424,444 | |
Dynavax Technologies Corp. (a) | 25,600 | 56,576 | |
Enzon Pharmaceuticals, Inc. (a)(d) | 3,900 | 42,666 | |
Exelixis, Inc. (a) | 19,332 | 60,316 | |
Genomic Health, Inc. (a) | 1,000 | 12,890 | |
Genzyme Corp. (a) | 47,632 | 3,313,282 | |
Gilead Sciences, Inc. (a) | 166,402 | 5,544,515 | |
Halozyme Therapeutics, Inc. (a) | 46,500 | 333,405 | |
Human Genome Sciences, Inc. (a) | 53,508 | 1,387,998 | |
Idenix Pharmaceuticals, Inc. (a)(d) | 63,666 | 325,333 | |
ImmunoGen, Inc. (a) | 5,300 | 49,979 | |
Incyte Corp. (a) | 57,795 | 752,491 | |
Inhibitex, Inc. (a) | 38,500 | 72,765 | |
InterMune, Inc. (a) | 28,817 | 281,254 | |
Isis Pharmaceuticals, Inc. (a) | 34,800 | 344,172 | |
Lexicon Pharmaceuticals, Inc. (a) | 680,273 | 1,027,212 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 11,400 | 18,810 | |
MannKind Corp. (a)(d) | 32,300 | 223,193 | |
Martek Biosciences (a)(d) | 13,900 | 287,591 | |
Micromet, Inc. (a)(d) | 15,500 | 106,175 | |
Momenta Pharmaceuticals, Inc. (a) | 24,829 | 529,851 | |
| |||
Shares | Value | ||
Myrexis, Inc. (a) | 302 | $ 1,157 | |
Myriad Genetics, Inc. (a) | 3,424 | 49,682 | |
Neurocrine Biosciences, Inc. (a) | 47,581 | 270,260 | |
NPS Pharmaceuticals, Inc. (a) | 77,300 | 534,916 | |
ONYX Pharmaceuticals, Inc. (a) | 26,948 | 700,648 | |
OREXIGEN Therapeutics, Inc. (a)(d) | 27,000 | 140,400 | |
PDL BioPharma, Inc. | 164,088 | 1,020,627 | |
Pharmasset, Inc. (a) | 21,242 | 573,746 | |
Progenics Pharmaceuticals, Inc. (a) | 2,900 | 13,340 | |
Regeneron Pharmaceuticals, Inc. (a) | 9,849 | 238,247 | |
Rigel Pharmaceuticals, Inc. (a) | 31,077 | 251,724 | |
Sangamo Biosciences, Inc. (a)(d) | 3,098 | 11,679 | |
Savient Pharmaceuticals, Inc. (a)(d) | 28,255 | 387,094 | |
Seattle Genetics, Inc. (a) | 35,421 | 431,428 | |
SIGA Technologies, Inc. (a)(d) | 51,212 | 429,157 | |
Theratechnologies, Inc. (a) | 3,600 | 16,880 | |
Theravance, Inc. (a)(d) | 31,372 | 464,619 | |
United Therapeutics Corp. (a) | 39,798 | 1,945,724 | |
Vertex Pharmaceuticals, Inc. (a) | 53,404 | 1,797,579 | |
ZIOPHARM Oncology, Inc. (a) | 23,700 | 88,638 | |
Zymogenetics, Inc. (a) | 2,895 | 11,841 | |
| 48,746,471 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% | |||
Health Care Equipment - 0.0% | |||
Alsius Corp. | 14,200 | 0 | |
Aradigm Corp. (a) | 21,800 | 2,398 | |
|
| 2,398 | |
Health Care Supplies - 0.1% | |||
Alimera Sciences, Inc. (a) | 7,200 | 52,488 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 54,886 | ||
PHARMACEUTICALS - 6.2% | |||
Pharmaceuticals - 6.2% | |||
Adolor Corp. (a) | 196,299 | 217,892 | |
Akorn, Inc. (a) | 17,279 | 62,896 | |
Alexza Pharmaceuticals, Inc. (a) | 5,981 | 16,567 | |
Ardea Biosciences, Inc. (a) | 3,300 | 65,835 | |
Auxilium Pharmaceuticals, Inc. (a)(d) | 52,758 | 1,190,220 | |
AVANIR Pharmaceuticals Class A (a) | 33,900 | 108,480 | |
Biodel, Inc. (a)(d) | 62,269 | 242,849 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 12,500 | 95,750 | |
Elan Corp. PLC sponsored ADR (a) | 85,350 | 407,120 | |
Inspire Pharmaceuticals, Inc. (a) | 5,570 | 28,129 | |
Jazz Pharmaceuticals, Inc. (a) | 2,435 | 21,185 | |
Optimer Pharmaceuticals, Inc. (a) | 38,988 | 354,011 | |
ViroPharma, Inc. (a) | 31,988 | 421,282 | |
XenoPort, Inc. (a) | 6,700 | 41,138 | |
| 3,273,354 | ||
TOTAL COMMON STOCKS (Cost $48,215,385) | 52,074,711 | ||
Money Market Funds - 8.0% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.24% (b) | 1,322,129 | $ 1,322,129 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 2,907,100 | 2,907,100 | |
TOTAL MONEY MARKET FUNDS (Cost $4,229,229) | 4,229,229 | ||
TOTAL INVESTMENT PORTFOLIO - 107.1% (Cost $52,444,614) | 56,303,940 |
NET OTHER ASSETS (LIABILITIES) - (7.1)% | (3,741,183) | ||
NET ASSETS - 100% | $ 52,562,757 | ||
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 $307,198 or 0.6% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
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 | $ 866 |
Fidelity Securities Lending Cash Central Fund | 40,061 |
Total | $ 40,927 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 52,074,711 | $ 51,767,513 | $ 307,198 | $ - |
Money Market Funds | 4,229,229 | 4,229,229 | - | - |
Total Investments in Securities: | $ 56,303,940 | $ 55,996,742 | $ 307,198 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | - |
Proceeds of Sales | (852) |
Amortization/Accretion | - |
Transfers in to Level 3 | 852 |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at July 31, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $3,491,594 all of which will expire on July 31, 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
The Fund intends to elect to defer to its fiscal year ending July 31, 2011 approximately $2,681,229 of losses recognized during the period November 1, 2009 to July 31, 2010. |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Fidelity Advisor Biotechnology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,896,028) - See accompanying schedule: Unaffiliated issuers (cost $48,215,385) | $ 52,074,711 |
|
Fidelity Central Funds (cost $4,229,229) | 4,229,229 |
|
Total Investments (cost $52,444,614) |
| $ 56,303,940 |
Receivable for investments sold | 121,912 | |
Receivable for fund shares sold | 49,251 | |
Distributions receivable from Fidelity Central Funds | 4,508 | |
Other receivables | 2,388 | |
Total assets | 56,481,999 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 837,491 | |
Payable for fund shares redeemed | 70,452 | |
Accrued management fee | 24,047 | |
Distribution fees payable | 23,065 | |
Other affiliated payables | 14,906 | |
Other payables and accrued expenses | 42,181 | |
Collateral on securities loaned, at value | 2,907,100 | |
Total liabilities | 3,919,242 | |
|
|
|
Net Assets | $ 52,562,757 | |
Net Assets consist of: |
| |
Paid in capital | $ 56,361,699 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (7,658,268) | |
Net unrealized appreciation (depreciation) on investments | 3,859,326 | |
Net Assets | $ 52,562,757 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 6.67 | |
|
|
|
Maximum offering price per share (100/94.25 of $6.67) | $ 7.08 | |
Class T: | $ 6.50 | |
|
|
|
Maximum offering price per share (100/96.50 of $6.50) | $ 6.74 | |
Class B: | $ 6.17 | |
|
|
|
Class C: | $ 6.18 | |
|
|
|
Institutional Class: | $ 6.87 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,994 |
Special dividends |
| 75,315 |
Interest |
| 3,417 |
Income from Fidelity Central Funds (including $40,061 from security lending) |
| 40,927 |
Total income |
| 125,653 |
|
|
|
Expenses | ||
Management fee | $ 301,275 | |
Transfer agent fees | 180,221 | |
Distribution fees | 300,604 | |
Accounting and security lending fees | 21,652 | |
Custodian fees and expenses | 19,954 | |
Independent trustees' compensation | 314 | |
Registration fees | 51,116 | |
Audit | 43,078 | |
Legal | 308 | |
Miscellaneous | 853 | |
Total expenses before reductions | 919,375 | |
Expense reductions | (9,673) | 909,702 |
Net investment income (loss) | (784,049) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (2,345,145) | |
Foreign currency transactions | (345) | |
Total net realized gain (loss) |
| (2,345,490) |
Change in net unrealized appreciation (depreciation) on investment securities | 88,127 | |
Net gain (loss) | (2,257,363) | |
Net increase (decrease) in net assets resulting from operations | $ (3,041,412) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (784,049) | $ (837,247) |
Net realized gain (loss) | (2,345,490) | (282,180) |
Change in net unrealized appreciation (depreciation) | 88,127 | (7,383,033) |
Net increase (decrease) in net assets resulting from operations | (3,041,412) | (8,502,460) |
Share transactions - net increase (decrease) | 684,738 | 4,533,971 |
Redemption fees | 1,690 | 29,559 |
Total increase (decrease) in net assets | (2,354,984) | (3,938,930) |
|
|
|
Net Assets | ||
Beginning of period | 54,917,741 | 58,856,671 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $95, respectively) | $ 52,562,757 | $ 54,917,741 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.94 | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.08) F | (.08) | (.09) G | (.09) | (.09) |
Net realized and unrealized gain (loss) | (.19) | (.79) | 1.20 | .51 | .10 |
Total from investment operations | (.27) | (.87) | 1.11 | .42 | .01 |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.67 | $ 6.94 | $ 7.81 | $ 7.23 | $ 6.81 |
Total Return A, B | (3.89)% | (11.14)% | 15.95% | 6.17% | .15% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.39% | 1.40% | 1.37% | 1.42% | 1.48% |
Expenses net of fee waivers, if any | 1.39% | 1.40% | 1.37% | 1.40% | 1.40% |
Expenses net of all reductions | 1.38% | 1.40% | 1.37% | 1.40% | 1.37% |
Net investment income (loss) | (1.15)% F | (1.27)% | (1.24)% G | (1.25)% | (1.29)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,154 | $ 19,858 | $ 18,249 | $ 13,081 | $ 12,539 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (1.29)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.78 | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) F | (.09) | (.11) G | (.11) | (.11) |
Net realized and unrealized gain (loss) | (.19) | (.78) | 1.18 | .51 | .10 |
Total from investment operations | (.28) | (.87) | 1.07 | .40 | (.01) |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.50 | $ 6.78 | $ 7.65 | $ 7.11 | $ 6.71 |
Total Return A, B | (4.13)% | (11.37)% | 15.64% | 5.96% | (.15)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.69% | 1.71% | 1.69% | 1.75% | 1.79% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
Expenses net of all reductions | 1.64% | 1.65% | 1.65% | 1.65% | 1.62% |
Net investment income (loss) | (1.41)% F | (1.52)% | (1.53)% G | (1.49)% | (1.54)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,684 | $ 13,356 | $ 15,123 | $ 13,008 | $ 13,808 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (1.55)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) F | (.12) | (.14) G | (.14) | (.14) |
Net realized and unrealized gain (loss) | (.18) | (.75) | 1.13 | .50 | .10 |
Total from investment operations | (.30) | (.87) | .99 | .36 | (.04) |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.17 | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 |
Total Return A, B | (4.64)% | (11.85)% | 14.96% | 5.52% | (.61)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.14% | 2.15% | 2.12% | 2.17% | 2.23% |
Expenses net of fee waivers, if any | 2.14% | 2.15% | 2.12% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.12% | 2.15% | 2.12% |
Net investment income (loss) | (1.90)% F | (2.02)% | (2.00)% G | (1.99)% | (2.04)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 6,297 | $ 7,377 | $ 11,044 | $ 12,656 | $ 14,938 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (2.04)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) F | (.12) | (.13) G | (.14) | (.14) |
Net realized and unrealized gain (loss) | (.17) | (.75) | 1.12 | .50 | .09 |
Total from investment operations | (.29) | (.87) | .99 | .36 | (.05) |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.18 | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 |
Total Return A, B | (4.48)% | (11.85)% | 14.96% | 5.52% | (.76)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.14% | 2.15% | 2.12% | 2.16% | 2.17% |
Expenses net of fee waivers, if any | 2.14% | 2.15% | 2.12% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.12% | 2.15% | 2.12% |
Net investment income (loss) | (1.90)% F | (2.02)% | (2.00)% G | (1.99)% | (2.04)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,421 | $ 12,426 | $ 13,323 | $ 11,813 | $ 13,787 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (2.04)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.12 | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.06) E | (.06) | (.07) F | (.07) | (.07) |
Net realized and unrealized gain (loss) | (.19) | (.82) | 1.23 | .53 | .09 |
Total from investment operations | (.25) | (.88) | 1.16 | .46 | .02 |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 6.87 | $ 7.12 | $ 8.00 | $ 7.37 | $ 6.91 |
Total Return A | (3.51)% | (11.00)% | 16.35% | 6.66% | .29% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | 1.07% | 1.11% | 1.06% | 1.06% | 1.05% |
Expenses net of fee waivers, if any | 1.07% | 1.11% | 1.06% | 1.06% | 1.05% |
Expenses net of all reductions | 1.06% | 1.11% | 1.06% | 1.06% | 1.03% |
Net investment income (loss) | (.83)% E | (.98)% | (.94)% F | (.91)% | (.94)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,008 | $ 1,901 | $ 1,117 | $ 991 | $ 1,268 |
Portfolio turnover rate D | 130% | 73% | 132% | 120% | 62% |
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 (.97)%.
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 (1.02)%.
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds,including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, market discount, net operating losses, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 8,321,628 |
Gross unrealized depreciation | (5,947,747) |
Net unrealized appreciation (depreciation) | $ 2,373,881 |
|
|
Tax Cost | $ 53,930,059 |
Biotechnology
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (3,491,594) |
Net unrealized appreciation (depreciation) | $ 2,373,881 |
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.
4. Operating Policies.
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 $69,198,208 and $69,783,530, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 50,984 | $ 673 |
Class T | .25% | .25% | 62,407 | 291 |
Class B | .75% | .25% | 68,085 | 51,174 |
Class C | .75% | .25% | 119,128 | 19,251 |
|
|
| $ 300,604 | $ 71,389 |
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% for certain purchases of Class A (1.00% to .50% prior to July 12, 2010) shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 17,352 |
Class T | 6,728 |
Class B* | 13,265 |
Class C* | 1,272 |
| $ 38,617 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 66,544 | .33 |
Class T | 46,477 | .37 |
Class B | 22,391 | .33 |
Class C | 38,945 | .33 |
Institutional Class | 5,864 | .26 |
| $ 180,221 |
|
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 $995 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $216 and is reflected in Miscellaneous expenses 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.
Biotechnology
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class T | 1.65% | $ 4,575 |
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 $5,098 for the period.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,118,865 | 2,341,295 | $ 7,975,997 | $ 15,410,062 |
Shares redeemed | (959,085) | (1,815,151) | (6,583,930) | (11,129,933) |
Net increase (decrease) | 159,780 | 526,144 | $ 1,392,067 | $ 4,280,129 |
Class T |
|
|
|
|
Shares sold | 412,827 | 826,391 | $ 2,848,621 | $ 5,258,554 |
Shares redeemed | (585,419) | (832,503) | (3,906,373) | (5,110,823) |
Net increase (decrease) | (172,592) | (6,112) | $ (1,057,752) | $ 147,731 |
Class B |
|
|
|
|
Shares sold | 304,652 | 365,766 | $ 1,993,007 | $ 2,311,576 |
Shares redeemed | (424,638) | (730,232) | (2,696,945) | (4,256,288) |
Net increase (decrease) | (119,986) | (364,466) | $ (703,938) | $ (1,944,712) |
Class C |
|
|
|
|
Shares sold | 489,582 | 793,743 | $ 3,216,700 | $ 5,016,886 |
Shares redeemed | (559,923) | (688,414) | (3,577,484) | (3,988,392) |
Net increase (decrease) | (70,341) | 105,329 | $ (360,784) | $ 1,028,494 |
Institutional Class |
|
|
|
|
Shares sold | 453,122 | 390,521 | $ 3,410,559 | $ 2,696,069 |
Shares redeemed | (282,175) | (263,268) | (1,995,414) | (1,673,740) |
Net increase (decrease) | 170,947 | 127,253 | $ 1,415,145 | $ 1,022,329 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) D | 12.25% | 1.48% | -1.94% |
Class T (incl. 3.50% sales charge) D | 14.50% | 1.71% | -1.95% |
Class B (incl. contingent deferred sales charge)B,D | 13.01% | 1.54% | -1.87% |
Class C (incl. contingent deferred sales charge)C,D | 17.18% | 1.91% | -2.07% |
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, Fidelity Advisor Communications Equipment Fund 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
Fidelity Advisor Communications Equipment Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 19.09%, 18.65%, 18.01% and 18.18%, respectively (excluding sales charges), topping the S&P 500® and the 6.65% gain of the S&P® Custom Communications Equipment Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus its industry benchmark, favorable stock selection within the fund's core area of communications equipment was the biggest positive factor. Additionally, out-of-benchmark positions in a number of industries helped, including semiconductors, Internet software/services and computer hardware. The fund's focus on mid- and small-cap stocks also was beneficial. At the stock level, Acme Packet was the fund's top contributor on both a relative and absolute basis. The company makes session border control equipment used to integrate Internet Protocol (IP) capabilities with corporate phone systems. Also adding value were F5 Networks and longtime holding Starent Networks, which was acquired on favorable terms in December. Underweighting two major index components that performed poorly, handset maker Nokia and wireless component supplier QUALCOMM, further aided our results. Conversely, untimely ownership of Motorola detracted from performance. Underweighting Telefonaktiebolaget LM Ericsson, a Swedish networking gear provider, and Harris, a maker of communications equipment for military applications, also detracted in view of those stocks' strong gains. Additionally, overweighting Tekelec, a provider of communication network software and systems, was counterproductive. The stock fell in May after the company reduced its financial guidance.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund: During the past year, the fund's Institutional Class shares returned 19.19%, topping the S&P 500 and the 6.65% gain of the S&P® Custom Communications Equipment Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus its industry benchmark, favorable stock selection within the fund's core area of communications equipment was the biggest positive factor. Additionally, out-of-benchmark positions in a number of industries helped, including semiconductors, Internet software/services and computer hardware. The fund's focus on mid- and small-cap stocks also was beneficial. At the stock level, Acme Packet was the fund's top contributor on both a relative and absolute basis. The company makes session border control equipment used to integrate Internet Protocol (IP) capabilities with corporate phone systems. Also adding value were F5 Networks and longtime holding Starent Networks, which was acquired on favorable terms in December. Underweighting two major index components that performed poorly, handset maker Nokia and wireless component supplier QUALCOMM, further aided our results. Conversely, untimely ownership of Motorola detracted from performance. Underweighting Telefonaktiebolaget LM Ericsson, a Swedish networking gear provider, and Harris, a maker of communications equipment for military applications, also detracted in view of those stocks' strong gains. Additionally, overweighting Tekelec, a provider of communication network software and systems, was counterproductive. The stock fell in May after the company reduced its financial guidance.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,143.80 | $ 7.44 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,141.70 | $ 8.76 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,138.40 | $ 11.40 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,140.00 | $ 11.41 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,144.30 | $ 6.11 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Communications Equipment Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
QUALCOMM, Inc. | 11.4 | 9.7 |
Cisco Systems, Inc. | 8.7 | 13.5 |
Telefonaktiebolaget LM Ericsson | 8.6 | 4.2 |
Motorola, Inc. | 6.4 | 3.8 |
Research In Motion Ltd. | 6.4 | 6.0 |
Juniper Networks, Inc. | 4.6 | 5.3 |
F5 Networks, Inc. | 4.3 | 2.7 |
Acme Packet, Inc. | 4.0 | 2.1 |
Riverbed Technology, Inc. | 3.1 | 1.3 |
Apple, Inc. | 2.4 | 0.0 |
| 59.9 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Communications Equipment | 79.5% |
|
 | Semiconductors & Semiconductor Equipment | 4.8% |
|
 | Computers & Peripherals | 4.3% |
|
 | Wireless Telecommunication Services | 3.9% |
|
 | Internet Software & Services | 2.6% |
|
| All Others* | 4.9% |
|
As of January 31, 2010 | |||
| Communications Equipment | 79.8% |
|
| Semiconductors & Semiconductor Equipment | 6.7% |
|
| Wireless Telecommunication Services | 4.0% |
|
| Electronic Equipment & Components | 3.2% |
|
| Internet Software & Services | 2.1% |
|
| All Others* | 4.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Communications Equipment Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 100.9% | |||
Shares | Value | ||
AUTOMOBILES - 0.2% | |||
Automobile Manufacturers - 0.2% | |||
BYD Co. Ltd. (H Shares) | 3,500 | $ 24,084 | |
COMMUNICATIONS EQUIPMENT - 79.4% | |||
Communications Equipment - 79.4% | |||
Acme Packet, Inc. (a) | 20,235 | 571,841 | |
Adtran, Inc. | 10,483 | 331,053 | |
ADVA AG Optical Networking (a) | 15,658 | 95,448 | |
Alcatel-Lucent SA sponsored ADR (a) | 500 | 1,490 | |
Arris Group, Inc. (a) | 6,771 | 63,106 | |
Aruba Networks, Inc. (a) | 4,951 | 84,068 | |
Aviat Networks, Inc. (a) | 5,667 | 22,895 | |
BigBand Networks, Inc. (a) | 10,500 | 32,760 | |
Blue Coat Systems, Inc. (a) | 6,300 | 137,970 | |
Brocade Communications Systems, Inc. (a) | 5,309 | 26,280 | |
BYD Electronic International Co. Ltd. | 24,000 | 13,379 | |
Ceragon Networks Ltd. (a) | 200 | 1,504 | |
Ciena Corp. (a) | 1,059 | 13,862 | |
Cisco Systems, Inc. (a) | 54,069 | 1,247,372 | |
CommScope, Inc. (a) | 4,198 | 85,387 | |
Comverse Technology, Inc. (a) | 906 | 6,795 | |
DG FastChannel, Inc. (a) | 2,700 | 102,951 | |
Digi International, Inc. (a) | 2,700 | 22,437 | |
DragonWave, Inc. (a) | 2,400 | 14,616 | |
EchoStar Holding Corp. Class A (a) | 2,120 | 40,492 | |
EMCORE Corp. (a) | 4,600 | 4,148 | |
Extreme Networks, Inc. (a) | 5,400 | 15,444 | |
F5 Networks, Inc. (a) | 7,030 | 617,445 | |
Finisar Corp. (a)(d) | 12,112 | 194,155 | |
Harmonic, Inc. (a) | 11,860 | 82,664 | |
Harris Corp. | 3,400 | 151,402 | |
Infinera Corp. (a) | 2,800 | 25,340 | |
Ixia (a) | 700 | 7,686 | |
JDS Uniphase Corp. (a) | 23,573 | 255,767 | |
Juniper Networks, Inc. (a) | 23,514 | 653,219 | |
Motorola, Inc. (a) | 122,374 | 916,581 | |
Nokia Corp. sponsored ADR | 7,600 | 72,276 | |
Oclaro, Inc. (a) | 13,197 | 162,719 | |
Oplink Communications, Inc. (a) | 3,174 | 51,133 | |
Opnext, Inc. (a) | 15,501 | 27,902 | |
Polycom, Inc. (a) | 10,600 | 314,608 | |
QUALCOMM, Inc. | 42,820 | 1,630,580 | |
Research In Motion Ltd. (a) | 15,900 | 914,727 | |
Riverbed Technology, Inc. (a) | 11,979 | 444,301 | |
Sandvine Corp. (a) | 8,930 | 13,726 | |
Sandvine Corp. (U.K.) (a) | 56,400 | 88,900 | |
ShoreTel, Inc. (a) | 21,276 | 106,380 | |
Sierra Wireless, Inc. (a) | 9,200 | 86,366 | |
Tekelec (a) | 2,600 | 36,764 | |
Telefonaktiebolaget LM Ericsson | 112,107 | 1,233,177 | |
| |||
Shares | Value | ||
Tellabs, Inc. | 41,367 | $ 288,742 | |
ZTE Corp. (H Shares) | 10,450 | 33,432 | |
| 11,345,290 | ||
COMPUTERS & PERIPHERALS - 4.3% | |||
Computer Hardware - 3.6% | |||
Apple, Inc. (a) | 1,300 | 334,425 | |
Compal Electronics, Inc. | 28 | 37 | |
HTC Corp. | 9,400 | 172,793 | |
| 507,255 | ||
Computer Storage & Peripherals - 0.7% | |||
Isilon Systems, Inc. (a) | 2,150 | 37,711 | |
Novatel Wireless, Inc. (a) | 4,698 | 31,477 | |
QLogic Corp. (a) | 2,200 | 35,024 | |
| 104,212 | ||
TOTAL COMPUTERS & PERIPHERALS | 611,467 | ||
ELECTRICAL EQUIPMENT - 0.0% | |||
Electrical Components & Equipment - 0.0% | |||
A123 Systems, Inc. | 100 | 1,078 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 2.6% | |||
Electronic Components - 0.6% | |||
Prime View International Co. Ltd. (a) | 16,000 | 23,209 | |
Universal Display Corp. (a) | 2,800 | 57,708 | |
| 80,917 | ||
Electronic Manufacturing Services - 2.0% | |||
Foxconn International Holdings Ltd. (a) | 2,000 | 1,406 | |
Plexus Corp. (a) | 1,000 | 29,200 | |
SMART Modular Technologies (WWH), Inc. (a) | 4,416 | 23,891 | |
Trimble Navigation Ltd. (a) | 8,219 | 233,173 | |
| 287,670 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 368,587 | ||
INTERNET SOFTWARE & SERVICES - 2.6% | |||
Internet Software & Services - 2.6% | |||
Akamai Technologies, Inc. (a) | 6,100 | 233,996 | |
Equinix, Inc. (a) | 300 | 28,053 | |
Limelight Networks, Inc. (a) | 6,765 | 28,751 | |
NetEase.com, Inc. sponsored ADR (a) | 200 | 7,660 | |
Rackspace Hosting, Inc. (a) | 3,000 | 56,100 | |
Tencent Holdings Ltd. | 1,100 | 21,200 | |
| 375,760 | ||
IT SERVICES - 0.2% | |||
Data Processing & Outsourced Services - 0.2% | |||
Amadeus IT Holding SA Class A (a) | 700 | 12,317 | |
NeuStar, Inc. Class A (a) | 700 | 16,261 | |
| 28,578 | ||
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - CONTINUED | |||
IT Consulting & Other Services - 0.0% | |||
Yucheng Technologies Ltd. (a) | 1,200 | $ 3,816 | |
TOTAL IT SERVICES | 32,394 | ||
MEDIA - 0.5% | |||
Cable & Satellite - 0.5% | |||
Virgin Media, Inc. | 3,050 | 65,667 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.8% | |||
Semiconductors - 4.8% | |||
Actel Corp. (a) | 451 | 6,612 | |
Altera Corp. | 1,200 | 33,264 | |
Applied Micro Circuits Corp. (a) | 2,758 | 32,986 | |
ARM Holdings PLC sponsored ADR | 1,600 | 24,720 | |
Avago Technologies Ltd. | 1,300 | 28,288 | |
Cavium Networks, Inc. (a) | 3,249 | 87,171 | |
Ceva, Inc. (a) | 2,900 | 37,033 | |
Conexant Systems, Inc. (a) | 1,280 | 2,637 | |
CSR PLC (a) | 2,483 | 13,303 | |
Entropic Communications, Inc. (a) | 4,200 | 32,886 | |
Exar Corp. (a) | 143 | 1,000 | |
Hittite Microwave Corp. (a) | 2,300 | 105,708 | |
Ikanos Communications, Inc. (a) | 3,985 | 6,974 | |
Infineon Technologies AG (a) | 1,076 | 7,263 | |
Microsemi Corp. (a) | 449 | 7,166 | |
Netlogic Microsystems, Inc. (a) | 2,302 | 68,047 | |
Omnivision Technologies, Inc. (a) | 600 | 13,386 | |
ON Semiconductor Corp. (a) | 7,285 | 49,174 | |
Pericom Semiconductor Corp. (a) | 1,700 | 15,538 | |
Pixelplus Co. Ltd. ADR (a) | 900 | 711 | |
PLX Technology, Inc. (a) | 900 | 3,438 | |
PMC-Sierra, Inc. (a) | 3,100 | 25,110 | |
Standard Microsystems Corp. (a) | 1,200 | 26,424 | |
TriQuint Semiconductor, Inc. (a) | 5,000 | 34,650 | |
Xilinx, Inc. | 900 | 25,128 | |
| 688,617 | ||
SOFTWARE - 2.4% | |||
Application Software - 1.9% | |||
AsiaInfo Holdings, Inc. (a) | 2,800 | 57,120 | |
Citrix Systems, Inc. (a) | 1,592 | 87,592 | |
Cyberlink Corp. | 8,000 | 33,388 | |
KongZhong Corp. sponsored ADR (a) | 100 | 604 | |
NetScout Systems, Inc. (a) | 1,200 | 19,020 | |
Smith Micro Software, Inc. (a) | 2,768 | 27,209 | |
Synchronoss Technologies, Inc. (a) | 708 | 13,799 | |
Taleo Corp. Class A (a) | 100 | 2,460 | |
TeleNav, Inc. | 300 | 1,632 | |
Ulticom, Inc. (a) | 3,441 | 32,621 | |
| 275,445 | ||
Home Entertainment Software - 0.1% | |||
Giant Interactive Group, Inc. ADR (d) | 2,000 | 13,460 | |
| |||
Shares | Value | ||
Systems Software - 0.4% | |||
Allot Communications Ltd. (a) | 300 | $ 1,452 | |
Fortinet, Inc. | 1,350 | 24,314 | |
Opnet Technologies, Inc. | 400 | 6,096 | |
TeleCommunication Systems, Inc. | 6,977 | 25,047 | |
| 56,909 | ||
TOTAL SOFTWARE | 345,814 | ||
WIRELESS TELECOMMUNICATION SERVICES - 3.9% | |||
Wireless Telecommunication Services - 3.9% | |||
American Tower Corp. Class A (a) | 1,890 | 87,394 | |
Crown Castle International Corp. (a) | 2,000 | 79,020 | |
Leap Wireless International, Inc. (a) | 300 | 3,567 | |
SBA Communications Corp. | 2,152 | 77,859 | |
SOFTBANK CORP. | 800 | 23,928 | |
Sprint Nextel Corp. (a) | 39,300 | 179,601 | |
Syniverse Holdings, Inc. (a) | 4,821 | 107,653 | |
| 559,022 | ||
TOTAL COMMON STOCKS (Cost $12,578,643) | 14,417,780 | ||
Convertible Bonds - 0.1% | ||||
| Principal Amount |
| ||
COMMUNICATIONS EQUIPMENT - 0.1% | ||||
Communications Equipment - 0.1% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 20,000 | 17,142 | ||
Money Market Funds - 10.5% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.24% (b) | 166,105 | 166,105 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 1,334,500 | 1,334,500 | |
TOTAL MONEY MARKET FUNDS (Cost $1,500,605) | 1,500,605 | ||
TOTAL INVESTMENT PORTFOLIO - 111.5% (Cost $14,099,248) | 15,935,527 |
NET OTHER ASSETS (LIABILITIES) - (11.5)% | (1,648,509) | ||
NET ASSETS - 100% | $ 14,287,018 | ||
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 | $ 566 |
Fidelity Securities Lending Cash Central Fund | 286 |
Total | $ 852 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 14,417,780 | $ 14,417,780 | $ - | $ - |
Convertible Bonds | 17,142 | - | 17,142 | - |
Money Market Funds | 1,500,605 | 1,500,605 | - | - |
Total Investments in Securities: | $ 15,935,527 | $ 15,918,385 | $ 17,142 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 78.8% |
Sweden | 8.6% |
Canada | 7.8% |
Taiwan | 1.7% |
Others (Individually Less Than 1%) | 3.1% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $1,187,448 of which $207,917, $393,298 and $586,233 will expire on July 31, 2016, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Fidelity Advisor Communications Equipment Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,292,800) - See accompanying schedule: Unaffiliated issuers (cost $12,598,643) | $ 14,434,922 |
|
Fidelity Central Funds (cost $1,500,605) | 1,500,605 |
|
Total Investments (cost $14,099,248) |
| $ 15,935,527 |
Receivable for investments sold | 77,979 | |
Receivable for fund shares sold | 50,808 | |
Dividends receivable | 6,145 | |
Interest receivable | 12 | |
Distributions receivable from Fidelity Central Funds | 262 | |
Receivable from investment adviser for expense reductions | 2,389 | |
Other receivables | 1,682 | |
Total assets | 16,074,804 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 361,188 | |
Payable for fund shares redeemed | 37,308 | |
Accrued management fee | 6,537 | |
Distribution fees payable | 5,973 | |
Other affiliated payables | 3,987 | |
Other payables and accrued expenses | 38,293 | |
Collateral on securities loaned, at value | 1,334,500 | |
Total liabilities | 1,787,786 | |
|
|
|
Net Assets | $ 14,287,018 | |
Net Assets consist of: |
| |
Paid in capital | $ 13,824,183 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,373,449) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,836,284 | |
Net Assets | $ 14,287,018 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 8.67 | |
|
|
|
Maximum offering price per share (100/94.25 of $8.67) | $ 9.20 | |
Class T: | $ 8.46 | |
|
|
|
Maximum offering price per share (100/96.50 of $8.46) | $ 8.77 | |
Class B: | $ 8.06 | |
|
|
|
Class C: | $ 8.06 | |
|
|
|
Institutional Class: | $ 8.88 | |
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
Fidelity Advisor Communications Equipment Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,775 |
Interest |
| 57 |
Income from Fidelity Central Funds |
| 852 |
Total income |
| 8,684 |
|
|
|
Expenses | ||
Management fee | $ 79,403 | |
Transfer agent fees | 47,204 | |
Distribution fees | 73,414 | |
Accounting and security lending fees | 5,530 | |
Custodian fees and expenses | 8,840 | |
Independent trustees' compensation | 79 | |
Registration fees | 49,485 | |
Audit | 43,935 | |
Legal | 59 | |
Miscellaneous | 160 | |
Total expenses before reductions | 308,109 | |
Expense reductions | (74,216) | 233,893 |
Net investment income (loss) | (225,209) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 955,864 | |
Foreign currency transactions | (534) | |
Total net realized gain (loss) |
| 955,330 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,311,446 | |
Assets and liabilities in foreign currencies | 429 | |
Total change in net unrealized appreciation (depreciation) |
| 1,311,875 |
Net gain (loss) | 2,267,205 | |
Net increase (decrease) in net assets resulting from operations | $ 2,041,996 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (225,209) | $ (3,392) |
Net realized gain (loss) | 955,330 | (2,045,448) |
Change in net unrealized appreciation (depreciation) | 1,311,875 | 1,654,393 |
Net increase (decrease) in net assets resulting from operations | 2,041,996 | (394,447) |
Share transactions - net increase (decrease) | 1,341,807 | 4,154,179 |
Redemption fees | 1,464 | 239 |
Total increase (decrease) in net assets | 3,385,267 | 3,759,971 |
|
|
|
Net Assets | ||
Beginning of period | 10,901,751 | 7,141,780 |
End of period | $ 14,287,018 | $ 10,901,751 |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.28 | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.11) | .02 F | (.08) | (.09) | (.09) |
Net realized and unrealized gain (loss) | 1.50 | (.56) | (1.45) | 2.29 | (.32) |
Total from investment operations | 1.39 | (.54) | (1.53) | 2.20 | (.41) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.67 | $ 7.28 | $ 7.82 | $ 9.49 | $ 7.29 |
Total Return A, B | 19.09% | (6.91)% | (16.43)% | 30.18% | (5.32)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.90% | 3.15% | 2.25% | 2.24% | 2.13% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
Expenses net of all reductions | 1.38% | 1.40% | 1.39% | 1.40% | 1.32% |
Net investment income (loss) | (1.32)% | .26% F | (.91)% | (1.00)% | (1.05)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,860 | $ 3,476 | $ 2,459 | $ 2,825 | $ 3,145 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 (.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.13 | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.13) | - F, H | (.10) | (.11) | (.11) |
Net realized and unrealized gain (loss) | 1.46 | (.55) | (1.42) | 2.26 | (.31) |
Total from investment operations | 1.33 | (.55) | (1.52) | 2.15 | (.42) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.46 | $ 7.13 | $ 7.68 | $ 9.34 | $ 7.19 |
Total Return A, B | 18.65% | (7.16)% | (16.59)% | 29.90% | (5.52)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.20% | 3.52% | 2.62% | 2.57% | 2.51% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
Expenses net of all reductions | 1.63% | 1.65% | 1.65% | 1.64% | 1.57% |
Net investment income (loss) | (1.57)% | .01% F | (1.16)% | (1.25)% | (1.30)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,273 | $ 2,396 | $ 2,138 | $ 3,271 | $ 2,932 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.13)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.83 | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.03) F | (.14) | (.14) | (.14) |
Net realized and unrealized gain (loss) | 1.39 | (.53) | (1.36) | 2.18 | (.31) |
Total from investment operations | 1.23 | (.56) | (1.50) | 2.04 | (.45) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.06 | $ 6.83 | $ 7.39 | $ 9.03 | $ 6.99 |
Total Return A, B | 18.01% | (7.58)% | (16.94)% | 29.18% | (6.05)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.68% | 3.98% | 3.03% | 3.00% | 2.94% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.15% | 2.15% | 2.07% |
Net investment income (loss) | (2.07)% | (.49)% F | (1.67)% | (1.75)% | (1.80)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,408 | $ 1,281 | $ 1,219 | $ 2,225 | $ 2,406 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.63)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.82 | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.03) F | (.14) | (.14) | (.15) |
Net realized and unrealized gain (loss) | 1.40 | (.53) | (1.37) | 2.18 | (.30) |
Total from investment operations | 1.24 | (.56) | (1.51) | 2.04 | (.45) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.06 | $ 6.82 | $ 7.38 | $ 9.03 | $ 6.99 |
Total Return A, B | 18.18% | (7.59)% | (17.06)% | 29.18% | (6.05)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.67% | 3.63% | 3.02% | 2.98% | 2.86% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.15% | 2.15% | 2.07% |
Net investment income (loss) | (2.07)% | (.49)% F | (1.67)% | (1.75)% | (1.81)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,029 | $ 2,792 | $ 1,097 | $ 1,745 | $ 1,768 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.63)%.
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 reductions from 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.
Communications Equipment
Financial Highlights - Institutional Class
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.45 | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.09) | .03 E | (.06) | (.07) | (.07) |
Net realized and unrealized gain (loss) | 1.52 | (.56) | (1.47) | 2.33 | (.33) |
Total from investment operations | 1.43 | (.53) | (1.53) | 2.26 | (.40) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 8.88 | $ 7.45 | $ 7.98 | $ 9.65 | $ 7.39 |
Total Return A | 19.19% | (6.64)% | (16.16)% | 30.58% | (5.13)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | 1.54% | 2.44% | 1.94% | 1.87% | 1.70% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.15% | 1.15% |
Expenses net of all reductions | 1.13% | 1.15% | 1.14% | 1.15% | 1.07% |
Net investment income (loss) | (1.07)% | .51% E | (.66)% | (.75)% | (.80)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,717 | $ 957 | $ 229 | $ 324 | $ 379 |
Portfolio turnover rate D | 106% | 97% | 63% | 58% | 174% |
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 (.63)%.
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Communications Equipment
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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. 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, 2009, dividend income has been reduced $46,400 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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, losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 2,694,088 |
Gross unrealized depreciation | (1,043,810) |
Net unrealized appreciation (depreciation) | $ 1,650,278 |
|
|
Tax Cost | $ 14,285,249 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (1,187,448) |
Net unrealized appreciation (depreciation) | $ 1,650,283 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $16,003,292 and $14,522,551, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 11,122 | $ 326 |
Class T | .25% | .25% | 15,332 | 28 |
Class B | .75% | .25% | 15,463 | 11,615 |
Class C | .75% | .25% | 31,497 | 8,293 |
|
|
| $ 73,414 | $ 20,262 |
Communications Equipment
5. 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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares. For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 6,542 |
Class T | 2,909 |
Class B* | 5,037 |
Class C* | 2,244 |
| $ 16,732 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 14,840 | .33 |
Class T | 11,726 | .38 |
Class B | 5,228 | .34 |
Class C | 10,557 | .34 |
Institutional Class | 4,853 | .24 |
| $ 47,204 |
|
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 $572 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $55 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $286.
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class A | 1.40% | $ 22,307 |
Class T | 1.65% | 16,765 |
Class B | 2.15% | 8,223 |
Class C | 2.15% | 16,271 |
Institutional Class | 1.15% | 7,769 |
|
| $ 71,335 |
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 $2,881 for the period.
9. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 379,066 | 355,106 | $ 3,104,413 | $ 2,309,221 |
Shares redeemed | (295,518) | (192,148) | (2,391,964) | (977,112) |
Net increase (decrease) | 83,548 | 162,958 | $ 712,449 | $ 1,332,109 |
Class T |
|
|
|
|
Shares sold | 156,340 | 141,676 | $ 1,239,925 | $ 842,215 |
Shares redeemed | (105,545) | (84,049) | (829,604) | (471,168) |
Net increase (decrease) | 50,795 | 57,627 | $ 410,321 | $ 371,047 |
Class B |
|
|
|
|
Shares sold | 104,878 | 79,696 | $ 798,141 | $ 489,378 |
Shares redeemed | (117,849) | (57,101) | (896,172) | (282,381) |
Net increase (decrease) | (12,971) | 22,595 | $ (98,031) | $ 206,997 |
Class C |
|
|
|
|
Shares sold | 234,346 | 334,255 | $ 1,790,479 | $ 2,000,139 |
Shares redeemed | (267,515) | (73,743) | (1,967,047) | (434,705) |
Net increase (decrease) | (33,169) | 260,512 | $ (176,568) | $ 1,565,434 |
Institutional Class |
|
|
|
|
Shares sold | 263,129 | 116,053 | $ 2,147,225 | $ 776,070 |
Shares redeemed | (198,313) | (16,263) | (1,653,589) | (97,478) |
Net increase (decrease) | 64,816 | 99,790 | $ 493,636 | $ 678,592 |
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.
Communications Equipment
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge)C | 17.12% | -1.60% | 0.81% |
Class T (incl. 3.50% sales charge)C | 19.61% | -1.36% | 0.81% |
Class B (incl. contingent deferred sales charge) A, C | 18.33% | -1.49% | 0.88% |
Class C (incl. contingent deferred sales charge) B, C | 22.41% | -1.16% | 0.66% |
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, Fidelity Advisor Consumer Discretionary Fund 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, 2000, 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
Fidelity Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from John Harris, Portfolio Manager of Fidelity Advisor® Consumer Discretionary Fund: For the 12-month period ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 24.27%, 23.94%, 23.33% and 23.41%, respectively, (excluding sales charges), underperforming the 27.86% gain of its sector benchmark, the MSCI® U.S. IM Consumer Discretionary 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - but solidly outperforming the S&P 500®. The fund's biggest disappointment was our sizable overweighting in home-improvement retailer Lowe's, one of the fund's largest holdings and biggest detractor in both relative and absolute terms. Although the stock performed well early on, wobbly housing reports later in the period drove it down. On the flip side, however, our beneficial underweighting of Lowe's competitor Home Depot offset some of the negative impact. The automobile industry was another weak spot, as overweightings in certain markets and poor stock picking in automotive retail and in auto parts and equipment hurt. The fund's relative return also took a hit from our underweighting in automaker Ford Motor since the company performed well as the only domestic automaker not to require government assistance. Jewelry retailer Zale detracted on disappointing revenue trends in its industry and company-specific problems. Several positions in casinos and gaming also hurt, including gaming machine manufacturers WMS Industries and Bally Technologies. On the positive side, casino operator Las Vegas Sands was the fund's top individual contributor, benefiting from accelerating growth in China's Macau market and the opening of the company's Singapore property. An overweighting and strong security selection in hotels, resorts and cruise lines helped, representing a cyclical play on an improving economy and increased leisure spending by consumers. Standouts in this area included Wyndham Worldwide and Starwood Hotels & Resorts Worldwide. Some of the stocks I've discussed were sold prior to period end.
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund: For the 12-month period ending July 31, 2010, the fund's Institutional Class shares returned 24.62%, underperforming the 27.86% gain of its sector benchmark, the MSCI® U.S. IM Consumer Discretionary 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - but solidly outperforming the S&P 500®. The fund's biggest disappointment was our sizable overweighting in home-improvement retailer Lowe's, one of the fund's largest holdings and biggest detractor in both relative and absolute terms. Although the stock performed well early on, wobbly housing reports later in the period drove down its value. On the flip side, however, our beneficial underweighting of Lowe's competitor Home Depot offset some of the negative impact. The automobile industry was another weak spot, as overweightings in certain markets and poor stock picking in automotive retail and in auto parts and equipment hurt. The fund's relative return also took a hit from our underweighting in automaker Ford Motor since the company performed well as the only domestic automaker not to require government assistance. Jewelry retailer Zale detracted on disappointing revenue trends in its industry and company-specific problems. Several positions in casinos and gaming also hurt, including gaming machine manufacturers WMS Industries and Bally Technologies. On the positive side, casino operator Las Vegas Sands was the fund's top individual contributor, benefiting from accelerating growth in China's Macau market and the opening of the company's Singapore property. An overweighting and strong security selection in hotels, resorts and cruise lines helped, representing a cyclical play on an improving economy and increased leisure spending by consumers. Standouts in this area included Wyndham Worldwide and Starwood Hotels & Resorts Worldwide. Some of the stocks I've discussed were sold prior to 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.
Consumer Discretionary
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,100.10 | $ 7.29 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,098.00 | $ 8.58 |
Hypothetical A |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,094.90 | $ 11.17 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.11% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,095.80 | $ 10.96 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.33 | $ 10.54 |
Institutional Class | 1.04% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,101.20 | $ 5.42 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.64 | $ 5.21 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Consumer Discretionary Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
McDonald's Corp. | 6.1 | 5.4 |
Lowe's Companies, Inc. | 5.8 | 5.7 |
The Walt Disney Co. | 5.7 | 5.5 |
Target Corp. | 4.2 | 6.1 |
Comcast Corp. Class A (special) (non-vtg.) | 3.6 | 0.0 |
Amazon.com, Inc. | 3.6 | 3.8 |
DIRECTV | 3.4 | 1.7 |
Time Warner, Inc. | 3.3 | 1.4 |
Time Warner Cable, Inc. | 2.6 | 1.8 |
Advance Auto Parts, Inc. | 2.3 | 2.4 |
| 40.6 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Media | 26.6% |
|
| Specialty Retail | 21.8% |
|
| Hotels, Restaurants & Leisure | 21.4% |
|
| Multiline Retail | 5.5% |
|
| Household Durables | 4.8% |
|
| All Others* | 19.9% |
|
As of January 31, 2010 | |||
| Media | 21.1% |
|
| Specialty Retail | 21.1% |
|
| Hotels, Restaurants & Leisure | 20.4% |
|
| Multiline Retail | 7.9% |
|
| Internet & Catalog Retail | 4.7% |
|
| All Others* | 24.8% |
|
* Includes short-term investments and net other assets. |
Consumer Discretionary
Fidelity Advisor Consumer Discretionary Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
AUTO COMPONENTS - 3.1% | |||
Auto Parts & Equipment - 3.1% | |||
Autoliv, Inc. | 3,400 | $ 195,296 | |
Gentex Corp. | 18,100 | 348,787 | |
Johnson Controls, Inc. | 24,254 | 698,758 | |
Tenneco, Inc. (a) | 10,903 | 300,923 | |
| 1,543,764 | ||
AUTOMOBILES - 2.5% | |||
Automobile Manufacturers - 2.5% | |||
Bayerische Motoren Werke AG (BMW) | 6,536 | 351,907 | |
Ford Motor Co. (a) | 70,564 | 901,102 | |
| 1,253,009 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.5% | |||
Diversified Support Services - 0.5% | |||
Viad Corp. | 11,100 | 220,890 | |
DISTRIBUTORS - 0.2% | |||
Distributors - 0.2% | |||
Li & Fung Ltd. | 20,000 | 91,664 | |
DIVERSIFIED CONSUMER SERVICES - 3.1% | |||
Education Services - 1.7% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 10,130 | 467,297 | |
Navitas Ltd. | 52,468 | 205,570 | |
Strayer Education, Inc. | 600 | 143,640 | |
| 816,507 | ||
Specialized Consumer Services - 1.4% | |||
Sotheby's Class A (ltd. vtg.) | 16,000 | 434,080 | |
Steiner Leisure Ltd. (a) | 6,100 | 259,311 | |
| 693,391 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 1,509,898 | ||
FOOD & STAPLES RETAILING - 0.8% | |||
Hypermarkets & Super Centers - 0.8% | |||
BJ's Wholesale Club, Inc. (a) | 3,968 | 180,742 | |
Costco Wholesale Corp. | 3,483 | 197,521 | |
| 378,263 | ||
HOTELS, RESTAURANTS & LEISURE - 21.4% | |||
Casinos & Gaming - 5.3% | |||
Bally Technologies, Inc. (a) | 14,600 | 471,580 | |
Las Vegas Sands Corp. unit | 1,410 | 635,092 | |
MGM Mirage, Inc. (a)(d) | 24,247 | 263,322 | |
Penn National Gaming, Inc. (a) | 7,312 | 200,276 | |
Pinnacle Entertainment, Inc. (a) | 12,800 | 138,880 | |
Shuffle Master, Inc. (a) | 32,500 | 285,675 | |
WMS Industries, Inc. (a) | 16,500 | 635,415 | |
| 2,630,240 | ||
| |||
Shares | Value | ||
Hotels, Resorts & Cruise Lines - 4.0% | |||
Home Inns & Hotels Management, Inc. sponsored ADR (a) | 6,000 | $ 252,420 | |
Starwood Hotels & Resorts Worldwide, Inc. | 16,900 | 818,805 | |
Wyndham Worldwide Corp. | 35,067 | 895,261 | |
| 1,966,486 | ||
Restaurants - 12.1% | |||
BJ's Restaurants, Inc. (a) | 10,600 | 270,300 | |
Darden Restaurants, Inc. | 10,600 | 444,034 | |
McDonald's Corp. | 43,500 | 3,033,255 | |
P.F. Chang's China Bistro, Inc. (d) | 6,493 | 268,810 | |
Papa John's International, Inc. (a) | 10,025 | 253,933 | |
Ruth's Hospitality Group, Inc. (a) | 56,219 | 227,125 | |
Starbucks Corp. | 37,459 | 930,856 | |
Texas Roadhouse, Inc. Class A (a) | 21,600 | 291,168 | |
The Cheesecake Factory, Inc. (a) | 11,700 | 274,248 | |
| 5,993,729 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 10,590,455 | ||
HOUSEHOLD DURABLES - 4.8% | |||
Home Furnishings - 1.3% | |||
La-Z-Boy, Inc. (a) | 30,400 | 260,224 | |
Tempur-Pedic International, Inc. (a) | 12,400 | 380,308 | |
| 640,532 | ||
Homebuilding - 1.4% | |||
Lennar Corp. Class A | 35,811 | 528,928 | |
Toll Brothers, Inc. (a) | 10,600 | 184,016 | |
| 712,944 | ||
Household Appliances - 2.1% | |||
Stanley Black & Decker, Inc. | 13,960 | 809,959 | |
Whirlpool Corp. | 2,600 | 216,580 | |
| 1,026,539 | ||
TOTAL HOUSEHOLD DURABLES | 2,380,015 | ||
INTERNET & CATALOG RETAIL - 4.5% | |||
Internet Retail - 4.5% | |||
Amazon.com, Inc. (a) | 15,000 | 1,768,350 | |
Expedia, Inc. | 19,700 | 446,796 | |
Ocado Group PLC (a) | 4,000 | 10,477 | |
| 2,225,623 | ||
INTERNET SOFTWARE & SERVICES - 1.3% | |||
Internet Software & Services - 1.3% | |||
eBay, Inc. (a) | 11,200 | 234,192 | |
Google, Inc. Class A (a) | 310 | 150,304 | |
Monster Worldwide, Inc. (a)(d) | 17,465 | 239,620 | |
| 624,116 | ||
Common Stocks - continued | |||
Shares | Value | ||
LEISURE EQUIPMENT & PRODUCTS - 0.6% | |||
Leisure Products - 0.6% | |||
Polaris Industries, Inc. | 4,800 | $ 286,560 | |
MEDIA - 26.6% | |||
Advertising - 3.3% | |||
Interpublic Group of Companies, Inc. (a) | 57,100 | 521,894 | |
Lamar Advertising Co. Class A (a) | 21,096 | 576,976 | |
National CineMedia, Inc. | 30,386 | 545,125 | |
| 1,643,995 | ||
Broadcasting - 0.9% | |||
Discovery Communications, Inc. | 8,784 | 301,994 | |
Scripps Networks Interactive, Inc. Class A | 2,900 | 123,627 | |
| 425,621 | ||
Cable & Satellite - 11.4% | |||
Comcast Corp. Class A (special) (non-vtg.) | 96,088 | 1,773,784 | |
DIRECTV (a) | 45,195 | 1,679,446 | |
Time Warner Cable, Inc. | 22,239 | 1,271,404 | |
Virgin Media, Inc. (d) | 41,800 | 899,954 | |
| 5,624,588 | ||
Movies & Entertainment - 11.0% | |||
The Walt Disney Co. | 83,227 | 2,803,918 | |
Time Warner, Inc. | 52,085 | 1,638,594 | |
Viacom, Inc. Class B (non-vtg.) | 30,746 | 1,015,848 | |
| 5,458,360 | ||
TOTAL MEDIA | 13,152,564 | ||
MULTILINE RETAIL - 5.5% | |||
Department Stores - 1.3% | |||
Macy's, Inc. | 35,234 | 657,114 | |
General Merchandise Stores - 4.2% | |||
Target Corp. | 39,916 | 2,048,489 | |
TOTAL MULTILINE RETAIL | 2,705,603 | ||
SPECIALTY RETAIL - 21.8% | |||
Apparel Retail - 5.6% | |||
Citi Trends, Inc. (a) | 7,901 | 248,012 | |
Inditex SA | 3,647 | 241,231 | |
J. Crew Group, Inc. (a) | 6,700 | 238,721 | |
Ross Stores, Inc. | 9,200 | 484,472 | |
TJX Companies, Inc. | 21,800 | 905,136 | |
Urban Outfitters, Inc. (a) | 19,778 | 636,060 | |
| 2,753,632 | ||
Automotive Retail - 2.3% | |||
Advance Auto Parts, Inc. | 20,800 | 1,113,424 | |
| |||
Shares | Value | ||
Computer & Electronics Retail - 2.3% | |||
Best Buy Co., Inc. | 24,149 | $ 837,004 | |
hhgregg, Inc. (a) | 13,430 | 272,495 | |
| 1,109,499 | ||
Home Improvement Retail - 7.4% | |||
Home Depot, Inc. | 16,790 | 478,683 | |
Lowe's Companies, Inc. | 138,623 | 2,875,041 | |
Lumber Liquidators Holdings, Inc. (a) | 12,725 | 315,835 | |
| 3,669,559 | ||
Homefurnishing Retail - 2.2% | |||
Bed Bath & Beyond, Inc. (a) | 29,006 | 1,098,747 | |
Specialty Stores - 2.0% | |||
Cabela's, Inc. Class A (a)(d) | 7,150 | 111,469 | |
Hengdeli Holdings Ltd. | 534,000 | 244,743 | |
OfficeMax, Inc. (a) | 21,905 | 313,022 | |
Tractor Supply Co. | 4,900 | 340,599 | |
| 1,009,833 | ||
TOTAL SPECIALTY RETAIL | 10,754,694 | ||
TEXTILES, APPAREL & LUXURY GOODS - 2.4% | |||
Apparel, Accessories & Luxury Goods - 2.4% | |||
G-III Apparel Group Ltd. (a) | 9,168 | 236,534 | |
Phillips-Van Heusen Corp. | 10,300 | 534,467 | |
Polo Ralph Lauren Corp. Class A | 5,492 | 433,923 | |
| 1,204,924 | ||
TOTAL COMMON STOCKS (Cost $48,242,113) | 48,922,042 | ||
Money Market Funds - 4.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 393,218 | 393,218 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 1,933,116 | 1,933,116 | |
TOTAL MONEY MARKET FUNDS (Cost $2,326,334) | 2,326,334 | ||
TOTAL INVESTMENT PORTFOLIO - 103.8% (Cost $50,568,447) | 51,248,376 | ||
NET OTHER ASSETS (LIABILITIES) - (3.8)% | (1,862,743) | ||
NET ASSETS - 100% | $ 49,385,633 | ||
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 | $ 1,024 |
Fidelity Securities Lending Cash Central Fund | 6,534 |
Total | $ 7,558 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 48,922,042 | $ 48,286,950 | $ 635,092 | $ - |
Money Market Funds | 2,326,334 | 2,326,334 | - | - |
Total Investments in Securities: | $ 51,248,376 | $ 50,613,284 | $ 635,092 | $ - |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $2,978,434 all of which will expire on July 31, 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Advisor Consumer Discretionary Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,905,403) - See accompanying schedule: Unaffiliated issuers (cost $48,242,113) | $ 48,922,042 |
|
Fidelity Central Funds (cost $2,326,334) | 2,326,334 |
|
Total Investments (cost $50,568,447) |
| $ 51,248,376 |
Receivable for investments sold | 1,166,959 | |
Receivable for fund shares sold | 81,423 | |
Dividends receivable | 25,449 | |
Distributions receivable from Fidelity Central Funds | 458 | |
Other receivables | 7,630 | |
Total assets | 52,530,295 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1 | |
Payable for investments purchased | 1,060,153 | |
Payable for fund shares redeemed | 58,061 | |
Accrued management fee | 22,929 | |
Distribution fees payable | 17,662 | |
Other affiliated payables | 13,092 | |
Other payables and accrued expenses | 39,648 | |
Collateral on securities loaned, at value | 1,933,116 | |
Total liabilities | 3,144,662 | |
|
|
|
Net Assets | $ 49,385,633 | |
Net Assets consist of: |
| |
Paid in capital | $ 52,106,769 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,401,070) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 679,934 | |
Net Assets | $ 49,385,633 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 12.75 | |
|
|
|
Maximum offering price per share (100/94.25 of $12.75) | $ 13.53 | |
Class T: | $ 12.32 | |
|
|
|
Maximum offering price per share (100/96.50 of $12.32) | $ 12.77 | |
Class B: | $ 11.42 | |
|
|
|
Class C: | $ 11.44 | |
|
|
|
Institutional Class: | $ 13.27 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 527,792 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 7,558 |
Total income |
| 535,356 |
|
|
|
Expenses | ||
Management fee | $ 241,648 | |
Transfer agent fees | 130,698 | |
Distribution fees | 188,832 | |
Accounting and security lending fees | 17,218 | |
Custodian fees and expenses | 20,074 | |
Independent trustees' compensation | 248 | |
Registration fees | 51,490 | |
Audit | 43,251 | |
Legal | 169 | |
Miscellaneous | 519 | |
Total expenses before reductions | 694,147 | |
Expense reductions | (19,431) | 674,716 |
Net investment income (loss) | (139,360) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,027,554 | |
Foreign currency transactions | (408) | |
Total net realized gain (loss) |
| 6,027,146 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,905,027 | |
Assets and liabilities in foreign currencies | 6 | |
Total change in net unrealized appreciation (depreciation) |
| 1,905,033 |
Net gain (loss) | 7,932,179 | |
Net increase (decrease) in net assets resulting from operations | $ 7,792,819 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (139,360) | $ 41,542 |
Net realized gain (loss) | 6,027,146 | (6,306,395) |
Change in net unrealized appreciation (depreciation) | 1,905,033 | 3,085,863 |
Net increase (decrease) in net assets resulting from operations | 7,792,819 | (3,178,990) |
Distributions to shareholders from net investment income | (6,476) | (36,930) |
Share transactions - net increase (decrease) | 9,354,979 | 5,542,508 |
Redemption fees | 1,671 | 4,036 |
Total increase (decrease) in net assets | 17,142,993 | 2,330,624 |
|
|
|
Net Assets | ||
Beginning of period | 32,242,640 | 29,912,016 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $5,602, respectively) | $ 49,385,633 | $ 32,242,640 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.26 | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | .04 | .02 | .02 F | (.04) |
Net realized and unrealized gain (loss) | 2.51 | (1.16) | (3.09) | 1.83 | (.07) |
Total from investment operations | 2.49 | (1.12) | (3.07) | 1.85 | (.11) |
Distributions from net investment income | - | (.03) | - | (.05) | - |
Distributions from net realized gain | - | - | (1.41) | (2.30) | (.12) |
Total distributions | - | (.03) | (1.41) | (2.35) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 12.75 | $ 10.26 | $ 11.41 | $ 15.89 | $ 16.39 |
Total Return A, B | 24.27% | (9.81)% | (21.24)% | 11.67% | (.69)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.62% | 1.40% | 1.42% | 1.42% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
Expenses net of all reductions | 1.39% | 1.40% | 1.40% | 1.39% | 1.39% |
Net investment income (loss) | (.15)% | .42% | .15% | .11% F | (.23)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 19,423 | $ 13,010 | $ 11,899 | $ 19,708 | $ 16,935 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.94 | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.05) | .01 | (.01) | (.02) F | (.07) |
Net realized and unrealized gain (loss) | 2.43 | (1.12) | (3.00) | 1.79 | (.07) |
Total from investment operations | 2.38 | (1.11) | (3.01) | 1.77 | (.14) |
Distributions from net investment income | - | (.02) | - | (.03) | - |
Distributions from net realized gain | - | - | (1.39) | (2.30) | (.12) |
Total distributions | - | (.02) | (1.39) | (2.33) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 12.32 | $ 9.94 | $ 11.07 | $ 15.47 | $ 16.03 |
Total Return A, B | 23.94% | (10.04)% | (21.41)% | 11.43% | (.89)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.71% | 1.89% | 1.64% | 1.69% | 1.69% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.64% | 1.65% | 1.65% |
Expenses net of all reductions | 1.64% | 1.65% | 1.62% | 1.61% | 1.62% |
Net investment income (loss) | (.40)% | .17% | (.08)% | (.10)% F | (.46)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 8,018 | $ 6,738 | $ 9,095 | $ 14,787 | $ 14,267 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.26 | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | (.03) | (.07) | (.10) F | (.15) |
Net realized and unrealized gain (loss) | 2.26 | (1.06) | (2.81) | 1.70 | (.07) |
Total from investment operations | 2.16 | (1.09) | (2.88) | 1.60 | (.22) |
Distributions from net realized gain | - | - | (1.33) | (2.30) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.42 | $ 9.26 | $ 10.35 | $ 14.56 | $ 15.26 |
Total Return A, B | 23.33% | (10.53)% | (21.80)% | 10.82% | (1.45)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.21% | 2.38% | 2.14% | 2.20% | 2.19% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.14% | 2.15% | 2.15% |
Expenses net of all reductions | 2.14% | 2.15% | 2.14% | 2.15% | 2.14% |
Net investment income (loss) | (.90)% | (.33)% | (.60)% | (.64)% F | (.98)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,643 | $ 3,550 | $ 5,090 | $ 11,081 | $ 14,088 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.27 | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | (.03) | (.07) | (.10) F | (.15) |
Net realized and unrealized gain (loss) | 2.27 | (1.07) | (2.81) | 1.71 | (.07) |
Total from investment operations | 2.17 | (1.10) | (2.88) | 1.61 | (.22) |
Distributions from net realized gain | - | - | (1.34) | (2.30) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.44 | $ 9.27 | $ 10.37 | $ 14.59 | $ 15.28 |
Total Return A, B | 23.41% | (10.61)% | (21.77)% | 10.88% | (1.45)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.12% | 2.38% | 2.15% | 2.16% | 2.12% |
Expenses net of fee waivers, if any | 2.12% | 2.15% | 2.15% | 2.15% | 2.12% |
Expenses net of all reductions | 2.11% | 2.15% | 2.14% | 2.15% | 2.12% |
Net investment income (loss) | (.87)% | (.33)% | (.60)% | (.64)% F | (.95)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 9,288 | $ 2,955 | $ 3,430 | $ 8,051 | $ 7,160 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.66 | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .02 | .06 | .06 | .06 E | - G |
Net realized and unrealized gain (loss) | 2.60 | (1.20) | (3.22) | 1.89 | (.07) |
Total from investment operations | 2.62 | (1.14) | (3.16) | 1.95 | (.07) |
Distributions from net investment income | (.01) | (.04) | - | (.06) | - |
Distributions from net realized gain | - | - | (1.41) | (2.30) | (.12) |
Total distributions | (.01) | (.04) | (1.41) | (2.36) | (.12) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 13.27 | $ 10.66 | $ 11.84 | $ 16.41 | $ 16.82 |
Total Return A | 24.62% | (9.59)% | (21.09)% | 12.04% | (.44)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | 1.09% | 1.15% | 1.14% | 1.15% | 1.18% |
Expenses net of fee waivers, if any | 1.09% | 1.15% | 1.14% | 1.15% | 1.15% |
Expenses net of all reductions | 1.08% | 1.15% | 1.14% | 1.14% | 1.14% |
Net investment income (loss) | .16% | .67% | .40% | .36% E | .02% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 9,013 | $ 5,990 | $ 398 | $ 1,385 | $ 1,144 |
Portfolio turnover rate D | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs)and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 gain distributions from the Fidelity Central Funds, foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 3,664,746 |
Gross unrealized depreciation | (3,407,453) |
Net unrealized appreciation (depreciation) | $ 257,293 |
|
|
Tax Cost | $ 50,991,083 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (2,978,434) |
Net unrealized appreciation (depreciation) | $ 257,298 |
Consumer Discretionary
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 6,476 | $ 36,930 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, short-term securities, aggregated $77,876,759 and $68,684,462, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 43,803 | $ - |
Class T | .25% | .25% | 38,298 | - |
Class B | .75% | .25% | 37,556 | 28,167 |
Class C | .75% | .25% | 69,175 | 9,486 |
|
|
| $ 188,832 | $ 37,653 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 16,991 |
Class T | 2,251 |
Class B* | 8,073 |
Class C* | 998 |
| $ 28,313 |
* 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
5. 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 applicable class were as follows:
| Amount | % of |
Class A | $ 56,967 | .32 |
Class T | 25,990 | .34 |
Class B | 12,319 | .33 |
Class C | 19,217 | .28 |
Institutional Class | 16,205 | .22 |
| $ 130,698 |
|
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 $2,710 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $165 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $6,534.
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class A | 1.40% | $ 7,175 |
Class T | 1.65% | 4,856 |
Class B | 2.15% | 2,076 |
|
| $ 14,107 |
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 $5,324 for the period.
Consumer Discretionary
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ - | $ 24,249 |
Class T | - | 11,523 |
Institutional Class | 6,476 | 1,158 |
Total | $ 6,476 | $ 36,930 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 790,157 | 816,977 | $ 9,916,430 | $ 7,713,175 |
Reinvestment of distributions | - | 2,650 | - | 22,145 |
Shares redeemed | (535,046) | (593,853) | (6,621,987) | (5,358,348) |
Net increase (decrease) | 255,111 | 225,774 | $ 3,294,443 | $ 2,376,972 |
Class T |
|
|
|
|
Shares sold | 124,293 | 78,811 | $ 1,532,286 | $ 695,608 |
Reinvestment of distributions | - | 1,356 | - | 11,014 |
Shares redeemed | (151,532) | (223,538) | (1,774,930) | (1,973,930) |
Net increase (decrease) | (27,239) | (143,371) | $ (242,644) | $ (1,267,308) |
Class B |
|
|
|
|
Shares sold | 84,992 | 72,993 | $ 960,028 | $ 620,027 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (149,463) | (181,364) | (1,626,686) | (1,535,455) |
Net increase (decrease) | (64,471) | (108,371) | $ (666,658) | $ (915,428) |
Class C |
|
|
|
|
Shares sold | 651,335 | 90,426 | $ 6,961,979 | $ 763,994 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (158,268) | (102,729) | (1,769,753) | (841,041) |
Net increase (decrease) | 493,067 | (12,303) | $ 5,192,226 | $ (77,047) |
Institutional Class |
|
|
|
|
Shares sold | 718,370 | 581,111 | $ 9,586,550 | $ 5,891,294 |
Reinvestment of distributions | 555 | 104 | 6,322 | 903 |
Shares redeemed | (601,861) | (52,903) | (7,815,260) | (466,878) |
Net increase (decrease) | 117,064 | 528,312 | $ 1,777,612 | $ 5,425,319 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 2.49% | -3.43% | -4.01% |
Class T (incl. 3.50% sales charge) | 4.70% | -3.20% | -3.99% |
Class B (incl. contingent deferred sales charge) B | 3.08% | -3.36% | -3.92% |
Class C (incl. contingent deferred sales charge) C | 7.09% | -2.98% | -4.12% |
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
Fidelity Advisor Electronics Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Stephen Barwikowski and Christopher Lin, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 8.74%, 8.50%, 8.08% and 8.09%, respectively (excluding sales charges), compared with 13.84% for the broadly based S&P 500® and 10.34% for the MSCI® U.S. IM Semiconductors & Semiconductor Equipment 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, weak stock picking and an underweighting in semiconductors, by far the fund's largest investment category, worked against us. Secondarily, out-of-index exposure to communications equipment was counterproductive, as was security selection in the semiconductor equipment group. Underweighting benchmark components Cree, a maker of light-emitting diode (LED) lights, and Cirrus Logic, a supplier of audio chips, hampered performance, given those stocks' strong gains. I sold Cirrus Logic by period end. Untimely ownership of Advanced Micro Devices, an Intel competitor in the manufacture of microprocessors for personal computers, and Marvell Technology Group, a maker of chips for data storage and handset applications, also had a negative impact on the fund's results. In the case of silicon wafer manufacturer MEMC Electronic Materials, the company reported disappointing financial results due in part to its expansion into solar project installation, a business with solid potential that was underestimated by the market, in our opinion. Another holding with ties to the solar power industry, SunPower, struggled amid greater competition and concern about its balance sheet. Conversely, out-of-index representation in the computer storage/peripherals and electronic manufacturing services groups aided relative performance. At the stock level, underweighting Intel in the first half of the period added value. Another holding that bolstered results was SanDisk, which was helped by its status as a key supplier of flash memory to Apple. Other contributors included Avago Technologies, a provider of analog semiconductors for wireless telecommunications, and two Germany-based success stories from the period's first half: chip maker Infineon Technologies and Aixtron, a semiconductor equipment maker with a rapidly growing business producing equipment for manufacturing LED lights. SanDisk, Infineon and Aixtron were out-of-index positions, and the latter two stocks were sold by period end.
Comments from Stephen Barwikowski and Christopher Lin, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund: During the past year, the fund's Institutional Class shares returned 9.10%, , compared with 13.84% for the broadly based S&P 500® and 10.34% for the MSCI® U.S. IM Semiconductors & Semiconductor Equipment 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, weak stock picking and an underweighting in semiconductors, by far the fund's largest investment category, worked against us. Secondarily, out-of-index exposure to communications equipment was counterproductive, as was security selection in the semiconductor equipment group. Underweighting benchmark components Cree, a maker of light-emitting diode (LED) lights, and Cirrus Logic, a supplier of audio chips, hampered performance, given those stocks' strong gains. I sold Cirrus Logic by period end. Untimely ownership of Advanced Micro Devices, an Intel competitor in the manufacture of microprocessors for personal computers, and Marvell Technology Group, a maker of chips for data storage and handset applications, also had a negative impact on the fund's results. In the case of silicon wafer manufacturer MEMC Electronic Materials, the company reported disappointing financial results due in part to its expansion into solar project installation, a business with solid potential that was underestimated by the market, in our opinion. Another holding with ties to the solar power industry, SunPower, struggled amid greater competition and concern about its balance sheet. Conversely, out-of-index representation in the computer storage/peripherals and electronic manufacturing services groups aided relative performance. At the stock level, underweighting Intel in the first half of the period added value. Another holding that bolstered results was SanDisk, which was helped by its status as a key supplier of flash memory to Apple. Other contributors included Avago Technologies, a provider of analog semiconductors for wireless telecommunications, and two Germany-based success stories from the period's first half: chip maker Infineon Technologies and Aixtron, a semiconductor equipment maker with a rapidly growing business producing equipment for manufacturing LED lights. SanDisk, Infineon and Aixtron were out-of-index positions, and the latter two stocks were sold by 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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,031.80 | $ 7.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,030.90 | $ 8.31 |
Hypothetical A |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,029.20 | $ 10.82 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,029.30 | $ 10.82 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,033.90 | $ 5.80 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Electronics
Fidelity Advisor Electronics Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Intel Corp. | 18.0 | 23.6 |
Marvell Technology Group Ltd. | 7.6 | 4.5 |
Applied Materials, Inc. | 5.2 | 5.5 |
Micron Technology, Inc. | 4.5 | 4.6 |
Advanced Micro Devices, Inc. | 4.3 | 0.5 |
Texas Instruments, Inc. | 4.1 | 6.5 |
Amkor Technology, Inc. | 3.8 | 2.3 |
QUALCOMM, Inc. | 3.5 | 2.2 |
Avago Technologies Ltd. | 3.0 | 1.9 |
Intersil Corp. Class A | 2.8 | 1.5 |
| 56.8 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Semiconductors & Semiconductor Equipment | 89.6% |
|
| Electronic Equipment & Components | 4.3% |
|
| Communications Equipment | 3.7% |
|
| Computers & Peripherals | 1.5% |
|
| Internet Software & Services | 0.3% |
|
| All Others* | 0.6% |
|
As of January 31, 2010 | |||
| Semiconductors & Semiconductor Equipment | 88.4% |
|
| Electronic Equipment & Components | 3.5% |
|
| Computers & Peripherals | 2.6% |
|
| Communications Equipment | 2.2% |
|
| Electrical Equipment | 0.5% |
|
| All Others* | 2.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Electronics Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 3.7% | |||
Communications Equipment - 3.7% | |||
QUALCOMM, Inc. | 12,981 | $ 494,316 | |
Research In Motion Ltd. (a) | 500 | 28,765 | |
| 523,081 | ||
COMPUTERS & PERIPHERALS - 1.5% | |||
Computer Storage & Peripherals - 1.5% | |||
SanDisk Corp. (a) | 500 | 21,850 | |
Seagate Technology (a) | 8,100 | 101,655 | |
Western Digital Corp. (a) | 3,573 | 94,291 | |
| 217,796 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 4.3% | |||
Electronic Components - 0.1% | |||
Universal Display Corp. (a) | 300 | 6,183 | |
Electronic Manufacturing Services - 3.9% | |||
Benchmark Electronics, Inc. (a) | 5,865 | 97,946 | |
Flextronics International Ltd. (a) | 39,826 | 247,718 | |
Jabil Circuit, Inc. | 8,262 | 119,882 | |
SMART Modular Technologies (WWH), Inc. (a) | 600 | 3,246 | |
Tyco Electronics Ltd. | 2,200 | 59,400 | |
Viasystems Group, Inc. (a) | 1,597 | 24,626 | |
| 552,818 | ||
Technology Distributors - 0.3% | |||
Avnet, Inc. (a) | 1,869 | 47,005 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 606,006 | ||
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
Google, Inc. Class A (a) | 100 | 48,485 | |
LIFE SCIENCES TOOLS & SERVICES - 0.0% | |||
Life Sciences Tools & Services - 0.0% | |||
Arrowhead Research Corp. warrants 5/21/17 (a) | 64,879 | 1 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 89.5% | |||
Semiconductor Equipment - 18.6% | |||
Advanced Energy Industries, Inc. (a) | 200 | 3,522 | |
Amkor Technology, Inc. (a)(d) | 93,853 | 541,532 | |
Applied Materials, Inc. | 62,471 | 737,158 | |
ASM International NV unit (a) | 5,100 | 129,744 | |
ASML Holding NV | 3,230 | 103,974 | |
Brooks Automation, Inc. (a) | 300 | 2,289 | |
Cabot Microelectronics Corp. (a) | 100 | 3,269 | |
Cohu, Inc. | 100 | 1,568 | |
Cymer, Inc. (a) | 4,218 | 140,375 | |
Entegris, Inc. (a) | 1,561 | 7,196 | |
KLA-Tencor Corp. | 2,930 | 92,793 | |
Lam Research Corp. (a) | 9,190 | 387,726 | |
Mattson Technology, Inc. (a) | 1,196 | 3,504 | |
MEMC Electronic Materials, Inc. (a) | 20,736 | 198,236 | |
| |||
Shares | Value | ||
Novellus Systems, Inc. (a) | 1,200 | $ 32,052 | |
Teradyne, Inc. (a) | 2,500 | 26,900 | |
Tessera Technologies, Inc. (a) | 300 | 5,094 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 5,400 | 152,604 | |
Verigy Ltd. (a) | 8,300 | 73,870 | |
| 2,643,406 | ||
Semiconductors - 70.9% | |||
Actel Corp. (a) | 100 | 1,466 | |
Advanced Micro Devices, Inc. (a)(d) | 81,700 | 611,933 | |
Alpha & Omega Semiconductor Ltd. (a) | 3,400 | 42,194 | |
Altera Corp. | 11,838 | 328,149 | |
Analog Devices, Inc. | 2,600 | 77,246 | |
Applied Micro Circuits Corp. (a) | 928 | 11,099 | |
Atheros Communications, Inc. (a) | 3,309 | 87,490 | |
Atmel Corp. (a) | 30,548 | 159,766 | |
Avago Technologies Ltd. | 19,492 | 424,146 | |
Broadcom Corp. Class A | 10,940 | 394,168 | |
Conexant Systems, Inc. (a)(d) | 14,276 | 29,409 | |
Cree, Inc. (a) | 200 | 14,168 | |
CSR PLC (a) | 4,200 | 22,502 | |
Fairchild Semiconductor International, Inc. (a) | 33,049 | 300,085 | |
Ikanos Communications, Inc. (a) | 7,700 | 13,475 | |
Integrated Device Technology, Inc. (a) | 18,103 | 105,178 | |
Intel Corp. | 124,142 | 2,557,322 | |
International Rectifier Corp. (a) | 5,600 | 109,368 | |
Intersil Corp. Class A | 35,674 | 405,257 | |
LSI Corp. (a) | 58,185 | 234,486 | |
Marvell Technology Group Ltd. (a) | 72,311 | 1,078,880 | |
Micron Technology, Inc. (a) | 88,060 | 641,077 | |
Monolithic Power Systems, Inc. (a) | 8,368 | 147,444 | |
Motech Industries, Inc. | 1 | 4 | |
National Semiconductor Corp. | 15,201 | 209,774 | |
NVIDIA Corp. (a) | 31,453 | 289,053 | |
ON Semiconductor Corp. (a) | 39,616 | 267,408 | |
PMC-Sierra, Inc. (a) | 25,536 | 206,842 | |
Samsung Electronics Co. Ltd. | 60 | 41,091 | |
Skyworks Solutions, Inc. (a) | 3,450 | 60,479 | |
Standard Microsystems Corp. (a) | 6,254 | 137,713 | |
SunPower Corp. Class B (a) | 5,490 | 63,355 | |
Texas Instruments, Inc. | 23,512 | 580,511 | |
Volterra Semiconductor Corp. (a) | 2,600 | 58,552 | |
Xilinx, Inc. | 13,656 | 381,276 | |
| 10,092,366 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 12,735,772 | ||
TOTAL COMMON STOCKS (Cost $16,571,876) | 14,131,141 | ||
Convertible Bonds - 0.1% | ||||
| Principal Amount | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | ||||
Semiconductors - 0.1% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 10,000 | $ 8,138 | ||
Money Market Funds - 5.2% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.24% (b) | 61,013 | 61,013 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 682,750 | 682,750 | |
TOTAL MONEY MARKET FUNDS (Cost $743,763) | 743,763 | ||
TOTAL INVESTMENT PORTFOLIO - 104.6% (Cost $17,325,639) | 14,883,042 | ||
NET OTHER ASSETS (LIABILITIES) - (4.6)% | (652,584) | ||
NET ASSETS - 100% | $ 14,230,458 | ||
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 | $ 490 |
Fidelity Securities Lending Cash Central Fund | 377 |
Total | $ 867 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 14,131,141 | $ 14,131,140 | $ - | $ 1 |
Convertible Bonds | 8,138 | - | 8,138 | - |
Money Market Funds | 743,763 | 743,763 | - | - |
Total Investments in Securities: | $ 14,883,042 | $ 14,874,903 | $ 8,138 | $ 1 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (23,884) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 23,885 |
Transfers out of Level 3 | - |
Ending Balance | $ 1 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at July 31, 2010 | $ (23,884) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.5% |
Bermuda | 7.9% |
Singapore | 5.2% |
Netherlands | 1.6% |
Others (Individually Less Than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $12,180,956 of which $4,122,383, $2,265,871, $279,201, $310,663 and $5,202,838 will expire on July 31, 2011, 2012, 2013, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Electronics
Fidelity Advisor Electronics Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $641,415) - See accompanying schedule: Unaffiliated issuers (cost $16,581,876) | $ 14,139,279 |
|
Fidelity Central Funds (cost $743,763) | 743,763 |
|
Total Investments (cost $17,325,639) |
| $ 14,883,042 |
Receivable for investments sold | 357,233 | |
Receivable for fund shares sold | 40,592 | |
Dividends receivable | 3,347 | |
Interest receivable | 139 | |
Distributions receivable from Fidelity Central Funds | 125 | |
Receivable from investment adviser for expense reductions | 5,469 | |
Other receivables | 172 | |
Total assets | 15,290,119 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 8,335 | |
Payable for investments purchased | 260,378 | |
Payable for fund shares redeemed | 45,314 | |
Accrued management fee | 6,851 | |
Distribution fees payable | 6,526 | |
Other affiliated payables | 4,319 | |
Other payables and accrued expenses | 45,188 | |
Collateral on securities loaned, at value | 682,750 | |
Total liabilities | 1,059,661 | |
|
|
|
Net Assets | $ 14,230,458 | |
Net Assets consist of: |
| |
Paid in capital | $ 29,255,743 | |
Accumulated net investment loss | (688) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (12,582,023) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (2,442,574) | |
Net Assets | $ 14,230,458 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 7.14 | |
|
|
|
Maximum offering price per share (100/94.25 of $7.14) | $ 7.58 | |
Class T: | $ 7.00 | |
|
|
|
Maximum offering price per share (100/96.50 of $7.00) | $ 7.25 | |
Class B: | $ 6.69 | |
|
|
|
Class C: | $ 6.68 | |
|
|
|
Institutional Class: | $ 7.33 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 189,180 |
Interest |
| 9,144 |
Income from Fidelity Central Funds |
| 867 |
Total income |
| 199,191 |
|
|
|
Expenses | ||
Management fee | $ 89,248 | |
Transfer agent fees | 54,911 | |
Distribution fees | 86,081 | |
Accounting and security lending fees | 6,238 | |
Custodian fees and expenses | 33,640 | |
Independent trustees' compensation | 91 | |
Registration fees | 48,981 | |
Audit | 42,228 | |
Legal | 134 | |
Miscellaneous | 215 | |
Total expenses before reductions | 361,767 | |
Expense reductions | (93,231) | 268,536 |
Net investment income (loss) | (69,345) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,767,944 | |
Foreign currency transactions | (727) | |
Total net realized gain (loss) |
| 2,767,217 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,525,247) | |
Assets and liabilities in foreign currencies | 40 | |
Total change in net unrealized appreciation (depreciation) |
| (1,525,207) |
Net gain (loss) | 1,242,010 | |
Net increase (decrease) in net assets resulting from operations | $ 1,172,665 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (69,345) | $ 34,721 |
Net realized gain (loss) | 2,767,217 | (3,412,258) |
Change in net unrealized appreciation (depreciation) | (1,525,207) | 2,662,881 |
Net increase (decrease) in net assets resulting from operations | 1,172,665 | (714,656) |
Distributions to shareholders from net investment income | (30,683) | - |
Share transactions - net increase (decrease) | (1,121,329) | 612,433 |
Redemption fees | 1,611 | 572 |
Total increase (decrease) in net assets | 22,264 | (101,651) |
|
|
|
Net Assets | ||
Beginning of period | 14,208,194 | 14,309,845 |
End of period (including accumulated net investment loss of $688 and undistributed net investment income of $33,992, respectively) | $ 14,230,458 | $ 14,208,194 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.59 | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.01) | .04 | - G | (.03) | (.04) |
Net realized and unrealized gain (loss) | .59 | (.24) | (2.32) | 1.76 | (.62) |
Total from investment operations | .58 | (.20) | (2.32) | 1.73 | (.66) |
Distributions from net investment income | (.03) | - | - | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 7.14 | $ 6.59 | $ 6.79 | $ 9.11 | $ 7.38 |
Total Return A, B | 8.74% | (2.95)% | (25.47)% | 23.44% | (8.21)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.97% | 2.44% | 1.72% | 1.60% | 1.50% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
Expenses net of all reductions | 1.39% | 1.40% | 1.39% | 1.38% | 1.36% |
Net investment income (loss) | (.15)% | .69% | (.02)% | (.35)% | (.52)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,394 | $ 5,433 | $ 3,970 | $ 7,551 | $ 7,916 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.46 | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.03) | .02 | (.02) | (.05) | (.06) |
Net realized and unrealized gain (loss) | .58 | (.23) | (2.29) | 1.74 | (.61) |
Total from investment operations | .55 | (.21) | (2.31) | 1.69 | (.67) |
Distributions from net investment income | (.01) | - | - | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 7.00 | $ 6.46 | $ 6.67 | $ 8.98 | $ 7.29 |
Total Return A, B | 8.50% | (3.15)% | (25.72)% | 23.18% | (8.42)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.26% | 2.77% | 2.02% | 1.89% | 1.82% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
Expenses net of all reductions | 1.64% | 1.65% | 1.64% | 1.64% | 1.61% |
Net investment income (loss) | (.40)% | .44% | (.27)% | (.60)% | (.77)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,862 | $ 4,195 | $ 4,635 | $ 8,103 | $ 9,048 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.19 | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.06) | - G | (.06) | (.09) | (.10) |
Net realized and unrealized gain (loss) | .56 | (.24) | (2.21) | 1.69 | (.58) |
Total from investment operations | .50 | (.24) | (2.27) | 1.60 | (.68) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 6.69 | $ 6.19 | $ 6.43 | $ 8.70 | $ 7.10 |
Total Return A, B | 8.08% | (3.73)% | (26.09)% | 22.54% | (8.74)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.73% | 3.22% | 2.48% | 2.36% | 2.29% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.15% | 2.15% | 2.14% | 2.13% | 2.11% |
Net investment income (loss) | (.90)% | (.06)% | (.77)% | (1.10)% | (1.27)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,073 | $ 1,197 | $ 2,027 | $ 4,572 | $ 6,123 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.18 | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.06) | - G | (.06) | (.09) | (.10) |
Net realized and unrealized gain (loss) | .56 | (.24) | (2.21) | 1.69 | (.58) |
Total from investment operations | .50 | (.24) | (2.27) | 1.60 | (.68) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 6.68 | $ 6.18 | $ 6.42 | $ 8.69 | $ 7.09 |
Total Return A, B | 8.09% | (3.74)% | (26.12)% | 22.57% | (8.75)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.72% | 3.21% | 2.47% | 2.34% | 2.26% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.14% | 2.15% | 2.14% | 2.13% | 2.11% |
Net investment income (loss) | (.90)% | (.06)% | (.77)% | (1.10)% | (1.27)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,256 | $ 3,016 | $ 3,325 | $ 8,389 | $ 7,009 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.75 | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .01 | .05 | .02 | (.01) | (.02) |
Net realized and unrealized gain (loss) | .60 | (.24) | (2.38) | 1.80 | (.62) |
Total from investment operations | .61 | (.19) | (2.36) | 1.79 | (.64) |
Distributions from net investment income | (.03) | - | - | - | - |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 7.33 | $ 6.75 | $ 6.94 | $ 9.30 | $ 7.51 |
Total Return A | 9.10% | (2.74)% | (25.38)% | 23.83% | (7.85)% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | 1.64% | 2.16% | 1.47% | 1.26% | 1.11% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.15% | 1.11% |
Expenses net of all reductions | 1.14% | 1.15% | 1.14% | 1.13% | 1.07% |
Net investment income (loss) | .11% | .94% | .23% | (.10)% | (.23)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 645 | $ 367 | $ 353 | $ 730 | $ 750 |
Portfolio turnover rate D | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds,including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Electronics
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 700,582 |
Gross unrealized depreciation | (3,544,246) |
Net unrealized appreciation (depreciation) | $ (2,843,664) |
|
|
Tax Cost | $ 17,726,706 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (12,180,956) |
Net unrealized appreciation (depreciation) | $ (2,843,641) |
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 30,683 | $ - |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $13,287,875 and $13,904,771, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 15,085 | $ 421 |
Class T | .25% | .25% | 22,598 | 168 |
Class B | .75% | .25% | 12,907 | 9,699 |
Class C | .75% | .25% | 35,491 | 5,274 |
|
|
| $ 86,081 | $ 15,562 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 7,857 |
Class T | 3,294 |
Class B* | 1,380 |
Class C* | 1,830 |
| $ 14,361 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 20,190 | .34 |
Class T | 16,723 | .37 |
Class B | 4,366 | .34 |
Class C | 11,892 | .34 |
Institutional Class | 1,740 | .30 |
| $ 54,911 |
|
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 $1,468 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $63 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $377.
Electronics
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class A | 1.40% | $ 34,223 |
Class T | 1.65% | 27,426 |
Class B | 2.15% | 7,476 |
Class C | 2.15% | 20,144 |
Institutional Class | 1.15% | 2,834 |
|
| $ 92,103 |
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 $1,128 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 22,913 | $ - |
Class T | 5,704 | - |
Institutional Class | 2,066 | - |
Total | $ 30,683 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 463,925 | 454,229 | $ 3,450,517 | $ 2,515,743 |
Reinvestment of distributions | 3,053 | - | 21,642 | - |
Shares redeemed | (536,272) | (214,204) | (3,911,247) | (1,126,041) |
Net increase (decrease) | (69,294) | 240,025 | $ (439,088) | $ 1,389,702 |
Class T |
|
|
|
|
Shares sold | 149,748 | 211,424 | $ 1,082,460 | $ 1,046,750 |
Reinvestment of distributions | 793 | - | 5,519 | - |
Shares redeemed | (248,392) | (256,279) | (1,826,132) | (1,247,787) |
Net increase (decrease) | (97,851) | (44,855) | $ (738,153) | $ (201,037) |
Class B |
|
|
|
|
Shares sold | 71,160 | 57,656 | $ 500,056 | $ 278,136 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (103,890) | (179,676) | (717,856) | (832,636) |
Net increase (decrease) | (32,730) | (122,020) | $ (217,800) | $ (554,500) |
Class C |
|
|
|
|
Shares sold | 184,365 | 132,135 | $ 1,261,735 | $ 684,005 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (184,552) | (162,035) | (1,259,598) | (721,474) |
Net increase (decrease) | (187) | (29,900) | $ 2,137 | $ (37,469) |
Institutional Class |
|
|
|
|
Shares sold | 94,039 | 29,924 | $ 728,440 | $ 158,084 |
Reinvestment of distributions | 194 | - | 1,410 | - |
Shares redeemed | (60,662) | (26,319) | (458,275) | (142,347) |
Net increase (decrease) | 33,571 | 3,605 | $ 271,575 | $ 15,737 |
Annual Report
Notes to Financial Statements - continued
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Electronics
Fidelity 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 class' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) C | 1.11% | 2.26% | 7.80% |
Class T (incl. 3.50% sales charge) C | 3.28% | 2.52% | 7.84% |
Class B (incl. contingent deferred sales charge) A,C | 1.45% | 2.46% | 7.89% |
Class C (incl. contingent deferred sales charge) B,C | 5.49% | 2.74% | 7.68% |
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, Fidelity Advisor Energy Fund 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, 2000, 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.
Energy
Fidelity Advisor Energy Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 7.28%, 7.03%, 6.45% and 6.49%, respectively (excluding sales charges), falling short of the S&P 500® but ahead of the 6.26% return of the MSCI® U.S. IM Energy 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, the fund benefited from a significant underweighting and solid security selection in the sluggish integrated oil and gas segment, specifically a large underweighting in benchmark goliath Exxon Mobil, whose stock price fell more than 13%. Overweighting the outperforming coal and consumable fuels segment also helped, aided by a 52% increase in coal prices. An overweighting in the oil/gas equipment and services group further contributed. Among individual stocks, top contributors included coal producer Massey Energy and oil-field services providers BJ Services and Smith International, both of which were being acquired. Conversely, poor stock picking in the oil/gas exploration and production group hurt returns and accounted for two of the fund's three biggest detractors. As gas prices fell in the second half of the period, so did the value of our holdings in natural gas firms Petrohawk Energy and Southwestern Energy and global energy services firm Weatherford International. An underweighting in integrated oil and gas firm ConocoPhillips hurt, as the company's stock rose after a restructuring. Another detractor was Transocean, which owned the Deepwater Horizon rig that exploded in the Gulf of Mexico.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the year ending July 31, 2010, the fund's Institutional Class shares returned 7.60%, falling short of the S&P 500®, but ahead of the 6.26% return of the MSCI® U.S. IM Energy 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, the fund benefited from a significant underweighting and solid security selection in the sluggish integrated oil and gas segment, specifically a large underweighting in benchmark goliath Exxon Mobil, whose stock price fell more than 13%. Overweighting the outperforming coal and consumable fuels segment also helped, aided by a 52% increase in coal prices. An overweighting in the oil/gas equipment and services group further contributed. Among individual stocks, top contributors included coal producer Massey Energy and oil-field services providers BJ Services and Smith International, both of which were being acquired. Conversely, poor stock picking in the oil/gas exploration and production group hurt returns and accounted for two of the fund's three biggest detractors. As gas prices fell in the second half of the period, so did the value of our holdings in natural gas firms Petrohawk Energy and Southwestern Energy and global energy services firm Weatherford International. An underweighting in integrated oil and gas firm ConocoPhillips hurt, as the company's stock rose after a restructuring. Another detractor was Transocean, which owned the Deepwater Horizon rig that exploded in the Gulf of Mexico.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.18% |
|
|
|
Actual |
| $ 1,000.00 | $ 957.50 | $ 5.73 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.94 | $ 5.91 |
Class T | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 956.40 | $ 6.79 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 953.90 | $ 9.35 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 954.20 | $ 9.30 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 959.10 | $ 4.37 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Energy
Fidelity Advisor Energy Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Exxon Mobil Corp. | 18.7 | 6.0 |
Chevron Corp. | 10.2 | 0.2 |
Schlumberger Ltd. | 5.1 | 6.9 |
Marathon Oil Corp. | 4.9 | 3.1 |
Baker Hughes, Inc. | 4.2 | 0.7 |
Occidental Petroleum Corp. | 3.5 | 5.2 |
Southwestern Energy Co. | 3.4 | 5.2 |
Halliburton Co. | 3.4 | 1.8 |
Apache Corp. | 2.9 | 1.8 |
National Oilwell Varco, Inc. | 2.5 | 3.1 |
| 58.8 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Oil, Gas & Consumable Fuels | 65.6% |
|
| Energy Equipment & Services | 30.6% |
|
| Construction & Engineering | 1.4% |
|
| Semiconductors & Semiconductor Equipment | 1.4% |
|
| Metals & Mining | 0.2% |
|
| All Others* | 0.8% |
|
As of January 31, 2010 | |||
| Oil, Gas & Consumable Fuels | 57.5% |
|
| Energy Equipment & Services | 37.2% |
|
| Electrical Equipment | 2.2% |
|
| Construction & Engineering | 0.7% |
|
| Gas Utilities | 0.6% |
|
| All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Energy Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 1.4% | |||
Construction & Engineering - 1.4% | |||
Jacobs Engineering Group, Inc. (a) | 87,271 | $ 3,191,500 | |
KBR, Inc. | 223,300 | 4,997,454 | |
| 8,188,954 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Itron, Inc. (a) | 21,147 | 1,376,035 | |
ENERGY EQUIPMENT & SERVICES - 30.6% | |||
Oil & Gas Drilling - 7.1% | |||
Atwood Oceanics, Inc. (a) | 36,175 | 983,960 | |
Ensco International Ltd. ADR | 191,385 | 8,001,807 | |
Helmerich & Payne, Inc. | 140,453 | 5,692,560 | |
Hercules Offshore, Inc. (a) | 164,594 | 418,069 | |
Nabors Industries Ltd. (a) | 256,122 | 4,715,206 | |
Noble Corp. | 408,289 | 13,269,393 | |
Northern Offshore Ltd. (a) | 514,100 | 990,363 | |
Pride International, Inc. (a) | 39,400 | 937,326 | |
Transocean Ltd. (a) | 153,272 | 7,082,699 | |
| 42,091,383 | ||
Oil & Gas Equipment & Services - 23.5% | |||
Baker Hughes, Inc. | 514,605 | 24,839,983 | |
Cameron International Corp. (a) | 112,200 | 4,441,998 | |
Complete Production Services, Inc. (a) | 55,054 | 1,059,790 | |
Core Laboratories NV | 46,400 | 3,584,400 | |
Dresser-Rand Group, Inc. (a) | 35,900 | 1,335,839 | |
Halliburton Co. | 676,831 | 20,223,710 | |
National Oilwell Varco, Inc. | 384,057 | 15,039,672 | |
Oceaneering International, Inc. (a) | 188,400 | 9,322,032 | |
Oil States International, Inc. (a) | 25,900 | 1,189,846 | |
Schlumberger Ltd. | 505,500 | 30,158,130 | |
Smith International, Inc. | 318,111 | 13,195,244 | |
Superior Energy Services, Inc. (a) | 115,184 | 2,625,043 | |
TSC Offshore Group Ltd. (a) | 1,705,000 | 294,136 | |
Weatherford International Ltd. (a) | 665,564 | 10,782,137 | |
Willbros Group, Inc. (a) | 209,594 | 1,917,785 | |
| 140,009,745 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 182,101,128 | ||
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
Zhongyu Gas Holdings Ltd. (a) | 6,538,000 | 639,701 | |
METALS & MINING - 0.2% | |||
Diversified Metals & Mining - 0.2% | |||
Walter Energy, Inc. | 19,700 | 1,404,610 | |
OIL, GAS & CONSUMABLE FUELS - 65.6% | |||
Coal & Consumable Fuels - 5.7% | |||
Alpha Natural Resources, Inc. (a) | 332,064 | 12,728,013 | |
Arch Coal, Inc. | 163,629 | 3,876,371 | |
| |||
Shares | Value | ||
Cloud Peak Energy, Inc. | 2,100 | $ 32,235 | |
CONSOL Energy, Inc. | 189,713 | 7,110,443 | |
International Coal Group, Inc. (a) | 163,454 | 735,543 | |
Massey Energy Co. | 304,179 | 9,301,794 | |
| 33,784,399 | ||
Integrated Oil & Gas - 37.8% | |||
BP PLC sponsored ADR | 80,950 | 3,114,147 | |
Chevron Corp. | 795,983 | 60,661,864 | |
Exxon Mobil Corp. | 1,865,299 | 111,321,047 | |
Marathon Oil Corp. | 879,146 | 29,407,434 | |
Occidental Petroleum Corp. | 263,979 | 20,571,883 | |
Suncor Energy, Inc. | 600 | 19,781 | |
| 225,096,156 | ||
Oil & Gas Exploration & Production - 15.5% | |||
Anadarko Petroleum Corp. | 261,084 | 12,834,889 | |
Apache Corp. | 179,339 | 17,141,222 | |
Canadian Natural Resources Ltd. (d) | 41,300 | 1,422,268 | |
EXCO Resources, Inc. | 336,798 | 4,886,939 | |
Newfield Exploration Co. (a) | 174,350 | 9,320,751 | |
Niko Resources Ltd. | 15,800 | 1,704,270 | |
OPTI Canada, Inc. (a) | 143,700 | 230,658 | |
Painted Pony Petroleum Ltd. Class A (a) | 123,500 | 792,937 | |
Petrobank Energy & Resources Ltd. (a) | 23,400 | 964,045 | |
Petrohawk Energy Corp. (a) | 275,878 | 4,350,596 | |
QEP Resources, Inc. (a) | 77,700 | 2,674,434 | |
Southwestern Energy Co. (a) | 563,000 | 20,521,350 | |
Talisman Energy, Inc. | 165,200 | 2,820,429 | |
Ultra Petroleum Corp. (a) | 24,089 | 1,020,651 | |
Whiting Petroleum Corp. (a) | 135,010 | 11,882,230 | |
| 92,567,669 | ||
Oil & Gas Refining & Marketing - 6.6% | |||
CVR Energy, Inc. (a) | 39,200 | 317,520 | |
Frontier Oil Corp. | 472,723 | 5,809,766 | |
Holly Corp. | 224,132 | 5,991,048 | |
Petroplus Holdings AG | 67,010 | 1,038,396 | |
Sunoco, Inc. | 326,578 | 11,649,037 | |
Tesoro Corp. | 167,000 | 2,155,970 | |
Valero Energy Corp. | 519,363 | 8,823,977 | |
Western Refining, Inc. (a)(d) | 188,200 | 997,460 | |
World Fuel Services Corp. | 88,608 | 2,308,238 | |
| 39,091,412 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 390,539,636 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.4% | |||
Semiconductor Equipment - 0.1% | |||
centrotherm photovoltaics AG (a) | 25,223 | 1,024,037 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - 1.3% | |||
First Solar, Inc. (a)(d) | 50,200 | $ 6,297,590 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 226,595 | 1,348,240 | |
| 7,645,830 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 8,669,867 | ||
TOTAL COMMON STOCKS (Cost $615,340,541) | 592,919,931 | ||
Convertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% | ||||
Semiconductors - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 320,000 | 260,400 | ||
Money Market Funds - 2.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.24% (b) | 3,947,361 | $ 3,947,361 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 10,741,700 | 10,741,700 | |
TOTAL MONEY MARKET FUNDS (Cost $14,689,061) | 14,689,061 | ||
TOTAL INVESTMENT PORTFOLIO - 102.0% (Cost $630,349,602) | 607,869,392 | ||
NET OTHER ASSETS (LIABILITIES) - (2.0)% | (12,147,703) | ||
NET ASSETS - 100% | $ 595,721,689 | ||
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 | $ 10,924 |
Fidelity Securities Lending Cash Central Fund | 181,909 |
Total | $ 192,833 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 592,919,931 | $ 592,919,931 | $ - | $ - |
Convertible Bonds | 260,400 | - | 260,400 | - |
Money Market Funds | 14,689,061 | 14,689,061 | - | - |
Total Investments in Securities: | $ 607,869,392 | $ 607,608,992 | $ 260,400 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.9% |
Switzerland | 5.4% |
Netherlands Antilles | 5.1% |
United Kingdom | 1.8% |
Canada | 1.5% |
Others (Individually Less Than 1%) | 1.3% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $108,925,305 of which $106,222,894 and $2,702,411 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,941,001) - See accompanying schedule: Unaffiliated issuers (cost $615,660,541) | $ 593,180,331 |
|
Fidelity Central Funds (cost $14,689,061) | 14,689,061 |
|
Total Investments (cost $630,349,602) |
| $ 607,869,392 |
Receivable for investments sold | 8,358,277 | |
Receivable for fund shares sold | 399,330 | |
Dividends receivable | 132,929 | |
Interest receivable | 4,433 | |
Distributions receivable from Fidelity Central Funds | 5,420 | |
Other receivables | 8,464 | |
Total assets | 616,778,245 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 8,368,052 | |
Payable for fund shares redeemed | 1,225,480 | |
Accrued management fee | 272,533 | |
Distribution fees payable | 243,375 | |
Other affiliated payables | 163,198 | |
Other payables and accrued expenses | 42,218 | |
Collateral on securities loaned, at value | 10,741,700 | |
Total liabilities | 21,056,556 | |
|
|
|
Net Assets | $ 595,721,689 | |
Net Assets consist of: |
| |
Paid in capital | $ 741,162,000 | |
Accumulated net investment loss | (116) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (122,960,068) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (22,480,127) | |
Net Assets | $ 595,721,689 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 27.70 | |
|
|
|
Maximum offering price per share (100/94.25 of $27.70) | $ 29.39 | |
Class T: | $ 28.33 | |
|
|
|
Maximum offering price per share (100/96.50 of $28.33) | $ 29.36 | |
Class B: | $ 26.06 | |
|
|
|
Class C: | $ 26.25 | |
|
|
|
Institutional Class: | $ 28.87 | |
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
Fidelity Advisor Energy Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,544,549 |
Interest |
| 15,263 |
Income from Fidelity Central Funds |
| 192,833 |
Total income |
| 6,752,645 |
|
|
|
Expenses | ||
Management fee | $ 3,655,489 | |
Transfer agent fees | 1,976,034 | |
Distribution fees | 3,295,603 | |
Accounting and security lending fees | 248,793 | |
Custodian fees and expenses | 33,180 | |
Independent trustees' compensation | 3,840 | |
Registration fees | 100,943 | |
Audit | 52,085 | |
Legal | 3,134 | |
Miscellaneous | 10,347 | |
Total expenses before reductions | 9,379,448 | |
Expense reductions | (37,926) | 9,341,522 |
Net investment income (loss) | (2,588,877) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 85,319,102 | |
Foreign currency transactions | (100,116) | |
Total net realized gain (loss) |
| 85,218,986 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (40,712,080) | |
Assets and liabilities in foreign currencies | 25 | |
Total change in net unrealized appreciation (depreciation) |
| (40,712,055) |
Net gain (loss) | 44,506,931 | |
Net increase (decrease) in net assets resulting from operations | $ 41,918,054 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,588,877) | $ (2,256,368) |
Net realized gain (loss) | 85,218,986 | (205,660,800) |
Change in net unrealized appreciation (depreciation) | (40,712,055) | (183,346,614) |
Net increase (decrease) in net assets resulting from operations | 41,918,054 | (391,263,782) |
Distributions to shareholders from net realized gain | - | (137,595,735) |
Share transactions - net increase (decrease) | (40,286,664) | 82,598,513 |
Redemption fees | 43,053 | 78,335 |
Total increase (decrease) in net assets | 1,674,443 | (446,182,669) |
|
|
|
Net Assets | ||
Beginning of period | 594,047,246 | 1,040,229,915 |
End of period (including accumulated net investment loss of $116 and accumulated net investment loss of $108, respectively) | $ 595,721,689 | $ 594,047,246 |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 25.82 | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 |
Income from Investment Operations |
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Net investment income (loss) C | (.05) | (.04) | (.17) | (.02) F | (.04) |
Net realized and unrealized gain (loss) | 1.93 | (17.48) | 5.59 | 8.42 | 12.30 |
Total from investment operations | 1.88 | (17.52) | 5.42 | 8.40 | 12.26 |
Distributions from net realized gain | - | (6.90) | (3.46) | (6.51) | (6.81) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 27.70 | $ 25.82 | $ 50.24 | $ 48.28 | $ 46.39 |
Total Return A, B | 7.28% | (38.86)% | 11.52% | 22.08% | 32.90% |
Ratios to Average Net Assets D,G |
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Expenses before reductions | 1.20% | 1.22% | 1.14% | 1.19% | 1.21% |
Expenses net of fee waivers, if any | 1.20% | 1.22% | 1.14% | 1.19% | 1.21% |
Expenses net of all reductions | 1.19% | 1.21% | 1.14% | 1.19% | 1.17% |
Net investment income (loss) | (.16)% | (.14)% | (.32)% | (.05)% F | (.09)% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 214,407 | $ 216,595 | $ 355,200 | $ 268,108 | $ 204,391 |
Portfolio turnover rate E | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 26.47 | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 |
Income from Investment Operations |
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Net investment income (loss) C | (.11) | (.10) | (.29) | (.11)F | (.13) |
Net realized and unrealized gain (loss) | 1.97 | (17.93) | 5.72 | 8.61 | 12.49 |
Total from investment operations | 1.86 | (18.03) | 5.43 | 8.50 | 12.36 |
Distributions from net realized gain | - | (6.90) | (3.29) | (6.42) | (6.65) |
Redemption fees added to paid in capital C | - H | -H | -H | -H | .01 |
Net asset value, end of period | $ 28.33 | $ 26.47 | $ 51.40 | $ 49.26 | $ 47.18 |
Total Return A, B | 7.03% | (38.99)% | 11.27% | 21.84% | 32.60% |
Ratios to Average Net Assets D, G |
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Expenses before reductions | 1.41% | 1.45% | 1.36% | 1.40% | 1.42% |
Expenses net of fee waivers, if any | 1.41% | 1.45% | 1.36% | 1.40% | 1.42% |
Expenses net of all reductions | 1.41% | 1.45% | 1.35% | 1.39% | 1.38% |
Net investment income (loss) | (.37)% | (.38)% | (.54)% | (.26)% F | (.29)% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 219,051 | $ 224,376 | $ 407,784 | $ 382,222 | $ 362,272 |
Portfolio turnover rate E | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 24.48 | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 |
Income from Investment Operations |
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Net investment income (loss) C | (.25) | (.22) | (.56) | (.34) F | (.35) |
Net realized and unrealized gain (loss) | 1.83 | (16.75) | 5.41 | 8.17 | 11.98 |
Total from investment operations | 1.58 | (16.97) | 4.85 | 7.83 | 11.63 |
Distributions from net realized gain | - | (6.90) | (3.14) | (6.29) | (6.43) |
Redemption fees added to paid in capital C | - H | -H | -H | -H | .01 |
Net asset value, end of period | $ 26.06 | $ 24.48 | $ 48.35 | $ 46.64 | $ 45.10 |
Total Return A, B | 6.45% | (39.31)% | 10.62% | 21.18% | 31.86% |
Ratios to Average Net Assets D, G |
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Expenses before reductions | 1.96% | 1.96% | 1.93% | 1.96% | 1.96% |
Expenses net of fee waivers, if any | 1.96% | 1.96% | 1.93% | 1.96% | 1.96% |
Expenses net of all reductions | 1.95% | 1.96% | 1.93% | 1.95% | 1.92% |
Net investment income (loss) | (.92)% | (.89)% | (1.11)% | (.82)% F | (.84)% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 44,330 | $ 47,795 | $ 98,602 | $ 116,487 | $ 130,973 |
Portfolio turnover rate E | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 24.65 | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 |
Income from Investment Operations |
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Net investment income (loss)C | (.25) | (.21) | (.54) | (.32)F | (.34) |
Net realized and unrealized gain (loss) | 1.85 | (16.87) | 5.45 | 8.20 | 12.06 |
Total from investment operations | 1.60 | (17.08) | 4.91 | 7.88 | 11.72 |
Distributions from net realized gain | - | (6.90) | (3.16) | (6.33) | (6.50) |
Redemption fees added to paid in capitalC | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 26.25 | $ 24.65 | $ 48.63 | $ 46.88 | $ 45.33 |
Total ReturnA, B | 6.49% | (39.31)% | 10.71% | 21.22% | 31.96% |
Ratios to Average Net Assets D, G |
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Expenses before reductions | 1.94% | 1.96% | 1.87% | 1.91% | 1.92% |
Expenses net of fee waivers, if any | 1.94% | 1.96% | 1.87% | 1.91% | 1.92% |
Expenses net of all reductions | 1.93% | 1.95% | 1.87% | 1.91% | 1.88% |
Net investment income (loss) | (.90)% | (.88)% | (1.05)% | (.77)% F | (.79)% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 90,596 | $ 86,650 | $ 156,393 | $ 135,072 | $ 125,424 |
Portfolio turnover rateE | 103% | 148% | 90% | 80% | 139% |
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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Institutional Class
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 26.83 | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 |
Income from Investment Operations |
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Net investment income (loss)B | .04 | .03 | (.02) | .11E | .12 |
Net realized and unrealized gain (loss) | 2.00 | (18.06) | 5.74 | 8.67 | 12.56 |
Total from investment operations | 2.04 | (18.03) | 5.72 | 8.78 | 12.68 |
Distributions from net realized gain | - | (6.90) | (3.64) | (6.58) | (6.97) |
Redemption fees added to paid in capital B | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 28.87 | $ 26.83 | $ 51.76 | $ 49.68 | $ 47.48 |
Total ReturnA | 7.60% | (38.68)% | 11.83% | 22.47% | 33.35% |
Ratios to Average Net Assets C, F |
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Expenses before reductions | .90% | .95% | .85% | .88% | .87% |
Expenses net of fee waivers, if any | .90% | .95% | .85% | .88% | .87% |
Expenses net of all reductions | .90% | .94% | .85% | .88% | .83% |
Net investment income (loss) | .14% | .13% | (.03)% | .25% E | .26% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 27,338 | $ 18,631 | $ 22,250 | $ 17,127 | $ 19,553 |
Portfolio turnover rate D | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Energy
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, net operating losses, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 38,811,239 |
Gross unrealized depreciation | (75,326,212) |
Net unrealized appreciation (depreciation) | $ (36,514,973) |
|
|
Tax Cost | $ 644,384,365 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (108,925,305) |
Net unrealized appreciation (depreciation) | $ (36,514,890) |
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Long-term Capital Gains | $ - | $ 137,595,735 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $652,847,020 and $697,223,654, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 595,584 | $ 12,445 |
Class T | .25% | .25% | 1,219,542 | 6,862 |
Class B | .75% | .25% | 504,338 | 378,914 |
Class C | .75% | .25% | 976,139 | 167,819 |
|
|
| $ 3,295,603 | $ 566,040 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
Energy
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 169,334 |
Class T | 29,608 |
Class B* | 97,377 |
Class C* | 12,015 |
| $ 308,334 |
* 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 |
Class A | $ 758,087 | .32 |
Class T | 689,022 | .28 |
Class B | 165,953 | .33 |
Class C | 298,434 | .31 |
Institutional Class | 64,538 | .27 |
| $ 1,976,034 |
|
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 $5,171 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $2,602 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $181,909.
Annual Report
Notes to Financial Statements - continued
8. 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 $37,926 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net realized gain |
|
|
Class A | $ - | $ 46,997,290 |
Class T | - | 53,170,678 |
Class B | - | 13,492,835 |
Class C | - | 21,034,743 |
Institutional Class | - | 2,900,189 |
Total | $ - | $ 137,595,735 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 2,475,060 | 3,517,345 | $ 72,154,427 | $ 85,305,714 |
Reinvestment of distributions | - | 1,158,188 | - | 42,134,872 |
Shares redeemed | (3,122,404) | (3,358,560) | (89,993,205) | (88,397,497) |
Net increase (decrease) | (647,344) | 1,316,973 | $ (17,838,778) | $ 39,043,089 |
Class T |
|
|
|
|
Shares sold | 1,265,490 | 2,191,463 | $ 38,114,553 | $ 53,583,018 |
Reinvestment of distributions | - | 1,332,408 | - | 49,792,078 |
Shares redeemed | (2,010,804) | (2,980,646) | (59,843,042) | (77,608,101) |
Net increase (decrease) | (745,314) | 543,225 | $ (21,728,489) | $ 25,766,995 |
Class B |
|
|
|
|
Shares sold | 320,063 | 529,128 | $ 8,832,050 | $ 12,513,157 |
Reinvestment of distributions | - | 339,485 | - | 11,786,924 |
Shares redeemed | (571,409) | (955,690) | (15,635,733) | (23,571,286) |
Net increase (decrease) | (251,346) | (87,077) | $ (6,803,683) | $ 728,795 |
Class C |
|
|
|
|
Shares sold | 819,751 | 1,217,008 | $ 22,984,733 | $ 28,382,837 |
Reinvestment of distributions | - | 507,064 | - | 17,726,948 |
Shares redeemed | (883,306) | (1,425,212) | (24,290,742) | (35,998,056) |
Net increase (decrease) | (63,555) | 298,860 | $ (1,306,009) | $ 10,111,729 |
Institutional Class |
|
|
|
|
Shares sold | 669,423 | 470,080 | $ 20,180,428 | $ 12,030,140 |
Reinvestment of distributions | - | 54,219 | - | 2,044,586 |
Shares redeemed | (416,730) | (259,760) | (12,790,133) | (7,126,821) |
Net increase (decrease) | 252,693 | 264,539 | $ 7,390,295 | $ 6,947,905 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Energy
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | 3.31% | -9.61% | -1.64% |
Class T (incl. 3.50% sales charge) | 5.44% | -9.41% | -1.64% |
Class B (incl. contingent deferred sales charge) A | 3.78% | -9.48% | -1.57% |
Class C (incl. contingent deferred sales charge) B | 7.79% | -9.19% | -1.75% |
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, 2000, 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.
Financial Services
Fidelity Advisor Financial Services Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 9.61%, 9.26%, 8.78% and 8.79%, respectively (excluding sales charges). Performance lagged both the S&P 500® and the 16.64% gain of the MSCI® U.S. IM Financials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Industry allocations caused the fund to lag the MSCI index, as a sizable overweighting in the weak-performing investment banking/brokerage segment more than offset the benefit of an underweighting in other diversified financial services. Individual detractors included Xinyuan Real Estate, a Chinese real estate developer hurt by signs the country's economy was slowing, and China Finance Online, a financial services technology provider vulnerable to a market downturn. In addition, Gleacher, a small-cap investment bank, suffered from an earnings shortfall. Some of these stocks were not in the index, and Xinyuan was not held at period end. Top contributors included Genworth Financial, a multi-line insurer that reported strong earnings, and Citigroup, a diversified financial services company that benefited from a successful capital raise, improved credit conditions and expectations that the U.S. Treasury would sell its stake in the company.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2010, the fund's Institutional Class shares returned 9.99%. Performance lagged both the S&P 500® and the 16.64% gain of the MSCI® U.S. IM Financials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Industry allocations caused the fund to lag the MSCI index, as a sizable overweighting in the weak performing investment banking/brokerage segment more than offset the benefit from an underweighting in other diversified financial services. Individual detractors included Xinyuan Real Estate, a Chinese real estate developer hurt by signs the country's economy was slowing, and China Finance Online, a financial services technology provider vulnerable to a market downturn. In addition, Gleacher, a small-cap investment bank, suffered from an earnings shortfall. Some of these stocks were not in the index, and Xinyuan was not held at period end. Top contributors included Genworth Financial, a multi-line insurer that reported strong earnings, and Citigroup, a diversified financial services company that benefited from a successful capital raise, improved credit conditions and expectations that the U.S. Treasury would sell its stake in the company.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.25% |
|
|
|
Actual |
| $ 1,000.00 | $ 990.40 | $ 6.17 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | 1.50% |
|
|
|
Actual |
| $ 1,000.00 | $ 988.50 | $ 7.40 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.36 | $ 7.50 |
Class B | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 986.30 | $ 9.85 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 987.20 | $ 9.85 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 992.50 | $ 4.84 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.93 | $ 4.91 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Financial Services
Fidelity Advisor Financial Services Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
SunTrust Banks, Inc. | 5.5 | 1.2 |
Regions Financial Corp. | 5.3 | 1.9 |
Zions Bancorporation | 5.1 | 4.8 |
Synovus Financial Corp. | 5.1 | 0.0 |
Citigroup, Inc. | 4.9 | 4.8 |
JPMorgan Chase & Co. | 4.9 | 5.0 |
Morgan Stanley | 4.8 | 4.2 |
Moody's Corp. | 4.5 | 2.6 |
MasterCard, Inc. Class A | 4.3 | 0.4 |
Visa, Inc. Class A | 4.1 | 0.0 |
| 48.5 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Commercial Banks | 40.9% |
|
| Diversified Financial Services | 19.4% |
|
| Capital Markets | 18.4% |
|
| IT Services | 11.2% |
|
| Insurance | 4.6% |
|
| All Others* | 5.5% |
|
As of January 31, 2010 | |||
| Commercial Banks | 39.9% |
|
| Capital Markets | 23.9% |
|
| Diversified Financial Services | 18.0% |
|
| Insurance | 7.1% |
|
| Media | 4.7% |
|
| All Others* | 6.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Financial Services Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 100.3% | |||
Shares | Value | ||
CAPITAL MARKETS - 18.4% | |||
Asset Management & Custody Banks - 4.8% | |||
AllianceBernstein Holding LP | 49,852 | $ 1,330,051 | |
EFG International | 147,899 | 1,746,587 | |
Franklin Resources, Inc. | 12,178 | 1,224,863 | |
Janus Capital Group, Inc. | 36,400 | 381,472 | |
Legg Mason, Inc. | 41,453 | 1,197,577 | |
Northern Trust Corp. | 14,340 | 673,837 | |
T. Rowe Price Group, Inc. | 8,400 | 405,132 | |
U.S. Global Investments, Inc. Class A | 31,848 | 192,043 | |
| 7,151,562 | ||
Diversified Capital Markets - 0.6% | |||
Credit Suisse Group sponsored ADR | 20,600 | 934,622 | |
Investment Banking & Brokerage - 13.0% | |||
Evercore Partners, Inc. Class A | 54,700 | 1,284,356 | |
GFI Group, Inc. | 433,378 | 2,552,596 | |
Gleacher & Co., Inc. (a) | 353,770 | 707,540 | |
Goldman Sachs Group, Inc. | 18,623 | 2,808,721 | |
Jefferies Group, Inc. | 125,209 | 3,091,410 | |
MF Global Holdings Ltd. (a) | 269,125 | 1,730,474 | |
Morgan Stanley | 268,500 | 7,246,815 | |
| 19,421,912 | ||
TOTAL CAPITAL MARKETS | 27,508,096 | ||
COMMERCIAL BANKS - 40.9% | |||
Diversified Banks - 7.2% | |||
Banco Macro SA sponsored ADR | 12,643 | 480,055 | |
BBVA Banco Frances SA sponsored ADR | 69,283 | 547,336 | |
China Citic Bank Corp. Ltd. Class H | 5,057,000 | 3,411,481 | |
China Merchants Bank Co. Ltd. (H Shares) | 135,600 | 362,240 | |
Comerica, Inc. | 57,900 | 2,221,044 | |
U.S. Bancorp, Delaware | 93,800 | 2,241,820 | |
Wells Fargo & Co. | 54,500 | 1,511,285 | |
| 10,775,261 | ||
Regional Banks - 33.7% | |||
Atlantic Southern Financial Group, Inc. (a)(d) | 14,602 | 14,894 | |
Bancorp New Jersey, Inc. | 3,062 | 37,448 | |
BancTrust Financial Group, Inc. (d) | 28,700 | 88,396 | |
Bar Harbor Bankshares | 1,132 | 30,338 | |
BB&T Corp. | 44,400 | 1,102,452 | |
Boston Private Financial Holdings, Inc. | 31,200 | 206,232 | |
Bridge Capital Holdings (a) | 4,470 | 41,571 | |
Cathay General Bancorp | 14,700 | 172,872 | |
Chicopee Bancorp, Inc. (a) | 2,500 | 28,450 | |
Citizens Banking Corp., Michigan (a) | 1,044,600 | 944,527 | |
City National Corp. | 44,600 | 2,527,482 | |
CoBiz, Inc. (d) | 223,900 | 1,412,809 | |
Evans Bancorp, Inc. | 2,675 | 34,775 | |
Fifth Third Bancorp | 68,362 | 868,881 | |
First Interstate Bancsystem, Inc. | 40,500 | 538,650 | |
| |||
Shares | Value | ||
Glacier Bancorp, Inc. | 114,617 | $ 1,831,580 | |
Huntington Bancshares, Inc. | 79,800 | 483,588 | |
Landmark Bancorp, Inc. | 1,183 | 18,632 | |
Marshall & Ilsley Corp. | 303,900 | 2,136,417 | |
MidWestOne Financial Group, Inc. (d) | 3,400 | 50,966 | |
Monroe Bancorp | 5,250 | 23,730 | |
Nara Bancorp, Inc. (a) | 36,404 | 261,017 | |
Oriental Financial Group, Inc. | 45,100 | 638,616 | |
PNC Financial Services Group, Inc. | 1,445 | 85,819 | |
Preferred Bank, Los Angeles California (a)(d) | 8,800 | 16,720 | |
Regions Financial Corp. | 1,071,981 | 7,857,621 | |
Salisbury Bancorp, Inc. | 1,500 | 33,900 | |
Savannah Bancorp, Inc. | 29,131 | 284,027 | |
Southwest Bancorp, Inc., Oklahoma | 7,300 | 106,215 | |
Sterling Bancshares, Inc. | 48,200 | 250,158 | |
Sun Bancorp, Inc., New Jersey (a) | 21,747 | 116,129 | |
SunTrust Banks, Inc. | 316,266 | 8,207,103 | |
SVB Financial Group (a) | 33,612 | 1,451,702 | |
Synovus Financial Corp. (d) | 2,902,900 | 7,605,598 | |
Umpqua Holdings Corp. | 92,884 | 1,163,837 | |
United Security Bancshares, California (d) | 6,861 | 28,816 | |
Valley National Bancorp | 23,205 | 336,705 | |
Washington Trust Bancorp, Inc. | 2,600 | 50,336 | |
West Bancorp., Inc. (a) | 6,500 | 43,485 | |
Western Alliance Bancorp. (a) | 10,800 | 78,516 | |
Wintrust Financial Corp. | 53,619 | 1,668,623 | |
Zions Bancorporation | 346,234 | 7,682,932 | |
| 50,562,565 | ||
TOTAL COMMERCIAL BANKS | 61,337,826 | ||
CONSUMER FINANCE - 2.6% | |||
Consumer Finance - 2.6% | |||
Capital One Financial Corp. | 34,000 | 1,439,220 | |
SLM Corp. (a) | 205,203 | 2,462,436 | |
| 3,901,656 | ||
DIVERSIFIED FINANCIAL SERVICES - 19.4% | |||
Other Diversified Financial Services - 13.1% | |||
Bank of America Corp. | 353,559 | 4,963,968 | |
Citigroup, Inc. (a) | 1,806,220 | 7,405,502 | |
JPMorgan Chase & Co. | 181,372 | 7,305,664 | |
| 19,675,134 | ||
Specialized Finance - 6.3% | |||
CME Group, Inc. | 8,400 | 2,341,920 | |
IntercontinentalExchange, Inc. (a) | 1,400 | 147,868 | |
JSE Ltd. | 20,600 | 200,513 | |
Moody's Corp. (d) | 287,451 | 6,769,471 | |
| 9,459,772 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 29,134,906 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOTELS, RESTAURANTS & LEISURE - 0.3% | |||
Casinos & Gaming - 0.3% | |||
Wynn Macau Ltd. | 252,800 | $ 430,256 | |
INSURANCE - 4.6% | |||
Life & Health Insurance - 0.1% | |||
Symetra Financial Corp. | 19,000 | 221,540 | |
Multi-Line Insurance - 3.2% | |||
Genworth Financial, Inc. Class A (a) | 267,635 | 3,634,483 | |
Hartford Financial Services Group, Inc. | 47,700 | 1,116,657 | |
| 4,751,140 | ||
Property & Casualty Insurance - 1.3% | |||
ACE Ltd. | 16,500 | 875,820 | |
CNA Financial Corp. (a) | 30,695 | 861,302 | |
United Fire & Casualty Co. | 9,000 | 192,960 | |
| 1,930,082 | ||
TOTAL INSURANCE | 6,902,762 | ||
INTERNET SOFTWARE & SERVICES - 0.9% | |||
Internet Software & Services - 0.9% | |||
China Finance Online Co. Ltd. ADR (a)(d) | 168,015 | 1,328,999 | |
IT SERVICES - 11.2% | |||
Data Processing & Outsourced Services - 11.2% | |||
CoreLogic, Inc. (a) | 106,180 | 2,126,785 | |
Euronet Worldwide, Inc. (a) | 59,803 | 938,907 | |
MasterCard, Inc. Class A | 30,319 | 6,368,203 | |
MoneyGram International, Inc. (a) | 476,265 | 1,243,052 | |
Visa, Inc. Class A | 83,519 | 6,126,119 | |
| 16,803,066 | ||
MEDIA - 0.9% | |||
Advertising - 0.0% | |||
SearchMedia Holdings Ltd. (a) | 4,261 | 13,550 | |
Publishing - 0.9% | |||
McGraw-Hill Companies, Inc. | 45,190 | 1,386,881 | |
TOTAL MEDIA | 1,400,431 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.3% | |||
Real Estate Development - 0.3% | |||
Central China Real Estate Ltd. | 1,753,000 | 451,368 | |
| |||
Shares | Value | ||
SPECIALTY RETAIL - 0.1% | |||
Home Improvement Retail - 0.1% | |||
Home Depot, Inc. | 6,600 | $ 188,166 | |
THRIFTS & MORTGAGE FINANCE - 0.7% | |||
Thrifts & Mortgage Finance - 0.7% | |||
BofI Holding, Inc. (a) | 16,300 | 254,606 | |
Cheviot Financial Corp. | 20,185 | 161,480 | |
First Financial Northwest, Inc. | 4,800 | 21,888 | |
Mayflower Bancorp, Inc. | 3,946 | 30,621 | |
Ocean Shore Holding Co. | 17,768 | 187,630 | |
Osage Bancshares, Inc. | 8,968 | 67,260 | |
Washington Federal, Inc. | 21,404 | 372,430 | |
| 1,095,915 | ||
TOTAL COMMON STOCKS (Cost $155,144,907) | 150,483,447 | ||
Money Market Funds - 8.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 820,281 | 820,281 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 11,896,853 | 11,896,853 | |
TOTAL MONEY MARKET FUNDS (Cost $12,717,134) | 12,717,134 | ||
TOTAL INVESTMENT PORTFOLIO - 108.8% (Cost $167,862,041) | 163,200,581 | ||
NET OTHER ASSETS (LIABILITIES) - (8.8)% | (13,213,219) | ||
NET ASSETS - 100% | $ 149,987,362 | ||
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 | $ 7,073 |
Fidelity Securities Lending Cash Central Fund | 89,737 |
Total | $ 96,810 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $78,880,478 of which $55,672,202 and $23,208,276 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Fidelity Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,459,892) - See accompanying schedule: Unaffiliated issuers (cost $155,144,907) | $ 150,483,447 |
|
Fidelity Central Funds (cost $12,717,134) | 12,717,134 |
|
Total Investments (cost $167,862,041) |
| $ 163,200,581 |
Receivable for investments sold | 244,211 | |
Receivable for fund shares sold | 44,181 | |
Dividends receivable | 108,764 | |
Distributions receivable from Fidelity Central Funds | 3,912 | |
Other receivables | 18,130 | |
Total assets | 163,619,779 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,239,530 | |
Payable for fund shares redeemed | 278,222 | |
Accrued management fee | 68,217 | |
Distribution fees payable | 61,958 | |
Other affiliated payables | 42,223 | |
Other payables and accrued expenses | 45,414 | |
Collateral on securities loaned, at value | 11,896,853 | |
Total liabilities | 13,632,417 | |
|
|
|
Net Assets | $ 149,987,362 | |
Net Assets consist of: |
| |
Paid in capital | $ 237,730,063 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (83,082,221) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (4,660,480) | |
Net Assets | $ 149,987,362 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.35 | |
|
|
|
Maximum offering price per share (100/94.25 of $10.35) | $ 10.98 | |
Class T: | $ 10.32 | |
|
|
|
Maximum offering price per share (100/96.50 of $10.32) | $ 10.69 | |
Class B: | $ 10.09 | |
|
|
|
Class C: | $ 10.00 | |
|
|
|
Institutional Class: | $ 10.55 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,707,384 |
Interest |
| 47 |
Income from Fidelity Central Funds |
| 96,810 |
Total income |
| 1,804,241 |
|
|
|
Expenses | ||
Management fee | $ 898,528 | |
Transfer agent fees | 521,166 | |
Distribution fees | 818,349 | |
Accounting and security lending fees | 64,789 | |
Custodian fees and expenses | 49,120 | |
Independent trustees' compensation | 1,022 | |
Registration fees | 55,469 | |
Audit | 47,900 | |
Legal | 996 | |
Miscellaneous | 2,562 | |
Total expenses before reductions | 2,459,901 | |
Expense reductions | (88,191) | 2,371,710 |
Net investment income (loss) | (567,469) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,142,373 | |
Foreign currency transactions | 47,666 | |
Total net realized gain (loss) |
| 36,190,039 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (22,169,925) | |
Assets and liabilities in foreign currencies | 697 | |
Total change in net unrealized appreciation (depreciation) |
| (22,169,228) |
Net gain (loss) | 14,020,811 | |
Net increase (decrease) in net assets resulting from operations | $ 13,453,342 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (567,469) | $ 2,607,315 |
Net realized gain (loss) | 36,190,039 | (88,858,385) |
Change in net unrealized appreciation (depreciation) | (22,169,228) | 30,047,773 |
Net increase (decrease) in net assets resulting from operations | 13,453,342 | (56,203,297) |
Distributions to shareholders from net investment income | (1,313,190) | (3,219,822) |
Distributions to shareholders from net realized gain | - | (320,528) |
Total distributions | (1,313,190) | (3,540,350) |
Share transactions - net increase (decrease) | (11,450,926) | 1,444,825 |
Redemption fees | 4,230 | 13,297 |
Total increase (decrease) in net assets | 693,456 | (58,285,525) |
|
|
|
Net Assets | ||
Beginning of period | 149,293,906 | 207,579,431 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $1,248,708, respectively) | $ 149,987,362 | $ 149,293,906 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.53 | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.01) | .19 | .30 | .23 | .20 |
Net realized and unrealized gain (loss) | .93 | (3.58) | (6.41) | .92 | 2.02 |
Total from investment operations | .92 | (3.39) | (6.11) | 1.15 | 2.22 |
Distributions from net investment income | (.10) | (.24) | (.27) | (.22) | (.26) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.63) |
Total distributions | (.10) | (.26) | (1.73) | (3.47) H | (1.89) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.35 | $ 9.53 | $ 13.18 | $ 21.02 | $ 23.34 |
Total Return A, B | 9.61% | (25.87)% | (31.67)% | 4.54% | 10.32% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.27% | 1.29% | 1.21% | 1.23% | 1.25% |
Expenses net of fee waivers, if any | 1.27% | 1.29% | 1.21% | 1.23% | 1.25% |
Expenses net of all reductions | 1.22% | 1.28% | 1.21% | 1.22% | 1.23% |
Net investment income (loss) | (.09)% | 2.12% | 1.75% | 1.01% | .87% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 69,723 | $ 68,245 | $ 90,037 | $ 106,722 | $ 85,356 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.52 | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | .16 | .26 | .18 | .15 |
Net realized and unrealized gain (loss) | .92 | (3.56) | (6.41) | .91 | 2.02 |
Total from investment operations | .88 | (3.40) | (6.15) | 1.09 | 2.17 |
Distributions from net investment income | (.08) | (.20) | (.19) | (.16) | (.15) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.63) |
Total distributions | (.08) | (.22) | (1.65) | (3.41)H | (1.78) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.32 | $ 9.52 | $ 13.14 | $ 20.94 | $ 23.26 |
Total Return A, B | 9.26% | (26.00)% | (31.85)% | 4.25% | 10.11% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.53% | 1.55% | 1.47% | 1.46% | 1.47% |
Expenses net of fee waivers, if any | 1.53% | 1.55% | 1.47% | 1.46% | 1.47% |
Expenses net of all reductions | 1.47% | 1.54% | 1.47% | 1.46% | 1.46% |
Net investment income (loss) | (.35)% | 1.86% | 1.50% | .77% | .65% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 33,310 | $ 34,927 | $ 53,526 | $ 95,426 | $ 113,344 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.33 | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) | .12 | .18 | .06 | .03 |
Net realized and unrealized gain (loss) | .91 | (3.50) | (6.29) | .89 | 1.97 |
Total from investment operations | .82 | (3.38) | (6.11) | .95 | 2.00 |
Distributions from net investment income | (.06) | (.12) | (.04) | (.02) | (.01) |
Distributions from net realized gain | - | (.02) | (1.44) | (3.25) | (1.57) |
Total distributions | (.06) | (.14) | (1.48) | (3.26)H | (1.58) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.09 | $ 9.33 | $ 12.85 | $ 20.44 | $ 22.75 |
Total Return A, B | 8.78% | (26.35)% | (32.21)% | 3.71% | 9.52% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.02% | 2.04% | 1.96% | 1.98% | 1.99% |
Expenses net of fee waivers, if any | 2.02% | 2.04% | 1.96% | 1.98% | 1.99% |
Expenses net of all reductions | 1.97% | 2.03% | 1.96% | 1.98% | 1.98% |
Net investment income (loss) | (.85)% | 1.38% | 1.01% | .25% | .13% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 10,992 | $ 12,477 | $ 20,420 | $ 64,837 | $ 113,652 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.25 | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) | .12 | .17 | .06 | .04 |
Net realized and unrealized gain (loss) | .90 | (3.48) | (6.24) | .90 | 1.98 |
Total from investment operations | .81 | (3.36) | (6.07) | .96 | 2.02 |
Distributions from net investment income | (.06) | (.15) | (.09) | (.05) | (.02) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.60) |
Total distributions | (.06) | (.17) | (1.55) | (3.30)H | (1.62) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.00 | $ 9.25 | $ 12.78 | $ 20.40 | $ 22.74 |
Total Return A, B | 8.79% | (26.38)% | (32.18)% | 3.75% | 9.58% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.02% | 2.04% | 1.96% | 1.94% | 1.94% |
Expenses net of fee waivers, if any | 2.02% | 2.04% | 1.96% | 1.94% | 1.94% |
Expenses net of all reductions | 1.96% | 2.03% | 1.96% | 1.94% | 1.93% |
Net investment income (loss) | (.84)% | 1.37% | 1.01% | .29% | .18% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 30,804 | $ 29,849 | $ 37,777 | $ 55,219 | $ 62,469 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.69 | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .02 | .21 | .36 | .31 | .29 |
Net realized and unrealized gain (loss) | .95 | (3.63) | (6.51) | .93 | 2.05 |
Total from investment operations | .97 | (3.42) | (6.15) | 1.24 | 2.34 |
Distributions from net investment income | (.11) | (.25) | (.33) | (.30) | (.37) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.63) |
Total distributions | (.11) | (.27) | (1.79) | (3.55) G | (2.00) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 10.55 | $ 9.69 | $ 13.38 | $ 21.32 | $ 23.63 |
Total Return A | 9.99% | (25.68)% | (31.47)% | 4.88% | 10.78% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .99% | 1.04% | .93% | .89% | .86% |
Expenses net of fee waivers, if any | .99% | 1.04% | .93% | .89% | .86% |
Expenses net of all reductions | .94% | 1.03% | .92% | .88% | .85% |
Net investment income (loss) | .19% | 2.37% | 2.04% | 1.34% | 1.26% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,158 | $ 3,797 | $ 5,819 | $ 8,474 | $ 11,892 |
Portfolio turnover rate D | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Financial Services
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 gain distributions from the Fidelity Central Funds, foreign currency transactions, partnerships, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 8,146,053 |
Gross unrealized depreciation | (17,009,256) |
Net unrealized appreciation (depreciation) | $ (8,863,203) |
|
|
Tax Cost | $ 172,063,784 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (78,880,478) |
Net unrealized appreciation (depreciation) | $ (8,862,224) |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 1,313,190 | $ 3,219,822 |
Long-term Capital Gains | - | 320,528 |
Total | $ 1,313,190 | $ 3,540,350 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $396,434,784 and $406,742,858, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 185,547 | $ 1,757 |
Class T | .25% | .25% | 183,356 | 1,004 |
Class B | .75% | .25% | 126,266 | 94,883 |
Class C | .75% | .25% | 323,180 | 58,297 |
|
|
| $ 818,349 | $ 155,941 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 30,993 |
Class T | 7,776 |
Class B* | 29,738 |
Class C* | 6,418 |
| $ 74,925 |
* 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.
Financial Services
5. 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 applicable class were as follows:
| Amount | % of |
Class A | $ 239,982 | .32 |
Class T | 121,430 | .33 |
Class B | 41,153 | .33 |
Class C | 104,299 | .32 |
Institutional Class | 14,302 | .29 |
| $ 521,166 |
|
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 $22,566 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $638 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $89,737.
8. 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 $88,191 for the period.
Annual Report
Notes to Financial Statements - continued
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 686,640 | $ 1,698,174 |
Class T | 298,090 | 781,807 |
Class B | 78,308 | 182,682 |
Class C | 206,470 | 461,265 |
Institutional Class | 43,682 | 95,894 |
Total | $ 1,313,190 | $ 3,219,822 |
From net realized gain |
|
|
Class A | $ - | $ 139,687 |
Class T | - | 80,989 |
Class B | - | 31,565 |
Class C | - | 60,568 |
Institutional Class | - | 7,719 |
Total | $ - | $ 320,528 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 2,082,714 | 2,723,908 | $ 22,402,196 | $ 24,853,928 |
Reinvestment of distributions | 58,808 | 159,397 | 610,428 | 1,638,390 |
Shares redeemed | (2,567,565) | (2,556,039) | (27,335,650) | (22,026,835) |
Net increase (decrease) | (426,043) | 327,266 | $ (4,323,026) | $ 4,465,483 |
Class T |
|
|
|
|
Shares sold | 481,524 | 995,392 | $ 5,227,941 | $ 8,604,735 |
Reinvestment of distributions | 27,047 | 77,111 | 280,751 | 791,775 |
Shares redeemed | (952,462) | (1,475,806) | (10,134,806) | (12,935,480) |
Net increase (decrease) | (443,891) | (403,303) | $ (4,626,114) | $ (3,538,970) |
Class B |
|
|
|
|
Shares sold | 217,909 | 506,058 | $ 2,331,426 | $ 4,460,037 |
Reinvestment of distributions | 6,452 | 19,064 | 65,677 | 185,301 |
Shares redeemed | (472,669) | (776,048) | (4,904,869) | (6,568,493) |
Net increase (decrease) | (248,308) | (250,926) | $ (2,507,766) | $ (1,923,155) |
Class C |
|
|
|
|
Shares sold | 749,668 | 1,273,214 | $ 8,032,665 | $ 11,448,111 |
Reinvestment of distributions | 17,064 | 43,964 | 172,172 | 431,812 |
Shares redeemed | (913,840) | (1,045,476) | (9,328,999) | (8,677,353) |
Net increase (decrease) | (147,108) | 271,702 | $ (1,124,162) | $ 3,202,570 |
Institutional Class |
|
|
|
|
Shares sold | 278,977 | 270,723 | $ 3,114,760 | $ 2,262,133 |
Reinvestment of distributions | 3,007 | 6,287 | 31,721 | 65,572 |
Shares redeemed | (184,671) | (320,256) | (2,016,339) | (3,088,808) |
Net increase (decrease) | 97,313 | (43,246) | $ 1,130,142 | $ (761,103) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Financial Services
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | 4.47% | -0.32% | 0.76% |
Class T (incl. 3.50% sales charge) | 6.73% | -0.10% | 0.75% |
Class B (incl. contingent deferred sales charge) A | 5.04% | -0.20% | 0.83% |
Class C (incl. contingent deferred sales charge) B | 9.13% | 0.15% | 0.65% |
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, 2000, 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.
Health Care
Fidelity Advisor Health Care Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 10.85%, 10.61%, 10.04% and 10.13%, respectively (excluding sales charges), underperforming the S&P 500® but substantially outperforming the 5.95% gain of the MSCI® U.S. IM Health Care 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Good stock picking in biotechnology, health care equipment, pharmaceuticals, life science tools/services and health care supplies helped fund performance, but an underweighting in pharmaceuticals and poor stock picking in fertilizers/agricultural chemicals, health care distributors and drug retail hurt. The largest contribution came from an underweighting in Johnson & Johnson, a large-cap pharma stock that lost ground. Overweightings in Illumina (technology for genetic analysis), Edwards Lifesciences (transcatheter heart valves) and Express Scripts (pharmacy benefit management) helped, as did an underweighting in Gilead Sciences (biotechnology). Detractors included Medco Health Solutions (pharmacy benefit management), Covance (drug-research outsourcing) and, from outside the index, Monsanto (agriculture) - a position that was sold by period end. We were also hurt by not owning Bristol-Myers Squibb, a drug stock that gained ground.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2010, the fund's Institutional Class shares returned 11.19%, underperforming the S&P 500® but substantially outperforming the 5.95% gain of the MSCI® U.S. IM Health Care 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Good stock picking in biotechnology, health care equipment, pharmaceuticals, life science tools/services and health care supplies helped fund performance, but an underweighting in pharmaceuticals and poor stock picking in fertilizers/agricultural chemicals, health care distributors and drug retail hurt. The largest contribution came from an underweighting in Johnson & Johnson, a large-cap pharma stock that lost ground. Overweightings in Illumina (technology for genetic analysis), Edwards Lifesciences (transcatheter heart valves) and Express Scripts (pharmacy benefit management) helped, as did an underweighting in Gilead Sciences (biotechnology). Detractors included Medco Health Solutions (pharmacy benefit management), Covance (drug-research outsourcing) and, from outside the index, Monsanto (agriculture) - a position that was sold by period end. We were also hurt by not owning Bristol-Myers Squibb, a drug stock that gained ground.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 967.90 | $ 5.81 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.45% |
|
|
|
Actual |
| $ 1,000.00 | $ 967.00 | $ 7.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.60 | $ 7.25 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 964.40 | $ 9.45 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 964.80 | $ 9.35 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Institutional Class | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 969.60 | $ 4.59 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Health Care
Fidelity Advisor Health Care Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Medco Health Solutions, Inc. | 5.1 | 5.1 |
Merck & Co., Inc. | 5.0 | 4.0 |
Illumina, Inc. | 5.0 | 3.7 |
Pfizer, Inc. | 4.8 | 8.1 |
Express Scripts, Inc. | 4.1 | 4.3 |
Covidien PLC | 3.5 | 5.7 |
Biogen Idec, Inc. | 2.9 | 3.2 |
Valeant Pharmaceuticals International | 2.8 | 0.0 |
C. R. Bard, Inc. | 2.8 | 3.2 |
Gilead Sciences, Inc. | 2.4 | 0.6 |
| 38.4 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Pharmaceuticals | 22.4% |
|
| Biotechnology | 21.4% |
|
| Health Care Providers & Services | 20.4% |
|
| Health Care Equipment & Supplies | 16.5% |
|
| Life Sciences Tools & Services | 10.5% |
|
| All Others* | 8.8% |
|
As of January 31, 2010 | |||
| Health Care Providers & Services | 23.8% |
|
| Pharmaceuticals | 23.7% |
|
| Health Care Equipment & Supplies | 20.1% |
|
| Biotechnology | 14.4% |
|
| Life Sciences Tools & Services | 10.2% |
|
| All Others* | 7.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Health Care Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 98.2% | |||
Shares | Value | ||
BIOTECHNOLOGY - 21.4% | |||
Biotechnology - 21.4% | |||
Acorda Therapeutics, Inc. (a) | 82,800 | $ 2,677,752 | |
Alexion Pharmaceuticals, Inc. (a) | 130,098 | 7,072,127 | |
Allos Therapeutics, Inc. (a)(d) | 170,500 | 821,810 | |
Alnylam Pharmaceuticals, Inc. (a) | 52,137 | 800,303 | |
Amgen, Inc. (a) | 137,812 | 7,514,888 | |
Anadys Pharmaceuticals, Inc. (a) | 192,046 | 386,012 | |
ARIAD Pharmaceuticals, Inc. (a)(d) | 636,890 | 2,038,048 | |
Biogen Idec, Inc. (a) | 197,379 | 11,029,539 | |
BioMarin Pharmaceutical, Inc. (a) | 302,567 | 6,611,089 | |
Celgene Corp. (a) | 86,300 | 4,759,445 | |
Cephalon, Inc. (a) | 44,400 | 2,519,700 | |
Dynavax Technologies Corp. (a) | 349,200 | 771,732 | |
Genzyme Corp. (a) | 110,650 | 7,696,814 | |
Gilead Sciences, Inc. (a) | 271,465 | 9,045,214 | |
Human Genome Sciences, Inc. (a) | 67,800 | 1,758,732 | |
Incyte Corp. (a) | 221,382 | 2,882,394 | |
Ironwood Pharmaceuticals, Inc. Class A | 49,500 | 584,100 | |
Keryx Biopharmaceuticals, Inc. (a)(d) | 166,640 | 626,566 | |
Micromet, Inc. (a) | 103,100 | 706,235 | |
Neurocrine Biosciences, Inc. (a) | 150,100 | 852,568 | |
Protalix BioTherapeutics, Inc. (a)(d) | 148,624 | 970,515 | |
Seattle Genetics, Inc. (a) | 137,557 | 1,675,444 | |
Targacept, Inc. (a) | 97,815 | 2,115,738 | |
United Therapeutics Corp. (a) | 96,048 | 4,695,787 | |
ZIOPHARM Oncology, Inc. (a)(d) | 170,847 | 638,968 | |
| 81,251,520 | ||
CAPITAL MARKETS - 0.1% | |||
Asset Management & Custody Banks - 0.1% | |||
Safeguard Scientifics, Inc. (a) | 34,947 | 442,778 | |
DIVERSIFIED CONSUMER SERVICES - 0.6% | |||
Specialized Consumer Services - 0.6% | |||
Carriage Services, Inc. (a) | 252,255 | 1,180,553 | |
Stewart Enterprises, Inc. Class A | 167,743 | 900,780 | |
| 2,081,333 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 1.8% | |||
Electronic Equipment & Instruments - 1.8% | |||
Agilent Technologies, Inc. (a) | 245,653 | 6,861,088 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 16.5% | |||
Health Care Equipment - 14.8% | |||
American Medical Systems Holdings, Inc. (a) | 160,900 | 3,597,724 | |
ArthroCare Corp. (a) | 84,500 | 2,262,910 | |
C. R. Bard, Inc. | 132,622 | 10,414,806 | |
Covidien PLC | 350,345 | 13,074,875 | |
Edwards Lifesciences Corp. (a) | 130,672 | 7,552,842 | |
Genmark Diagnostics, Inc. | 79,000 | 352,340 | |
HeartWare International, Inc. (a) | 23,984 | 1,545,289 | |
HeartWare International, Inc. CDI unit (a) | 273,246 | 501,911 | |
| |||
Shares | Value | ||
Hologic, Inc. (a) | 223,000 | $ 3,153,220 | |
NuVasive, Inc. (a)(d) | 49,000 | 1,605,730 | |
Orthofix International NV (a) | 63,605 | 1,925,959 | |
Orthovita, Inc. (a) | 633,763 | 1,172,462 | |
William Demant Holding AS (a) | 32,969 | 2,416,304 | |
Wright Medical Group, Inc. (a) | 73,471 | 1,146,882 | |
Zimmer Holdings, Inc. (a) | 98,212 | 5,204,254 | |
| 55,927,508 | ||
Health Care Supplies - 1.7% | |||
AGA Medical Holdings, Inc. | 72,100 | 1,044,729 | |
Cooper Companies, Inc. | 98,602 | 3,831,674 | |
RTI Biologics, Inc. (a) | 563,676 | 1,629,024 | |
| 6,505,427 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 62,432,935 | ||
HEALTH CARE PROVIDERS & SERVICES - 20.4% | |||
Health Care Distributors & Services - 3.7% | |||
Henry Schein, Inc. (a) | 72,803 | 3,821,429 | |
McKesson Corp. | 135,491 | 8,511,545 | |
Sinopharm Group Co. Ltd. (H Shares) | 156,800 | 586,423 | |
United Drug PLC (Ireland) | 368,476 | 1,168,456 | |
| 14,087,853 | ||
Health Care Facilities - 1.6% | |||
Emeritus Corp. (a)(d) | 89,971 | 1,548,401 | |
Hanger Orthopedic Group, Inc. (a) | 155,165 | 2,661,080 | |
LCA-Vision, Inc. (a) | 142,580 | 739,990 | |
Sunrise Senior Living, Inc. (a)(d) | 319,849 | 956,349 | |
| 5,905,820 | ||
Health Care Services - 10.8% | |||
Express Scripts, Inc. (a) | 344,886 | 15,581,949 | |
Laboratory Corp. of America Holdings (a) | 23,900 | 1,744,222 | |
LHC Group, Inc. (a) | 111,286 | 2,558,465 | |
Medco Health Solutions, Inc. (a) | 406,919 | 19,532,110 | |
Team Health Holdings, Inc. | 129,300 | 1,695,123 | |
| 41,111,869 | ||
Managed Health Care - 4.3% | |||
Aetna, Inc. | 156,900 | 4,369,665 | |
CIGNA Corp. | 197,700 | 6,081,252 | |
Health Net, Inc. (a) | 48,247 | 1,136,217 | |
UnitedHealth Group, Inc. | 96,367 | 2,934,375 | |
WellPoint, Inc. (a) | 33,623 | 1,705,359 | |
| 16,226,868 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 77,332,410 | ||
HEALTH CARE TECHNOLOGY - 4.0% | |||
Health Care Technology - 4.0% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 315,043 | 5,258,068 | |
Cerner Corp. (a) | 82,627 | 6,399,461 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE TECHNOLOGY - CONTINUED | |||
Health Care Technology - continued | |||
Computer Programs & Systems, Inc. | 29,321 | $ 1,318,565 | |
MedAssets, Inc. (a)(d) | 86,263 | 2,019,417 | |
| 14,995,511 | ||
INTERNET SOFTWARE & SERVICES - 0.5% | |||
Internet Software & Services - 0.5% | |||
WebMD Health Corp. (a) | 42,857 | 1,982,993 | |
LIFE SCIENCES TOOLS & SERVICES - 10.5% | |||
Life Sciences Tools & Services - 10.5% | |||
Covance, Inc. (a) | 130,593 | 5,061,785 | |
Illumina, Inc. (a)(d) | 420,584 | 18,854,781 | |
Life Technologies Corp. (a) | 31,919 | 1,372,198 | |
Lonza Group AG | 24,950 | 1,937,934 | |
MDS, Inc. (a) | 104,500 | 987,105 | |
PAREXEL International Corp. (a) | 160,682 | 3,298,801 | |
PerkinElmer, Inc. | 195,400 | 3,802,484 | |
QIAGEN NV (a)(d) | 245,986 | 4,604,858 | |
| 39,919,946 | ||
PHARMACEUTICALS - 22.4% | |||
Pharmaceuticals - 22.4% | |||
Abbott Laboratories | 62,024 | 3,044,138 | |
Allergan, Inc. | 147,663 | 9,016,303 | |
Ardea Biosciences, Inc. (a) | 135,950 | 2,712,203 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 142,086 | 1,088,379 | |
Cardiome Pharma Corp. (a) | 182,300 | 1,493,230 | |
Hikma Pharmaceuticals PLC | 58,008 | 651,415 | |
Johnson & Johnson | 24,800 | 1,440,632 | |
King Pharmaceuticals, Inc. (a) | 175,156 | 1,534,367 | |
Merck & Co., Inc. | 552,595 | 19,042,424 | |
Optimer Pharmaceuticals, Inc. (a) | 84,654 | 768,658 | |
Perrigo Co. | 49,082 | 2,749,083 | |
| |||
Shares | Value | ||
Pfizer, Inc. | 1,207,988 | $ 18,119,820 | |
Piramal Healthcare Ltd. | 124,221 | 1,291,888 | |
Pronova BioPharma ASA (a)(d) | 87,311 | 214,198 | |
Shire PLC sponsored ADR | 111,000 | 7,644,570 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 68,782 | 3,360,001 | |
Valeant Pharmaceuticals International (a) | 191,300 | 10,774,016 | |
| 84,945,325 | ||
TOTAL COMMON STOCKS (Cost $333,005,537) | 372,245,839 | ||
Money Market Funds - 5.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 7,690,515 | 7,690,515 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 12,889,867 | 12,889,867 | |
TOTAL MONEY MARKET FUNDS (Cost $20,580,382) | 20,580,382 | ||
TOTAL INVESTMENT PORTFOLIO - 103.6% (Cost $353,585,919) | 392,826,221 | ||
NET OTHER ASSETS (LIABILITIES) - (3.6)% | (13,781,726) | ||
NET ASSETS - 100% | $ 379,044,495 | ||
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 | $ 9,131 |
Fidelity Securities Lending Cash Central Fund | 80,131 |
Total | $ 89,262 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.6% |
Ireland | 3.8% |
Bailiwick of Jersey | 2.0% |
Netherlands | 1.2% |
Others (Individually Less Than 1%) | 3.4% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $32,671,830 of which $30,833,729 and $1,838,101 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Fidelity Advisor Health Care Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $12,652,432) - See accompanying schedule: Unaffiliated issuers (cost $333,005,537) | $ 372,245,839 |
|
Fidelity Central Funds (cost $20,580,382) | 20,580,382 |
|
Total Investments (cost $353,585,919) |
| $ 392,826,221 |
Foreign currency held at value (cost $2) | 2 | |
Receivable for investments sold | 10,405,534 | |
Receivable for fund shares sold | 103,532 | |
Dividends receivable | 176,223 | |
Distributions receivable from Fidelity Central Funds | 10,499 | |
Other receivables | 80,510 | |
Total assets | 403,602,521 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,429,190 | |
Payable for fund shares redeemed | 750,429 | |
Accrued management fee | 178,554 | |
Distribution fees payable | 151,232 | |
Other affiliated payables | 110,901 | |
Other payables and accrued expenses | 47,853 | |
Collateral on securities loaned, at value | 12,889,867 | |
Total liabilities | 24,558,026 | |
|
|
|
Net Assets | $ 379,044,495 | |
Net Assets consist of: |
| |
Paid in capital | $ 375,628,261 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (35,819,792) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 39,236,026 | |
Net Assets | $ 379,044,495 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 19.01 | |
|
|
|
Maximum offering price per share (100/94.25 of $19.01) | $ 20.17 | |
Class T: | $ 18.46 | |
|
|
|
Maximum offering price per share (100/96.50 of $18.46) | $ 19.13 | |
Class B: | $ 17.32 | |
|
|
|
Class C: | $ 17.29 | |
|
|
|
Institutional Class: | $ 19.77 | |
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
Fidelity Advisor Health Care Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,345,782 |
Interest |
| 27,278 |
Income from Fidelity Central Funds |
| 89,262 |
Total income |
| 3,462,322 |
|
|
|
Expenses | ||
Management fee | $ 2,290,004 | |
Transfer agent fees | 1,313,504 | |
Distribution fees | 1,974,126 | |
Accounting and security lending fees | 164,874 | |
Custodian fees and expenses | 50,729 | |
Independent trustees' compensation | 2,508 | |
Registration fees | 64,079 | |
Audit | 52,714 | |
Legal | 3,080 | |
Miscellaneous | 7,055 | |
Total expenses before reductions | 5,922,673 | |
Expense reductions | (39,394) | 5,883,279 |
Net investment income (loss) | (2,420,957) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 38,045,399 | |
Foreign currency transactions | 16,493 | |
Total net realized gain (loss) |
| 38,061,892 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 5,980,382 | |
Assets and liabilities in foreign currencies | 1,964 | |
Total change in net unrealized appreciation (depreciation) |
| 5,982,346 |
Net gain (loss) | 44,044,238 | |
Net increase (decrease) in net assets resulting from operations | $ 41,623,281 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,420,957) | $ (546,482) |
Net realized gain (loss) | 38,061,892 | (71,981,218) |
Change in net unrealized appreciation (depreciation) | 5,982,346 | 3,789,678 |
Net increase (decrease) in net assets resulting from operations | 41,623,281 | (68,738,022) |
Distributions to shareholders from net realized gain | - | (9,966,416) |
Share transactions - net increase (decrease) | (51,082,260) | (54,481,101) |
Redemption fees | 6,564 | 10,268 |
Total increase (decrease) in net assets | (9,452,415) | (133,175,271) |
|
|
|
Net Assets | ||
Beginning of period | 388,496,910 | 521,672,181 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $43,822, respectively) | $ 379,044,495 | $ 388,496,910 |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.15 | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.07) | .02 | (.03) | (.03) | (.09) |
Net realized and unrealized gain (loss) | 1.93 | (2.22) | (1.08) | 1.91 | .96 |
Total from investment operations | 1.86 | (2.20) | (1.11) | 1.88 | .87 |
Distributions from net realized gain | - | (.37) | (2.07) | (2.75) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 19.01 | $ 17.15 | $ 19.72 | $ 22.90 | $ 23.77 |
Total Return A, B | 10.85% | (11.37)% | (5.64)% | 8.54% | 3.79% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.22% | 1.23% | 1.20% | 1.22% | 1.25% |
Expenses net of fee waivers, if any | 1.22% | 1.23% | 1.20% | 1.22% | 1.25% |
Expenses net of all reductions | 1.21% | 1.23% | 1.19% | 1.21% | 1.21% |
Net investment income (loss) | (.36)% | .11% | (.13)% | (.14)% | (.38)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 179,586 | $ 177,890 | $ 220,888 | $ 234,656 | $ 199,221 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.69 | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) | (.02) | (.08) | (.09) | (.15) |
Net realized and unrealized gain (loss) | 1.89 | (2.18) | (1.06) | 1.87 | .95 |
Total from investment operations | 1.77 | (2.20) | (1.14) | 1.78 | .80 |
Distributions from net realized gain | - | (.37) | (1.99) | (2.65) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 18.46 | $ 16.69 | $ 19.26 | $ 22.39 | $ 23.26 |
Total Return A, B | 10.61% | (11.65)% | (5.86)% | 8.25% | 3.55% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.47% | 1.49% | 1.46% | 1.48% | 1.50% |
Expenses net of fee waivers, if any | 1.47% | 1.49% | 1.46% | 1.48% | 1.50% |
Expenses net of all reductions | 1.46% | 1.49% | 1.45% | 1.47% | 1.47% |
Net investment income (loss) | (.62)% | (.15)% | (.40)% | (.40)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 100,883 | $ 103,772 | $ 143,237 | $ 186,628 | $ 218,280 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.74 | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.20) | (.09) | (.18) | (.20) | (.25) |
Net realized and unrealized gain (loss) | 1.78 | (2.07) | (.99) | 1.79 | .91 |
Total from investment operations | 1.58 | (2.16) | (1.17) | 1.59 | .66 |
Distributions from net realized gain | - | (.37) | (1.85) | (2.47) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 17.32 | $ 15.74 | $ 18.27 | $ 21.29 | $ 22.17 |
Total Return A, B | 10.04% | (12.07)% | (6.30)% | 7.66% | 3.06% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.97% | 1.98% | 1.95% | 1.99% | 2.01% |
Expenses net of fee waivers, if any | 1.97% | 1.98% | 1.95% | 1.99% | 2.01% |
Expenses net of all reductions | 1.96% | 1.98% | 1.94% | 1.98% | 1.98% |
Net investment income (loss) | (1.11)% | (.64)% | (.89)% | (.91)% | (1.14)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 23,543 | $ 29,381 | $ 55,589 | $ 113,384 | $ 180,364 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.70 | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.19) | (.09) | (.17) | (.19) | (.24) |
Net realized and unrealized gain (loss) | 1.78 | (2.07) | (1.00) | 1.79 | .91 |
Total from investment operations | 1.59 | (2.16) | (1.17) | 1.60 | .67 |
Distributions from net realized gain | - | (.37) | (1.89) | (2.55) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 17.29 | $ 15.70 | $ 18.23 | $ 21.29 | $ 22.24 |
Total Return A, B | 10.13% | (12.09)% | (6.31)% | 7.75% | 3.10% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.94% | 1.98% | 1.94% | 1.94% | 1.94% |
Expenses net of fee waivers, if any | 1.94% | 1.98% | 1.94% | 1.94% | 1.94% |
Expenses net of all reductions | 1.93% | 1.98% | 1.94% | 1.93% | 1.91% |
Net investment income (loss) | (1.08)% | (.64)% | (.88)% | (.86)% | (1.07)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 60,861 | $ 64,002 | $ 83,133 | $ 105,519 | $ 115,644 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Institutional Class
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.78 | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.02) | .06 | .03 | .05 | - F |
Net realized and unrealized gain (loss) | 2.01 | (2.30) | (1.12) | 1.96 | .99 |
Total from investment operations | 1.99 | (2.24) | (1.09) | 2.01 | .99 |
Distributions from net realized gain | - | (.37) | (2.14) | (2.82) | (.04) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 19.77 | $ 17.78 | $ 20.39 | $ 23.62 | $ 24.43 |
Total Return A | 11.19% | (11.19)% | (5.36)% | 8.90% | 4.21% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .96% | .98% | .93% | .88% | .86% |
Expenses net of fee waivers, if any | .96% | .98% | .93% | .88% | .86% |
Expenses net of all reductions | .95% | .98% | .92% | .87% | .83% |
Net investment income (loss) | (.10)% | .36% | .14% | .19% | .01% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 14,172 | $ 13,452 | $ 18,825 | $ 22,174 | $ 20,652 |
Portfolio turnover rate D | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Health Care
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 53,158,372 |
Gross unrealized depreciation | (17,067,771) |
Net unrealized appreciation (depreciation) | $ 36,090,601 |
|
|
Tax Cost | $ 356,735,620 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (32,671,830) |
Net unrealized appreciation (depreciation) | $ 36,088,066 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Long-term Capital Gains | $ - | $ 9,966,416 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $411,602,718 and $466,387,409, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 475,297 | $ 3,208 |
Class T | .25% | .25% | 550,512 | 1,394 |
Class B | .75% | .25% | 285,520 | 214,517 |
Class C | .75% | .25% | 662,797 | 28,814 |
|
|
| $ 1,974,126 | $ 247,933 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 25,798 |
Class T | 13,488 |
Class B* | 36,610 |
Class C* | 1,703 |
| $ 77,599 |
* 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.
Health Care
5. 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 |
Class A | $ 614,611 | .32 |
Class T | 363,875 | .33 |
Class B | 93,095 | .33 |
Class C | 195,949 | .30 |
Institutional Class | 45,974 | .32 |
| $ 1,313,504 |
|
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 $3,638 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $1,636 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $80,131.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $39,394 for the period.
Annual Report
Notes to Financial Statements - continued
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net realized gain |
|
|
Class A | $ - | $ 4,165,896 |
Class T | - | 2,716,500 |
Class B | - | 1,072,948 |
Class C | - | 1,667,891 |
Institutional Class | - | 343,181 |
Total | $ - | $ 9,966,416 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,348,328 | 2,119,806 | $ 26,342,454 | $ 33,600,941 |
Reinvestment of distributions | - | 190,190 | - | 3,682,080 |
Shares redeemed | (2,277,034) | (3,135,479) | (43,802,733) | (48,422,714) |
Net increase (decrease) | (928,706) | (825,483) | $ (17,460,279) | $ (11,139,693) |
Class T |
|
|
|
|
Shares sold | 653,249 | 602,296 | $ 12,596,630 | $ 9,206,132 |
Reinvestment of distributions | - | 135,003 | - | 2,550,205 |
Shares redeemed | (1,405,398) | (1,958,228) | (26,754,410) | (29,483,941) |
Net increase (decrease) | (752,149) | (1,220,929) | $ (14,157,780) | $ (17,727,604) |
Class B |
|
|
|
|
Shares sold | 142,178 | 212,561 | $ 2,538,751 | $ 3,135,162 |
Reinvestment of distributions | - | 53,957 | - | 965,289 |
Shares redeemed | (649,613) | (1,442,718) | (11,572,231) | (20,918,367) |
Net increase (decrease) | (507,435) | (1,176,200) | $ (9,033,480) | $ (16,817,916) |
Class C |
|
|
|
|
Shares sold | 307,711 | 511,934 | $ 5,532,717 | $ 7,440,670 |
Reinvestment of distributions | - | 74,490 | - | 1,329,646 |
Shares redeemed | (862,744) | (1,071,755) | (15,167,135) | (15,223,014) |
Net increase (decrease) | (555,033) | (485,331) | $ (9,634,418) | $ (6,452,698) |
Institutional Class |
|
|
|
|
Shares sold | 188,384 | 260,510 | $ 3,842,212 | $ 4,409,032 |
Reinvestment of distributions | - | 12,578 | - | 251,944 |
Shares redeemed | (227,941) | (439,916) | (4,638,515) | (7,004,166) |
Net increase (decrease) | (39,557) | (166,828) | $ (796,303) | $ (2,343,190) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Health Care
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge)C | 20.77% | 3.88% | 7.63% |
Class T (incl. 3.50% sales charge)C | 23.33% | 4.11% | 7.64% |
Class B (incl. contingent deferred sales charge) A, C | 22.17% | 3.97% | 7.70% |
Class C (incl. contingent deferred sales charge) B, C | 26.23% | 4.34% | 7.51% |
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, Fidelity Advisor Industrials Fund 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, 2000, 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.
Industrials
Fidelity Advisor Industrials Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 28.13%, 27.80%, 27.17% and 27.23%, respectively (excluding sales charges), handily beating the S&P 500® and about in line with the 27.22% result of the MSCI® U.S. IM Industrials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock picking in aerospace and defense, industrial machinery and household appliances boosted our results, as did an overweighting in the construction and farm machinery/heavy trucks segment, which delivered a return in excess of 50%. Among our individual holdings, the top contributor was Cummins, a maker of heavy-truck engines. In the second half of the reporting period, the pace of order growth for heavy- and medium-duty trucks accelerated, lifting the company's share price. An out-of-benchmark position in household tool maker Black & Decker also paid off, as the company was acquired in March at a price substantially above where the stock had been trading at the time of the merger announcement. Another out-of-index position - this one in TriMas, a relatively unknown conglomerate with business lines in packaging, energy and aerospace/defense, among other areas - contributed to performance. Elsewhere, skillful trading enabled our stake in construction/engineering firm Fluor to add value and also enhanced the gain delivered by commercial printer R.R. Donnelly & Sons, the latter of which I sold to lock in profits. Conversely, minimal exposure to the strong-performing airlines group had a negative impact on relative performance. Weak security selection in electrical components/equipment and tires/rubber also worked against us. The largest relative detractor was building products distributor Masco, which was hurt toward period end by slackening housing activity due to the expiration of tax breaks for first-time homebuyers. An out-of-index position in Goodyear Tire & Rubber fared poorly, as demand for tires tailed off. Consequently, I liquidated the position. Significantly underweighted exposure to industrial conglomerate and index heavyweight General Electric early in the year had a negative impact on relative performance, and underweighting - - and ultimately selling - aerospace giant Boeing also worked against us. Lastly, I'll mention Chinese holding SmartHeat, which sells clean technology plate heat exchangers (PHEs) and related systems. The stock was hampered by China's recent efforts to slow economic growth.
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund: During the past year, the fund's Institutional Class shares returned 28.52%, handily beating the S&P 500® and modestly ahead of the 27.22% result of the MSCI® U.S. IM Industrials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock picking in aerospace and defense, industrial machinery and household appliances boosted our results, as did an overweighting in the construction and farm machinery/heavy trucks segment, which delivered a return in excess of 50%. Among our individual holdings, the top contributor was Cummins, a maker of heavy-truck engines. In the second half of the reporting period, the pace of order growth for heavy- and medium-duty trucks accelerated, lifting the company's share price. An out-of-benchmark position in household tool maker Black & Decker also paid off, as the company was acquired in March at a price substantially above where the stock had been trading at the time of the merger announcement. Another out-of-index position - this one in TriMas, a relatively unknown conglomerate with business lines in packaging, energy and aerospace/defense, among other areas - contributed to performance. Elsewhere, skillful trading enabled our stake in construction/engineering firm Fluor to add value and also enhanced the gain delivered by commercial printer R.R. Donnelly & Sons, the latter of which I sold to lock in profits. Conversely, minimal exposure to the strong-performing airlines group had a negative impact on relative performance. Weak security selection in electrical components/equipment and tires/rubber also worked against us. The largest relative detractor was building products distributor Masco, which was hurt toward period end by slackening housing activity due to the expiration of tax breaks for first-time homebuyers. An out-of-index position in Goodyear Tire & Rubber fared poorly, as demand for tires tailed off. Consequently, I liquidated the position. Significantly underweighted exposure to industrial conglomerate and index heavyweight General Electric early in the year had a negative impact on relative performance, and underweighting - and ultimately selling - aerospace giant Boeing also worked against us. Lastly, I'll mention Chinese holding SmartHeat, which sells clean technology plate heat exchangers (PHEs) and related systems. The stock was hampered by China's recent efforts to slow economic growth.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.16% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,131.90 | $ 6.13 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,130.40 | $ 7.45 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.80 | $ 7.05 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.70 | $ 10.23 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.90 | $ 10.08 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,133.70 | $ 4.60 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Industrials Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 13.4 | 6.1 |
United Technologies Corp. | 6.5 | 6.7 |
3M Co. | 5.3 | 4.6 |
Union Pacific Corp. | 4.5 | 4.4 |
Caterpillar, Inc. | 4.1 | 1.0 |
Ingersoll-Rand Co. Ltd. | 3.9 | 3.0 |
Honeywell International, Inc. | 3.3 | 3.5 |
Precision Castparts Corp. | 2.9 | 2.2 |
Danaher Corp. | 2.8 | 3.2 |
Textron, Inc. | 2.2 | 1.2 |
| 48.9 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Machinery | 25.1% |
|
| Industrial Conglomerates | 20.9% |
|
| Aerospace & Defense | 18.5% |
|
| Road & Rail | 7.6% |
|
| Electrical Equipment | 5.4% |
|
| All Others* | 22.5% |
|
As of January 31, 2010 | |||
| Machinery | 22.8% |
|
| Aerospace & Defense | 20.8% |
|
| Industrial Conglomerates | 13.7% |
|
| Road & Rail | 12.2% |
|
| Electrical Equipment | 5.7% |
|
| All Others* | 24.8% |
|
* Includes short-term investments and net other assets. |
Industrials
Fidelity Advisor Industrials Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 18.5% | |||
Aerospace & Defense - 18.5% | |||
BE Aerospace, Inc. (a) | 116,392 | $ 3,421,925 | |
DigitalGlobe, Inc. (a) | 103,779 | 2,829,016 | |
Esterline Technologies Corp. (a) | 6,800 | 349,044 | |
Goodrich Corp. | 65,600 | 4,780,272 | |
Honeywell International, Inc. | 259,900 | 11,139,314 | |
Moog, Inc. Class A (a) | 42,872 | 1,535,246 | |
Precision Castparts Corp. | 78,400 | 9,579,696 | |
Raytheon Co. | 82,596 | 3,821,717 | |
TransDigm Group, Inc. | 44,766 | 2,424,974 | |
United Technologies Corp. | 306,320 | 21,779,352 | |
| 61,660,556 | ||
AIR FREIGHT & LOGISTICS - 1.6% | |||
Air Freight & Logistics - 1.6% | |||
C.H. Robinson Worldwide, Inc. | 80,802 | 5,268,290 | |
AUTO COMPONENTS - 0.3% | |||
Auto Parts & Equipment - 0.3% | |||
Stoneridge, Inc. (a) | 85,914 | 920,139 | |
BUILDING PRODUCTS - 3.1% | |||
Building Products - 3.1% | |||
AAON, Inc. | 24,442 | 607,628 | |
Lennox International, Inc. | 25,396 | 1,109,043 | |
Masco Corp. | 435,300 | 4,474,884 | |
Owens Corning (a) | 129,061 | 4,062,840 | |
| 10,254,395 | ||
COMMERCIAL SERVICES & SUPPLIES - 5.0% | |||
Diversified Support Services - 0.9% | |||
Cintas Corp. | 70,418 | 1,863,260 | |
Iron Mountain, Inc. | 46,000 | 1,088,820 | |
| 2,952,080 | ||
Environmental & Facility Services - 1.7% | |||
Republic Services, Inc. | 138,661 | 4,417,739 | |
Stericycle, Inc. (a) | 18,901 | 1,190,763 | |
| 5,608,502 | ||
Office Services & Supplies - 1.2% | |||
Interface, Inc. Class A | 77,600 | 964,568 | |
Pitney Bowes, Inc. | 94,100 | 2,296,981 | |
Steelcase, Inc. Class A | 108,300 | 748,353 | |
| 4,009,902 | ||
Security & Alarm Services - 1.2% | |||
The Brink's Co. | 89,100 | 1,951,290 | |
The Geo Group, Inc. (a) | 94,700 | 2,043,626 | |
| 3,994,916 | ||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 16,565,400 | ||
| |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 5.2% | |||
Construction & Engineering - 5.2% | |||
Fluor Corp. | 144,660 | $ 6,985,631 | |
Foster Wheeler AG (a) | 102,331 | 2,355,660 | |
Granite Construction, Inc. | 98,315 | 2,285,824 | |
Jacobs Engineering Group, Inc. (a) | 117,704 | 4,304,435 | |
KBR, Inc. | 13,344 | 298,639 | |
MYR Group, Inc. (a) | 76,700 | 1,289,327 | |
| 17,519,516 | ||
ELECTRICAL EQUIPMENT - 5.4% | |||
Electrical Components & Equipment - 5.4% | |||
AMETEK, Inc. | 62,900 | 2,784,583 | |
Cooper Industries PLC Class A | 73,723 | 3,328,593 | |
Emerson Electric Co. | 82,550 | 4,089,527 | |
Fushi Copperweld, Inc. (a) | 223,933 | 1,894,473 | |
General Cable Corp. (a)(d) | 73,100 | 1,940,074 | |
Regal-Beloit Corp. | 35,612 | 2,166,278 | |
Zumtobel AG | 93,083 | 1,763,382 | |
| 17,966,910 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.3% | |||
Electronic Equipment & Instruments - 0.3% | |||
Agilent Technologies, Inc. (a) | 40,100 | 1,119,993 | |
HOUSEHOLD DURABLES - 1.0% | |||
Household Appliances - 1.0% | |||
Stanley Black & Decker, Inc. | 59,964 | 3,479,111 | |
INDUSTRIAL CONGLOMERATES - 20.9% | |||
Industrial Conglomerates - 20.9% | |||
3M Co. | 205,200 | 17,552,808 | |
General Electric Co. | 2,776,749 | 44,761,196 | |
Textron, Inc. (d) | 351,400 | 7,295,064 | |
| 69,609,068 | ||
MACHINERY - 25.1% | |||
Construction & Farm Machinery & Heavy Trucks - 12.4% | |||
Bucyrus International, Inc. Class A | 38,312 | 2,383,773 | |
Caterpillar, Inc. | 195,595 | 13,642,751 | |
Cummins, Inc. | 89,171 | 7,098,903 | |
Deere & Co. | 91,890 | 6,127,225 | |
MAN SE | 12,306 | 1,142,460 | |
Navistar International Corp. (a) | 78,285 | 4,048,117 | |
PACCAR, Inc. | 152,300 | 6,978,386 | |
| 41,421,615 | ||
Industrial Machinery - 12.7% | |||
Actuant Corp. Class A | 59,100 | 1,218,642 | |
Danaher Corp. | 239,354 | 9,193,587 | |
Gardner Denver, Inc. | 43,532 | 2,210,120 | |
Harsco Corp. | 42,800 | 991,248 | |
Ingersoll-Rand Co. Ltd. | 344,500 | 12,904,970 | |
NSK Ltd. | 236,000 | 1,679,375 | |
SmartHeat, Inc. (a)(d) | 330,316 | 2,133,841 | |
Common Stocks - continued | |||
Shares | Value | ||
MACHINERY - CONTINUED | |||
Industrial Machinery - continued | |||
SPX Corp. | 67,900 | $ 4,044,124 | |
The Weir Group PLC | 44,600 | 820,521 | |
Timken Co. | 104,362 | 3,508,650 | |
TriMas Corp. (a) | 72,930 | 870,784 | |
Weg SA | 262,400 | 2,705,324 | |
| 42,281,186 | ||
TOTAL MACHINERY | 83,702,801 | ||
PROFESSIONAL SERVICES - 2.4% | |||
Human Resource & Employment Services - 1.4% | |||
Manpower, Inc. | 48,611 | 2,332,356 | |
Towers Watson & Co. | 50,004 | 2,225,678 | |
| 4,558,034 | ||
Research & Consulting Services - 1.0% | |||
Equifax, Inc. | 106,607 | 3,341,063 | |
TOTAL PROFESSIONAL SERVICES | 7,899,097 | ||
ROAD & RAIL - 7.6% | |||
Railroads - 7.2% | |||
CSX Corp. | 77,800 | 4,101,616 | |
Norfolk Southern Corp. | 90,510 | 5,092,998 | |
Union Pacific Corp. | 200,492 | 14,970,738 | |
| 24,165,352 | ||
Trucking - 0.4% | |||
Saia, Inc. (a) | 85,016 | 1,283,742 | |
TOTAL ROAD & RAIL | 25,449,094 | ||
| |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 3.2% | |||
Trading Companies & Distributors - 3.2% | |||
Finning International, Inc. | 2,100 | $ 40,409 | |
Interline Brands, Inc. (a) | 125,073 | 2,262,571 | |
Mills Estruturas e Servicos de Engenharia SA (a) | 258,000 | 2,215,411 | |
Rush Enterprises, Inc. Class A (a) | 417,765 | 6,241,409 | |
| 10,759,800 | ||
TOTAL COMMON STOCKS (Cost $312,283,860) | 332,174,170 | ||
Money Market Funds - 3.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 3,533,738 | 3,533,738 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 7,647,550 | 7,647,550 | |
TOTAL MONEY MARKET FUNDS (Cost $11,181,288) | 11,181,288 | ||
TOTAL INVESTMENT PORTFOLIO - 102.9% (Cost $323,465,148) | 343,355,458 |
NET OTHER ASSETS (LIABILITIES) - (2.9)% | (9,737,746) | ||
NET ASSETS - 100% | $ 333,617,712 | ||
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 | $ 9,869 |
Fidelity Securities Lending Cash Central Fund | 100,909 |
Total | $ 110,778 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $49,540,826 of which $29,658,388 and $19,882,438 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Industrials
Fidelity Advisor Industrials Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,455,616) - See accompanying schedule: Unaffiliated issuers (cost $312,283,860) | $ 332,174,170 |
|
Fidelity Central Funds (cost $11,181,288) | 11,181,288 |
|
Total Investments (cost $323,465,148) |
| $ 343,355,458 |
Receivable for investments sold | 1,208,444 | |
Receivable for fund shares sold | 613,390 | |
Dividends receivable | 249,529 | |
Distributions receivable from Fidelity Central Funds | 1,962 | |
Other receivables | 5,147 | |
Total assets | 345,433,930 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,030,923 | |
Payable for fund shares redeemed | 743,121 | |
Accrued management fee | 148,505 | |
Distribution fees payable | 120,193 | |
Other affiliated payables | 83,878 | |
Other payables and accrued expenses | 42,048 | |
Collateral on securities loaned, at value | 7,647,550 | |
Total liabilities | 11,816,218 | |
|
|
|
Net Assets | $ 333,617,712 | |
Net Assets consist of: |
| |
Paid in capital | $ 367,575,473 | |
Distributions in excess of net investment income | (71,000) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (53,777,460) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 19,890,699 | |
Net Assets | $ 333,617,712 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 21.54 | |
|
|
|
Maximum offering price per share (100/94.25 of $21.54) | $ 22.85 | |
Class T: | $ 21.24 | |
|
|
|
Maximum offering price per share (100/96.50 of $21.24) | $ 22.01 | |
Class B: | $ 20.22 | |
|
|
|
Class C: | $ 20.28 | |
|
|
|
Institutional Class: | $ 22.30 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Industrials
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,448,041 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 110,778 |
Total income |
| 4,558,821 |
|
|
|
Expenses | ||
Management fee | $ 1,712,420 | |
Transfer agent fees | 866,895 | |
Distribution fees | 1,429,164 | |
Accounting and security lending fees | 120,555 | |
Custodian fees and expenses | 28,657 | |
Independent trustees' compensation | 1,735 | |
Registration fees | 68,361 | |
Audit | 49,265 | |
Legal | 1,261 | |
Miscellaneous | 4,449 | |
Total expenses before reductions | 4,282,762 | |
Expense reductions | (16,641) | 4,266,121 |
Net investment income (loss) | 292,700 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 53,700,097 | |
Foreign currency transactions | (106,377) | |
Total net realized gain (loss) |
| 53,593,720 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 14,759,665 | |
Assets and liabilities in foreign currencies | 2,334 | |
Total change in net unrealized appreciation (depreciation) |
| 14,761,999 |
Net gain (loss) | 68,355,719 | |
Net increase (decrease) in net assets resulting from operations | $ 68,648,419 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 292,700 | $ 1,715,553 |
Net realized gain (loss) | 53,593,720 | (102,654,173) |
Change in net unrealized appreciation (depreciation) | 14,761,999 | (6,469,546) |
Net increase (decrease) in net assets resulting from operations | 68,648,419 | (107,408,166) |
Distributions to shareholders from net investment income | (658,116) | (1,756,118) |
Distributions to shareholders from net realized gain | - | (285,855) |
Total distributions | (658,116) | (2,041,973) |
Share transactions - net increase (decrease) | 10,867,809 | (41,067,612) |
Redemption fees | 9,545 | 10,099 |
Total increase (decrease) in net assets | 78,867,657 | (150,507,652) |
|
|
|
Net Assets | ||
Beginning of period | 254,750,055 | 405,257,707 |
End of period (including distributions in excess of net investment income of $71,000 and undistributed net investment income of $309,528, respectively) | $ 333,617,712 | $ 254,750,055 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.87 | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .13 | .11 | .09 | .08 |
Net realized and unrealized gain (loss) | 4.68 | (5.08) | (1.17) | 5.11 | 1.63 |
Total from investment operations | 4.74 | (4.95) | (1.06) | 5.20 | 1.71 |
Distributions from net investment income | (.07) | (.13) | - | (.06) | - |
Distributions from net realized gain | - | (.02) | (2.46) | (1.81) | (1.08) |
Total distributions | (.07) | (.15) | (2.46) | (1.87) | (1.08) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 21.54 | $ 16.87 | $ 21.97 | $ 25.49 | $ 22.16 |
Total Return A, B | 28.13% | (22.49)% | (4.71)% | 25.13% | 8.40% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.18% | 1.23% | 1.17% | 1.21% | 1.26% |
Expenses net of fee waivers, if any | 1.18% | 1.23% | 1.17% | 1.21% | 1.26% |
Expenses net of all reductions | 1.17% | 1.23% | 1.16% | 1.21% | 1.24% |
Net investment income (loss) | .31% | .89% | .46% | .38% | .34% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 165,029 | $ 130,860 | $ 188,859 | $ 157,451 | $ 99,255 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.64 | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .01 | .10 | .05 | .03 | .02 |
Net realized and unrealized gain (loss) | 4.61 | (5.03) | (1.15) | 5.05 | 1.61 |
Total from investment operations | 4.62 | (4.93) | (1.10) | 5.08 | 1.63 |
Distributions from net investment income | (.02) | (.08) | - | (.03) | - |
Distributions from net realized gain | - | (.02) | (2.40) | (1.74) | (1.04) |
Total distributions | (.02) | (.10) | (2.40) | (1.77) | (1.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 21.24 | $ 16.64 | $ 21.67 | $ 25.17 | $ 21.86 |
Total Return A, B | 27.80% | (22.68)% | (4.96)% | 24.82% | 8.13% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.48% | 1.41% | 1.46% | 1.49% |
Expenses net of fee waivers, if any | 1.44% | 1.48% | 1.41% | 1.46% | 1.49% |
Expenses net of all reductions | 1.43% | 1.48% | 1.41% | 1.46% | 1.47% |
Net investment income (loss) | .06% | .63% | .21% | .13% | .11% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 58,202 | $ 48,054 | $ 85,025 | $ 75,530 | $ 55,936 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.90 | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) | .02 | (.07) | (.09) | (.09) |
Net realized and unrealized gain (loss) | 4.41 | (4.82) | (1.10) | 4.87 | 1.55 |
Total from investment operations | 4.32 | (4.80) | (1.17) | 4.78 | 1.46 |
Distributions from net investment income | - | (.04) | - | - | - |
Distributions from net realized gain | - | - | (2.28) | (1.61) | (.99) |
Total distributions | - | (.04) | (2.28) | (1.61) | (.99) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 20.22 | $ 15.90 | $ 20.74 | $ 24.19 | $ 21.02 |
Total Return A, B | 27.17% | (23.10)% | (5.46)% | 24.18% | 7.54% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.97% | 1.98% | 1.95% | 2.00% | 2.04% |
Expenses net of fee waivers, if any | 1.97% | 1.98% | 1.95% | 2.00% | 2.04% |
Expenses net of all reductions | 1.97% | 1.98% | 1.95% | 2.00% | 2.02% |
Net investment income (loss) | (.48)% | .13% | (.33)% | (.41)% | (.44)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,048 | $ 25,212 | $ 39,989 | $ 44,330 | $ 37,082 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.94 | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.08) | .02 | (.06) | (.08) | (.08) |
Net realized and unrealized gain (loss) | 4.42 | (4.83) | (1.11) | 4.88 | 1.56 |
Total from investment operations | 4.34 | (4.81) | (1.17) | 4.80 | 1.48 |
Distributions from net investment income | - | (.04) | - | - | - |
Distributions from net realized gain | - | - | (2.30) | (1.70) | (1.00) |
Total distributions | - | (.04) | (2.30) | (1.70) | (1.00) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 20.28 | $ 15.94 | $ 20.79 | $ 24.26 | $ 21.16 |
Total Return A, B | 27.23% | (23.09)% | (5.44)% | 24.25% | 7.59% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.93% | 1.98% | 1.91% | 1.94% | 1.99% |
Expenses net of fee waivers, if any | 1.93% | 1.98% | 1.91% | 1.94% | 1.99% |
Expenses net of all reductions | 1.92% | 1.98% | 1.90% | 1.94% | 1.97% |
Net investment income (loss) | (.43)% | .14% | (.28)% | (.35)% | (.38)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 51,760 | $ 37,862 | $ 57,742 | $ 57,862 | $ 42,363 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.45 | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .13 | .19 | .18 | .16 | .16 |
Net realized and unrealized gain (loss) | 4.83 | (5.27) | (1.19) | 5.27 | 1.66 |
Total from investment operations | 4.96 | (5.08) | (1.01) | 5.43 | 1.82 |
Distributions from net investment income | (.11) | (.17) | - | (.13) | - |
Distributions from net realized gain | - | (.02) | (2.53) | (1.81) | (1.11) |
Total distributions | (.11) | (.19) | (2.53) | (1.94) | (1.11) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 22.30 | $ 17.45 | $ 22.72 | $ 26.26 | $ 22.77 |
Total Return A | 28.52% | (22.31)% | (4.40)% | 25.53% | 8.73% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .89% | .96% | .88% | .92% | .91% |
Expenses net of fee waivers, if any | .89% | .96% | .88% | .92% | .91% |
Expenses net of all reductions | .88% | .95% | .87% | .91% | .89% |
Net investment income (loss) | .61% | 1.16% | .75% | .67% | .69% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,578 | $ 12,762 | $ 33,642 | $ 19,498 | $ 13,043 |
Portfolio turnover rate D | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 34,570,784 |
Gross unrealized depreciation | (18,917,108) |
Net unrealized appreciation (depreciation) | $ 15,653,676 |
|
|
Tax Cost | $ 327,701,782 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (49,540,826) |
Net unrealized appreciation (depreciation) | $ 15,654,065 |
Industrials
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 658,116 | $ 2,041,973 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $338,591,426 and $326,721,810, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 382,429 | $ 2,089 |
Class T | .25% | .25% | 289,388 | 214 |
Class B | .75% | .25% | 283,065 | 212,528 |
Class C | .75% | .25% | 474,282 | 72,794 |
|
|
| $ 1,429,164 | $ 287,625 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 62,332 |
Class T | 9,012 |
Class B* | 70,669 |
Class C* | 4,154 |
| $ 146,167 |
* 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
5. 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 |
Class A | $ 428,648 | .28 |
Class T | 167,533 | .29 |
Class B | 91,225 | .32 |
Class C | 132,658 | .28 |
Institutional Class | 46,831 | .24 |
| $ 866,895 |
|
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 $7,732 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $1,189 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $100,909.
8. 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 $16,638 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $3.
Industrials
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 508,657 | $ 1,066,448 |
Class T | 67,522 | 306,371 |
Class B | - | 68,325 |
Class C | - | 103,234 |
Institutional Class | 81,937 | 211,740 |
Total | $ 658,116 | $ 1,756,118 |
From net realized gain |
|
|
Class A | $ - | $ 176,460 |
Class T | - | 79,143 |
Institutional Class | - | 30,252 |
Total | $ - | $ 285,855 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 2,293,002 | 2,551,802 | $ 46,751,968 | $ 40,597,092 |
Reinvestment of distributions | 24,478 | 72,593 | 465,084 | 1,139,555 |
Shares redeemed | (2,413,077) | (3,461,949) | (48,350,817) | (50,255,155) |
Net increase (decrease) | (95,597) | (837,554) | $ (1,133,765) | $ (8,518,508) |
Class T |
|
|
|
|
Shares sold | 640,220 | 1,041,987 | $ 12,504,319 | $ 15,774,329 |
Reinvestment of distributions | 3,441 | 24,634 | 64,976 | 365,354 |
Shares redeemed | (791,417) | (2,101,374) | (15,762,597) | (29,010,054) |
Net increase (decrease) | (147,756) | (1,034,753) | $ (3,193,302) | $ (12,870,371) |
Class B |
|
|
|
|
Shares sold | 230,669 | 339,206 | $ 4,429,240 | $ 5,035,039 |
Reinvestment of distributions | - | 4,471 | - | 56,194 |
Shares redeemed | (379,173) | (686,403) | (7,171,787) | (9,410,134) |
Net increase (decrease) | (148,504) | (342,726) | $ (2,742,547) | $ (4,318,901) |
Class C |
|
|
|
|
Shares sold | 965,412 | 638,949 | $ 18,697,081 | $ 9,440,300 |
Reinvestment of distributions | - | 6,551 | - | 82,541 |
Shares redeemed | (787,460) | (1,047,655) | (14,785,582) | (14,427,567) |
Net increase (decrease) | 177,952 | (402,155) | $ 3,911,499 | $ (4,904,726) |
Institutional Class |
|
|
|
|
Shares sold | 1,199,584 | 291,640 | $ 26,360,020 | $ 4,730,735 |
Reinvestment of distributions | 3,299 | 10,868 | 64,789 | 192,321 |
Shares redeemed | (607,717) | (1,052,089) | (12,398,885) | (15,378,162) |
Net increase (decrease) | 595,166 | (749,581) | $ 14,025,924 | $ (10,455,106) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) | 16.59% | 2.95% | -5.95% |
Class T (incl. 3.50% sales charge) | 19.09% | 3.18% | -5.96% |
Class B (incl. contingent deferred sales charge) A | 17.77% | 3.04% | -5.89% |
Class C (incl. contingent deferred sales charge) B | 21.73% | 3.39% | -6.08% |
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, 2000, 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
Fidelity Advisor Technology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 23.71%, 23.41%, 22.77% and 22.73%, respectively (excluding sales charges), handily beating the S&P 500® and the 15.12% return of the MSCI® U.S. IM Information Technology 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, favorable stock picking in computer hardware, application software, communications equipment, computer storage/peripherals and Internet software/services lifted performance. At the individual stock level, the top relative contributor was Salesforce.com, which supplies corporate customers with Web-based customer relationship management (CRM) software and was aided by some exciting new products and marketing initiatives. Other contributors included SanDisk, a supplier of flash memory, and consumer electronics maker Apple, which lifted relative performance and was far and away the fund's top contributor in absolute terms. In addition to rolling out its iPad tablet computer, which sold briskly in its first several months, Apple launched an upgraded version of its popular iPhone during the period. HTC, a Taiwan-based manufacturer of smart phones, was a strong contributor in the second half of the period. Underweighting poorly performing index component QUALCOMM also helped. Conversely, untimely ownership of Microsoft's shares was the main factor responsible for the stock detracting from performance. An out-of-index stake in solar products company SunPower fared poorly, as did positions in semiconductor equipment holding Tessera Technologies and graphics chip maker NVIDIA.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the past year, the fund's Institutional Class shares returned 24.06%, handily beating the S&P 500® and the 15.12% return of the MSCI® U.S. IM Information Technology 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, favorable stock picking in computer hardware, application software, communications equipment, computer storage/peripherals and Internet software/services lifted performance. At the individual stock level, the top relative contributor was Salesforce.com, which supplies corporate customers with Web-based customer relationship management (CRM) software and was aided by some exciting new products and marketing initiatives. Other contributors included SanDisk, a supplier of flash memory, and consumer electronics maker Apple, which lifted relative performance and was far and away the fund's top contributor in absolute terms. In addition to rolling out its iPad tablet computer, which sold briskly in its first several months, Apple launched an upgraded version of its popular iPhone during the period. HTC, a Taiwan-based manufacturer of smart phones, was a strong contributor in the second half of the period. Underweighting poorly performing index component QUALCOMM also helped. Conversely, untimely ownership of Microsoft's shares was the main factor responsible for the stock detracting from performance. An out-of-index stake in solar products company SunPower fared poorly, as did positions in semiconductor equipment holding Tessera Technologies and graphics chip maker NVIDIA.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.18% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,099.80 | $ 6.14 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.94 | $ 5.91 |
Class T | 1.43% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,098.80 | $ 7.44 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.70 | $ 7.15 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,095.50 | $ 10.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,095.70 | $ 10.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,101.80 | $ 4.74 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Technology
Fidelity Advisor Technology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 13.3 | 8.2 |
Google, Inc. Class A | 4.9 | 5.1 |
Oracle Corp. | 4.0 | 3.7 |
Cisco Systems, Inc. | 3.5 | 3.1 |
QUALCOMM, Inc. | 3.5 | 2.6 |
Hewlett-Packard Co. | 2.8 | 3.9 |
Salesforce.com, Inc. | 2.1 | 1.4 |
Akamai Technologies, Inc. | 1.9 | 0.0 |
Motorola, Inc. | 1.7 | 0.3 |
BMC Software, Inc. | 1.5 | 2.1 |
| 39.2 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Software | 23.0% |
|
| Computers & Peripherals | 21.1% |
|
| Communications Equipment | 14.4% |
|
| Semiconductors & Semiconductor Equipment | 14.2% |
|
| Internet Software & Services | 10.4% |
|
| All Others* | 16.9% |
|
As of January 31, 2010 | |||
| Software | 28.8% |
|
| Semiconductors & Semiconductor Equipment | 17.5% |
|
| Computers & Peripherals | 16.7% |
|
| Communications Equipment | 10.6% |
|
| Internet Software & Services | 10.2% |
|
| All Others* | 16.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Technology Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value | ||
AUTOMOBILES - 0.2% | |||
Automobile Manufacturers - 0.2% | |||
BYD Co. Ltd. (H Shares) | 96,000 | $ 660,599 | |
Tesla Motors, Inc. (a) | 31,200 | 622,128 | |
| 1,282,727 | ||
CHEMICALS - 0.4% | |||
Commodity Chemicals - 0.2% | |||
STR Holdings, Inc. | 68,323 | 1,530,435 | |
Diversified Chemicals - 0.1% | |||
DC Chemical Co. Ltd. | 2,621 | 613,838 | |
Specialty Chemicals - 0.1% | |||
Shin-Etsu Chemical Co., Ltd. | 6,600 | 328,759 | |
Wacker Chemie AG | 500 | 80,254 | |
| 409,013 | ||
TOTAL CHEMICALS | 2,553,286 | ||
COMMUNICATIONS EQUIPMENT - 14.2% | |||
Communications Equipment - 14.2% | |||
Acme Packet, Inc. (a) | 145,100 | 4,100,526 | |
Adtran, Inc. | 56,500 | 1,784,270 | |
Aruba Networks, Inc. (a) | 9,800 | 166,404 | |
Brocade Communications Systems, Inc. (a) | 200 | 990 | |
Cisco Systems, Inc. (a) | 955,973 | 22,054,297 | |
Emulex Corp. (a) | 5,400 | 46,980 | |
F5 Networks, Inc. (a) | 56,758 | 4,985,055 | |
Finisar Corp. (a)(d) | 18,174 | 291,329 | |
Infinera Corp. (a) | 70,900 | 641,645 | |
Juniper Networks, Inc. (a) | 100,573 | 2,793,918 | |
Motorola, Inc. (a) | 1,425,467 | 10,676,748 | |
Netronix, Inc. (a) | 115,000 | 275,748 | |
OZ Optics Ltd. unit (a)(f) | 68,000 | 301,240 | |
Polycom, Inc. (a) | 82,700 | 2,454,536 | |
QUALCOMM, Inc. | 565,715 | 21,542,427 | |
Research In Motion Ltd. (a) | 58,000 | 3,336,740 | |
Riverbed Technology, Inc. (a) | 121,300 | 4,499,017 | |
Sandvine Corp. (a) | 887,400 | 1,363,969 | |
Sandvine Corp. (U.K.) (a) | 751,600 | 1,184,703 | |
ShoreTel, Inc. (a) | 58,300 | 291,500 | |
Sierra Wireless, Inc. (a) | 41,200 | 386,770 | |
Sonus Networks, Inc. (a) | 29,060 | 83,693 | |
Telefonaktiebolaget LM Ericsson | 402,530 | 4,427,830 | |
Tellabs, Inc. | 82,800 | 577,944 | |
ZTE Corp. (H Shares) | 93,600 | 299,448 | |
| 88,567,727 | ||
COMPUTERS & PERIPHERALS - 21.1% | |||
Computer Hardware - 17.3% | |||
3PAR, Inc. (a) | 71,337 | 720,504 | |
Apple, Inc. (a) | 322,030 | 82,842,218 | |
Hewlett-Packard Co. | 380,683 | 17,526,645 | |
| |||
Shares | Value | ||
HTC Corp. | 289,300 | $ 5,317,965 | |
Stratasys, Inc. (a) | 48,675 | 1,105,409 | |
Toshiba Corp. (a) | 58,000 | 303,338 | |
| 107,816,079 | ||
Computer Storage & Peripherals - 3.8% | |||
Chicony Electronics Co. Ltd. | 198,748 | 435,552 | |
EMC Corp. (a) | 285,237 | 5,644,840 | |
Imagination Technologies Group PLC (a) | 194,800 | 1,004,258 | |
Isilon Systems, Inc. (a) | 80,382 | 1,409,900 | |
NetApp, Inc. (a) | 168,700 | 7,136,010 | |
Netezza Corp. (a) | 6,100 | 94,550 | |
SanDisk Corp. (a) | 116,962 | 5,111,239 | |
Seagate Technology (a) | 17,700 | 222,135 | |
Smart Technologies, Inc. Class A (a) | 72,000 | 1,103,867 | |
Synaptics, Inc. (a)(d) | 48,875 | 1,529,788 | |
Western Digital Corp. (a) | 8,350 | 220,357 | |
| 23,912,496 | ||
TOTAL COMPUTERS & PERIPHERALS | 131,728,575 | ||
DIVERSIFIED CONSUMER SERVICES - 0.2% | |||
Education Services - 0.1% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 809 | 79,120 | |
Promethean World PLC (a) | 194,200 | 405,096 | |
| 484,216 | ||
Specialized Consumer Services - 0.1% | |||
Coinstar, Inc. (a) | 14,100 | 641,550 | |
TOTAL DIVERSIFIED CONSUMER SERVICES | 1,125,766 | ||
ELECTRICAL EQUIPMENT - 0.3% | |||
Electrical Components & Equipment - 0.3% | |||
A123 Systems, Inc. (d) | 2,200 | 23,716 | |
Acuity Brands, Inc. | 14,566 | 613,666 | |
American Superconductor Corp. (a)(d) | 19,869 | 599,050 | |
SMA Solar Technology AG | 5,400 | 667,563 | |
| 1,903,995 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 4.7% | |||
Electronic Components - 1.0% | |||
Amphenol Corp. Class A | 1,400 | 62,720 | |
Cando Corp. (a) | 1,071,392 | 617,966 | |
Corning, Inc. | 144,092 | 2,610,947 | |
Power-One, Inc. (a) | 157,312 | 1,955,388 | |
Prime View International Co. Ltd. (a) | 308,000 | 446,775 | |
Prime View International Co. Ltd. sponsored GDR (a)(e) | 4,700 | 68,252 | |
Vishay Intertechnology, Inc. (a) | 70,557 | 599,029 | |
| 6,361,077 | ||
Electronic Equipment & Instruments - 1.3% | |||
China Security & Surveillance Technology, Inc. warrants 8/25/10 (a)(f) | 42,000 | 91 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED | |||
Electronic Equipment & Instruments - continued | |||
Chroma ATE, Inc. | 1,145,003 | $ 2,301,640 | |
Coretronic Corp. | 219,300 | 305,426 | |
Itron, Inc. (a) | 17,308 | 1,126,232 | |
National Instruments Corp. | 102,890 | 3,282,191 | |
Test Research, Inc. | 136,500 | 188,614 | |
Vishay Precision Group, Inc. (a) | 5,039 | 63,743 | |
Wasion Group Holdings Ltd. (d) | 928,000 | 746,701 | |
| 8,014,638 | ||
Electronic Manufacturing Services - 1.5% | |||
Benchmark Electronics, Inc. (a) | 1,200 | 20,040 | |
IPG Photonics Corp. (a) | 27,300 | 439,803 | |
Ju Teng International Holdings Ltd. | 450,000 | 324,429 | |
Multi-Fineline Electronix, Inc. (a) | 2,289 | 58,003 | |
Trimble Navigation Ltd. (a) | 315,215 | 8,942,650 | |
| 9,784,925 | ||
Technology Distributors - 0.9% | |||
Digital China Holdings Ltd. (H Shares) | 1,278,000 | 2,073,099 | |
Inspur International Ltd. | 1,899,000 | 188,250 | |
Supreme Electronics Co. Ltd. | 798,000 | 604,971 | |
Synnex Technology International Corp. | 273,500 | 624,166 | |
WPG Holding Co. Ltd. | 948,000 | 1,958,978 | |
| 5,449,464 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 29,610,104 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% | |||
Health Care Equipment - 0.1% | |||
China Medical Technologies, Inc. sponsored ADR (d) | 1,900 | 19,475 | |
Golden Meditech Holdings Ltd. (a) | 2,168,000 | 415,876 | |
Mingyuan Medicare Development Co. Ltd. | 270,000 | 30,937 | |
| 466,288 | ||
Health Care Supplies - 0.3% | |||
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 410,000 | 1,847,441 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 2,313,729 | ||
HEALTH CARE TECHNOLOGY - 0.0% | |||
Health Care Technology - 0.0% | |||
athenahealth, Inc. (a) | 600 | 16,662 | |
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||
Hotels, Resorts & Cruise Lines - 0.2% | |||
Ctrip.com International Ltd. sponsored ADR (a) | 26,500 | 1,066,890 | |
| |||
Shares | Value | ||
HOUSEHOLD DURABLES - 0.0% | |||
Consumer Electronics - 0.0% | |||
Sony Corp. sponsored ADR | 1,979 | $ 61,784 | |
TomTom Group BV (a) | 160 | 964 | |
| 62,748 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.1% | |||
Independent Power Producers & Energy Traders - 0.1% | |||
GCL-Poly Energy Holdings Ltd. | 2,724,000 | 631,246 | |
INTERNET & CATALOG RETAIL - 1.7% | |||
Internet Retail - 1.7% | |||
Amazon.com, Inc. (a) | 56,357 | 6,643,927 | |
Overstock.com, Inc. (a)(d) | 42,681 | 843,803 | |
Priceline.com, Inc. (a) | 13,612 | 3,054,533 | |
| 10,542,263 | ||
INTERNET SOFTWARE & SERVICES - 10.4% | |||
Internet Software & Services - 10.4% | |||
Akamai Technologies, Inc. (a) | 310,539 | 11,912,276 | |
Alibaba.com Ltd. (d) | 1,028,500 | 2,126,516 | |
Art Technology Group, Inc. (a) | 73,824 | 265,766 | |
Baidu.com, Inc. sponsored ADR (a) | 48,102 | 3,915,984 | |
China Finance Online Co. Ltd. ADR (a) | 68,770 | 543,971 | |
DealerTrack Holdings, Inc. (a) | 12,300 | 192,003 | |
eBay, Inc. (a) | 259,308 | 5,422,130 | |
Google, Inc. Class A (a) | 62,829 | 30,462,641 | |
GREE, Inc. | 8,500 | 697,310 | |
LogMeIn, Inc. | 21,900 | 624,150 | |
Mercadolibre, Inc. (a)(d) | 54,434 | 3,293,257 | |
NHN Corp. (a) | 31 | 4,823 | |
Open Text Corp. (a) | 30,500 | 1,207,301 | |
OpenTable, Inc. (a) | 400 | 17,880 | |
Rackspace Hosting, Inc. (a) | 38,900 | 727,430 | |
Tencent Holdings Ltd. | 30,300 | 583,960 | |
VistaPrint Ltd. (a) | 78,435 | 2,592,277 | |
Vocus, Inc. (a) | 10,300 | 167,787 | |
| 64,757,462 | ||
IT SERVICES - 2.6% | |||
Data Processing & Outsourced Services - 1.0% | |||
Amadeus IT Holding SA Class A (a) | 90,700 | 1,595,887 | |
hiSoft Technology International Ltd. ADR (a) | 29,800 | 357,600 | |
Visa, Inc. Class A | 57,900 | 4,246,965 | |
| 6,200,452 | ||
IT Consulting & Other Services - 1.6% | |||
Accenture PLC Class A | 78,437 | 3,109,243 | |
Atos Origin SA (a) | 22,032 | 946,173 | |
China Information Security Technology, Inc. (a) | 17 | 99 | |
Cognizant Technology Solutions Corp. Class A (a) | 58,000 | 3,164,480 | |
Hi Sun Technology (China) Ltd. (a) | 408,000 | 159,155 | |
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - CONTINUED | |||
IT Consulting & Other Services - continued | |||
International Business Machines Corp. | 7,163 | $ 919,729 | |
RightNow Technologies, Inc. (a) | 121,090 | 1,915,644 | |
| 10,214,523 | ||
TOTAL IT SERVICES | 16,414,975 | ||
MACHINERY - 0.2% | |||
Industrial Machinery - 0.2% | |||
Meyer Burger Technology AG (a)(d) | 24,700 | 666,382 | |
Mirle Automation Corp. | 174,000 | 169,716 | |
Shin Zu Shing Co. Ltd. | 156,732 | 509,578 | |
| 1,345,676 | ||
MEDIA - 0.3% | |||
Advertising - 0.1% | |||
AirMedia Group, Inc. ADR (a) | 128,600 | 471,962 | |
Focus Media Holding Ltd. ADR (a) | 19,100 | 346,283 | |
| 818,245 | ||
Cable & Satellite - 0.2% | |||
Virgin Media, Inc. | 40,700 | 876,271 | |
TOTAL MEDIA | 1,694,516 | ||
METALS & MINING - 0.0% | |||
Diversified Metals & Mining - 0.0% | |||
Timminco Ltd. (a)(d) | 5,600 | 3,051 | |
OFFICE ELECTRONICS - 0.5% | |||
Office Electronics - 0.5% | |||
Xerox Corp. | 304,550 | 2,966,317 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.4% | |||
Real Estate Services - 0.4% | |||
China Real Estate Information Corp. ADR (d) | 250,917 | 2,323,491 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 14.2% | |||
Semiconductor Equipment - 3.3% | |||
Amkor Technology, Inc. (a) | 54,063 | 311,944 | |
ASM International NV unit (a) | 12,900 | 328,176 | |
ASML Holding NV | 180,200 | 5,800,638 | |
centrotherm photovoltaics AG (a) | 35,159 | 1,427,433 | |
Cymer, Inc. (a) | 44,300 | 1,474,304 | |
GT Solar International, Inc. (a) | 348,800 | 2,260,224 | |
Lam Research Corp. (a) | 52,700 | 2,223,413 | |
LTX-Credence Corp. (a) | 100,260 | 280,728 | |
MEMC Electronic Materials, Inc. (a) | 123,435 | 1,180,039 | |
Photronics, Inc. (a) | 19,800 | 89,496 | |
Roth & Rau AG (a) | 48,016 | 1,589,574 | |
Sumco Corp. (a) | 18,000 | 341,568 | |
| |||
Shares | Value | ||
Tessera Technologies, Inc. (a) | 14,100 | $ 239,418 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 107,800 | 3,046,428 | |
| 20,593,383 | ||
Semiconductors - 10.9% | |||
Advanced Micro Devices, Inc. (a)(d) | 333,198 | 2,495,653 | |
Altera Corp. | 100,038 | 2,773,053 | |
Applied Micro Circuits Corp. (a) | 66,050 | 789,958 | |
ARM Holdings PLC sponsored ADR | 161,200 | 2,490,540 | |
Atmel Corp. (a) | 178,285 | 932,431 | |
Avago Technologies Ltd. | 153,768 | 3,345,992 | |
Broadcom Corp. Class A | 128,099 | 4,615,407 | |
Canadian Solar, Inc. (a)(d) | 100 | 1,210 | |
Cavium Networks, Inc. (a)(d) | 168,718 | 4,526,704 | |
Cree, Inc. (a) | 46,910 | 3,323,104 | |
CSR PLC (a) | 8,708 | 46,654 | |
Cypress Semiconductor Corp. (a) | 230,800 | 2,446,480 | |
Duksan Hi-Metal Co. Ltd. (a) | 52,336 | 800,914 | |
Energy Conversion Devices, Inc. (a)(d) | 8,000 | 38,720 | |
Fairchild Semiconductor International, Inc. (a) | 32,200 | 292,376 | |
First Solar, Inc. (a) | 4,714 | 591,371 | |
Global Unichip Corp. | 142,291 | 547,145 | |
Hittite Microwave Corp. (a) | 22,479 | 1,033,135 | |
Hynix Semiconductor, Inc. (a) | 3,230 | 61,446 | |
Infineon Technologies AG (a) | 47,596 | 321,275 | |
Intel Corp. | 2,881 | 59,349 | |
International Rectifier Corp. (a) | 101,100 | 1,974,483 | |
Intersil Corp. Class A | 24,100 | 273,776 | |
JA Solar Holdings Co. Ltd. ADR (a) | 104,800 | 623,560 | |
Jinkosolar Holdings Co. Ltd. ADR | 74,675 | 1,092,495 | |
Marvell Technology Group Ltd. (a) | 259,709 | 3,874,858 | |
MediaTek, Inc. | 4,046 | 54,832 | |
Micron Technology, Inc. (a) | 573,346 | 4,173,959 | |
Microsemi Corp. (a) | 4,100 | 65,436 | |
Monolithic Power Systems, Inc. (a) | 68,500 | 1,206,970 | |
Netlogic Microsystems, Inc. (a)(d) | 38,200 | 1,129,192 | |
NVIDIA Corp. (a) | 483,300 | 4,441,527 | |
PMC-Sierra, Inc. (a) | 18,400 | 149,040 | |
Power Integrations, Inc. | 67,186 | 2,375,025 | |
Radiant Opto-Electronics Corp. | 253,122 | 344,222 | |
Rambus, Inc. (a) | 35,400 | 695,610 | |
Realtek Semiconductor Corp. | 275,000 | 628,449 | |
Silicon Laboratories, Inc. (a) | 8,300 | 332,415 | |
Skyworks Solutions, Inc. (a) | 175,300 | 3,073,009 | |
SolarWorld AG (d) | 8,681 | 117,839 | |
Spreadtrum Communications, Inc. ADR (a)(d) | 110,400 | 1,024,512 | |
Standard Microsystems Corp. (a) | 83,000 | 1,827,660 | |
SunPower Corp.: | |||
Class A (a)(d) | 8,600 | 106,898 | |
Class B (a) | 4,216 | 48,653 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 3,200 | 31,808 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Trina Solar Ltd. ADR (a)(d) | 105,300 | $ 2,289,222 | |
TriQuint Semiconductor, Inc. (a) | 260,150 | 1,802,840 | |
Volterra Semiconductor Corp. (a) | 15,500 | 349,060 | |
Xilinx, Inc. | 79,236 | 2,212,269 | |
Yingli Green Energy Holding Co. Ltd. ADR (a) | 200 | 2,184 | |
YoungTek Electronics Corp. | 83,000 | 204,208 | |
| 68,058,928 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 88,652,311 | ||
SOFTWARE - 23.0% | |||
Application Software - 11.9% | |||
Adobe Systems, Inc. (a) | 2,534 | 72,776 | |
ANSYS, Inc. (a) | 35,408 | 1,591,590 | |
AsiaInfo Holdings, Inc. (a) | 61,100 | 1,246,440 | |
Autodesk, Inc. (a) | 225,083 | 6,648,952 | |
AutoNavi Holdings Ltd. ADR | 46,747 | 683,909 | |
Autonomy Corp. PLC (a) | 115,875 | 2,989,596 | |
Citrix Systems, Inc. (a) | 133,790 | 7,361,126 | |
Concur Technologies, Inc. (a) | 111,565 | 5,163,228 | |
Cyberlink Corp. | 141,000 | 588,464 | |
Epicor Software Corp. (a) | 97,861 | 757,444 | |
Informatica Corp. (a) | 192,600 | 5,803,038 | |
Intuit, Inc. (a) | 18,300 | 727,425 | |
JDA Software Group, Inc. (a) | 23,090 | 542,615 | |
Kenexa Corp. (a) | 23,969 | 288,347 | |
Kingdee International Software Group Co. Ltd. | 12,698,000 | 5,345,666 | |
Longtop Financial Technologies Ltd. ADR (a) | 59,500 | 1,983,135 | |
Manhattan Associates, Inc. (a) | 4,157 | 111,657 | |
MicroStrategy, Inc. Class A (a) | 3,859 | 320,258 | |
Nuance Communications, Inc. (a) | 263,369 | 4,348,222 | |
ORC Software AB | 17,800 | 323,670 | |
Parametric Technology Corp. (a) | 178,590 | 3,203,905 | |
Pegasystems, Inc. | 17,903 | 550,696 | |
QLIK Technologies, Inc. | 2,200 | 31,614 | |
Salesforce.com, Inc. (a) | 133,100 | 13,170,245 | |
Smith Micro Software, Inc. (a) | 74,100 | 728,403 | |
SolarWinds, Inc. (a) | 2,700 | 37,314 | |
Sonic Solutions, Inc. (a) | 15,051 | 118,451 | |
SuccessFactors, Inc. (a) | 212,200 | 4,309,782 | |
Synopsys, Inc. (a) | 100 | 2,184 | |
Taleo Corp. Class A (a) | 116,488 | 2,865,605 | |
TeleNav, Inc. | 55,473 | 301,773 | |
| |||
Shares | Value | ||
TIBCO Software, Inc. (a) | 74,594 | $ 1,011,495 | |
TiVo, Inc. (a) | 35,100 | 301,158 | |
Ulticom, Inc. (a) | 79,731 | 755,850 | |
| 74,286,033 | ||
Home Entertainment Software - 1.2% | |||
Activision Blizzard, Inc. | 27,100 | 321,948 | |
Changyou.com Ltd. (A Shares) ADR (a)(d) | 24,000 | 686,640 | |
Giant Interactive Group, Inc. ADR (d) | 42,767 | 287,822 | |
NCsoft Corp. | 22,557 | 3,585,470 | |
Neowiz Games Corp. | 10,197 | 328,477 | |
Nintendo Co. Ltd. ADR | 16,500 | 581,039 | |
Perfect World Co. Ltd. sponsored ADR Class B (a) | 33,300 | 777,888 | |
RealD, Inc. | 3,600 | 61,200 | |
Shanda Games Ltd. sponsored ADR | 73,300 | 485,979 | |
| 7,116,463 | ||
Systems Software - 9.9% | |||
Ariba, Inc. (a) | 58,417 | 932,919 | |
BMC Software, Inc. (a) | 259,700 | 9,240,126 | |
Check Point Software Technologies Ltd. (a) | 1,700 | 57,834 | |
CommVault Systems, Inc. (a) | 37,364 | 691,981 | |
Fortinet, Inc. | 36,400 | 655,564 | |
Insyde Software Corp. | 102,498 | 299,603 | |
Microsoft Corp. | 240,846 | 6,216,235 | |
Novell, Inc. (a) | 316,210 | 1,909,908 | |
Oracle Corp. | 1,061,830 | 25,101,661 | |
Red Hat, Inc. (a) | 222,600 | 7,156,590 | |
Rovi Corp. (a) | 44,471 | 1,978,960 | |
Symantec Corp. (a) | 106,500 | 1,381,305 | |
VMware, Inc. Class A (a) | 77,479 | 6,006,947 | |
| 61,629,633 | ||
TOTAL SOFTWARE | 143,032,129 | ||
WIRELESS TELECOMMUNICATION SERVICES - 1.4% | |||
Wireless Telecommunication Services - 1.4% | |||
American Tower Corp. Class A (a) | 7,800 | 360,672 | |
Crown Castle International Corp. (a) | 8,800 | 347,688 | |
SBA Communications Corp. Class A (a) | 9,547 | 345,410 | |
Sprint Nextel Corp. (a) | 1,340,998 | 6,128,361 | |
Syniverse Holdings, Inc. (a) | 69,504 | 1,552,024 | |
| 8,734,155 | ||
TOTAL COMMON STOCKS (Cost $536,183,956) | 601,329,801 | ||
Convertible Bonds - 0.2% | ||||
| Principal Amount | Value | ||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 1,270,000 | $ 1,088,517 | ||
Money Market Funds - 5.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.24% (b) | 20,595,734 | 20,595,734 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 15,908,146 | 15,908,146 | |
TOTAL MONEY MARKET FUNDS (Cost $36,503,880) | 36,503,880 | ||
TOTAL INVESTMENT PORTFOLIO - 102.5% (Cost $573,957,836) | 638,922,198 | ||
NET OTHER ASSETS (LIABILITIES) - (2.5)% | (15,744,166) | ||
NET ASSETS - 100% | $ 623,178,032 | ||
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 $68,252 or 0.0% 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 $301,331 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
China Security & Surveillance Technology, Inc. warrants 8/25/10 | 8/25/09 | $ 4 |
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 | $ 7,783 |
Fidelity Securities Lending Cash Central Fund | 143,831 |
Total | $ 151,614 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 601,329,801 | $ 601,028,470 | $ 91 | $ 301,240 |
Convertible Bonds | 1,088,517 | - | 1,088,517 | - |
Money Market Funds | 36,503,880 | 36,503,880 | - | - |
Total Investments in Securities: | $ 638,922,198 | $ 637,532,350 | $ 1,088,608 | $ 301,240 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 320,960 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (19,720) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 301,240 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at July 31, 2010 | $ (19,720) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.6% |
Cayman Islands | 3.8% |
Taiwan | 2.7% |
China | 1.8% |
Canada | 1.5% |
United Kingdom | 1.2% |
Bermuda | 1.0% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 4.4% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $632,644,379 of which $499,806,783 and $132,837,596 will expire on July 31, 2011 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Technology
Fidelity Advisor Technology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $15,225,824) - See accompanying schedule: Unaffiliated issuers (cost $537,453,956) | $ 602,418,318 |
|
Fidelity Central Funds (cost $36,503,880) | 36,503,880 |
|
Total Investments (cost $573,957,836) |
| $ 638,922,198 |
Foreign currency held at value (cost $18) | 18 | |
Receivable for investments sold | 14,799,525 | |
Receivable for fund shares sold | 452,089 | |
Dividends receivable | 341,826 | |
Interest receivable | 785 | |
Distributions receivable from Fidelity Central Funds | 11,946 | |
Other receivables | 24,336 | |
Total assets | 654,552,723 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 13,507,784 | |
Payable for fund shares redeemed | 1,226,639 | |
Accrued management fee | 289,116 | |
Distribution fees payable | 217,087 | |
Other affiliated payables | 173,835 | |
Other payables and accrued expenses | 52,084 | |
Collateral on securities loaned, at value | 15,908,146 | |
Total liabilities | 31,374,691 | |
|
|
|
Net Assets | $ 623,178,032 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,194,815,135 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (636,597,230) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 64,960,127 | |
Net Assets | $ 623,178,032 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 19.83 | |
|
|
|
Maximum offering price per share (100/94.25 of $19.83) | $ 21.04 | |
Class T: | $ 19.24 | |
|
|
|
Maximum offering price per share (100/96.50 of $19.24) | $ 19.94 | |
Class B: | $ 18.01 | |
|
|
|
Class C: | $ 18.09 | |
|
|
|
Institutional Class: | $ 20.68 | |
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
Fidelity Advisor Technology Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,811,505 |
Interest |
| 172,259 |
Income from Fidelity Central Funds (including $143,831 from security lending) |
| 151,614 |
Total income |
| 2,135,378 |
|
|
|
Expenses | ||
Management fee | $ 3,415,846 | |
Transfer agent fees | 1,967,192 | |
Distribution fees | 2,609,226 | |
Accounting and security lending fees | 232,303 | |
Custodian fees and expenses | 84,909 | |
Independent trustees' compensation | 3,656 | |
Registration fees | 80,936 | |
Audit | 51,189 | |
Legal | 3,778 | |
Interest | 383 | |
Miscellaneous | 8,796 | |
Total expenses before reductions | 8,458,214 | |
Expense reductions | (146,219) | 8,311,995 |
Net investment income (loss) | (6,176,617) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 117,179,736 | |
Foreign currency transactions | 43,566 | |
Capital gain distributions from Fidelity Central Funds | 1,063 | |
Total net realized gain (loss) |
| 117,224,365 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 9,237,133 | |
Assets and liabilities in foreign currencies | (5,287) | |
Total change in net unrealized appreciation (depreciation) |
| 9,231,846 |
Net gain (loss) | 126,456,211 | |
Net increase (decrease) in net assets resulting from operations | $ 120,279,594 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (6,176,617) | $ (112,131) |
Net realized gain (loss) | 117,224,365 | (206,821,306) |
Change in net unrealized appreciation (depreciation) | 9,231,846 | 162,039,261 |
Net increase (decrease) in net assets resulting from operations | 120,279,594 | (44,894,176) |
Share transactions - net increase (decrease) | (19,248,670) | (14,948,367) |
Redemption fees | 34,453 | 15,958 |
Total increase (decrease) in net assets | 101,065,377 | (59,826,585) |
|
|
|
Net Assets | ||
Beginning of period | 522,112,655 | 581,939,240 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $425,528, respectively) | $ 623,178,032 | $ 522,112,655 |
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.03 | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | .02 F | (.10) | (.17) | (.15) |
Net realized and unrealized gain (loss) | 3.96 | (1.03) | (3.41) | 5.13 | (.42) |
Total from investment operations | 3.80 | (1.01) | (3.51) | 4.96 | (.57) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 19.83 | $ 16.03 | $ 17.04 | $ 20.55 | $ 15.59 |
Total Return A,B | 23.71% | (5.93)% | (17.08)% | 31.82% | (3.53)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.21% | 1.23% | 1.21% | 1.25% | 1.30% |
Expenses net of fee waivers, if any | 1.21% | 1.23% | 1.21% | 1.25% | 1.30% |
Expenses net of all reductions | 1.18% | 1.22% | 1.19% | 1.24% | 1.20% |
Net investment income (loss) | (.83)% | .17% F | (.49)% | (.91)% | (.88)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 312,659 | $ 258,433 | $ 275,117 | $ 309,105 | $ 189,054 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.18)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.59 | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.20) | (.01) F | (.14) | (.21) | (.19) |
Net realized and unrealized gain (loss) | 3.85 | (1.02) | (3.33) | 5.02 | (.41) |
Total from investment operations | 3.65 | (1.03) | (3.47) | 4.81 | (.60) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 19.24 | $ 15.59 | $ 16.62 | $ 20.09 | $ 15.28 |
Total Return A,B | 23.41% | (6.20)% | (17.27)% | 31.48% | (3.78)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.46% | 1.49% | 1.46% | 1.51% | 1.55% |
Expenses net of fee waivers, if any | 1.46% | 1.49% | 1.46% | 1.51% | 1.55% |
Expenses net of all reductions | 1.44% | 1.48% | 1.45% | 1.49% | 1.44% |
Net investment income (loss) | (1.09)% | (.09)% F | (.74)% | (1.16)% | (1.13)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 169,049 | $ 151,170 | $ 173,917 | $ 260,339 | $ 260,966 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.44)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 14.67 | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.27) | (.07) F | (.23) | (.28) | (.27) |
Net realized and unrealized gain (loss) | 3.61 | (.98) | (3.15) | 4.79 | (.38) |
Total from investment operations | 3.34 | (1.05) | (3.38) | 4.51 | (.65) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 18.01 | $ 14.67 | $ 15.72 | $ 19.10 | $ 14.59 |
Total Return A,B | 22.77% | (6.68)% | (17.70)% | 30.91% | (4.27)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of fee waivers, if any | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of all reductions | 1.94% | 1.97% | 1.94% | 2.00% | 1.94% |
Net investment income (loss) | (1.59)% | (.58)% F | (1.24)% | (1.67)% | (1.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,176 | $ 30,580 | $ 47,294 | $ 102,655 | $ 192,790 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 14.74 | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.28) | (.07) F | (.23) | (.29) | (.27) |
Net realized and unrealized gain (loss) | 3.63 | (.98) | (3.16) | 4.81 | (.38) |
Total from investment operations | 3.35 | (1.05) | (3.39) | 4.52 | (.65) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 18.09 | $ 14.74 | $ 15.79 | $ 19.18 | $ 14.66 |
Total Return A,B | 22.73% | (6.65)% | (17.67)% | 30.83% | (4.25)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of fee waivers, if any | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of all reductions | 1.93% | 1.97% | 1.94% | 1.99% | 1.94% |
Net investment income (loss) | (1.58)% | (.58)% F | (1.24)% | (1.66)% | (1.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 70,017 | $ 55,645 | $ 63,590 | $ 86,974 | $ 82,835 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.67 | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.11) | .06 E | (.04) | (.11) | (.09) |
Net realized and unrealized gain (loss) | 4.12 | (1.07) | (3.54) | 5.30 | (.44) |
Total from investment operations | 4.01 | (1.01) | (3.58) | 5.19 | (.53) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 20.68 | $ 16.67 | $ 17.68 | $ 21.26 | $ 16.07 |
Total Return A | 24.06% | (5.71)% | (16.84)% | 32.30% | (3.19)% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .92% | .98% | .94% | .93% | .90% |
Expenses net of fee waivers, if any | .92% | .98% | .94% | .93% | .90% |
Expenses net of all reductions | .90% | .97% | .92% | .92% | .80% |
Net investment income (loss) | (.55)% | .42% E | (.22)% | (.59)% | (.49)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 42,277 | $ 26,285 | $ 22,021 | $ 21,111 | $ 11,681 |
Portfolio turnover rate D | 115% | 225% | 214% | 208% | 258% |
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 $.04 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 reductions from 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, 2010
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Technology
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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. 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, 2009, dividend income has been reduced $1,075,061 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, market discount, net operating losses, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 98,770,260 |
Gross unrealized depreciation | (37,758,749) |
Net unrealized appreciation (depreciation) | $ 61,011,511 |
|
|
Tax Cost | $ 577,910,687 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (632,644,379) |
Net unrealized appreciation (depreciation) | $ 61,007,276 |
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.
4. Operating Policies.
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 $684,296,338 and $729,729,891, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares, except for the Institutional Class. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 768,219 | $ 11,929 |
Class T | .25% | .25% | 844,822 | 4,030 |
Class B | .75% | .25% | 321,710 | 241,714 |
Class C | .75% | .25% | 674,475 | 86,799 |
|
|
| $ 2,609,226 | $ 344,472 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
Technology
6. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 88,242 |
Class T | 19,307 |
Class B* | 43,677 |
Class C* | 6,996 |
| $ 158,222 |
* 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 |
Class A | $ 991,638 | .32 |
Class T | 552,433 | .33 |
Class B | 104,934 | .33 |
Class C | 217,727 | .32 |
Institutional Class | 100,460 | .29 |
| $ 1,967,192 |
|
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 $17,301 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 4,608,286 | .43% | $ 383 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $2,385 and is reflected in Miscellaneous expenses 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
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
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 $146,219 for the period.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 4,395,059 | 3,881,770 | $ 83,404,216 | $ 49,340,225 |
Shares redeemed | (4,747,519) | (3,900,491) | (89,682,006) | (47,190,702) |
Net increase (decrease) | (352,460) | (18,721) | $ (6,277,790) | $ 2,149,523 |
Class T |
|
|
|
|
Shares sold | 1,549,777 | 2,072,898 | $ 28,544,536 | $ 24,512,394 |
Shares redeemed | (2,457,153) | (2,840,598) | (44,605,674) | (33,936,510) |
Net increase (decrease) | (907,376) | (767,700) | $ (16,061,138) | $ (9,424,116) |
Class B |
|
|
|
|
Shares sold | 364,834 | 327,585 | $ 6,301,624 | $ 3,794,593 |
Shares redeemed | (829,145) | (1,251,978) | (14,327,782) | (14,128,827) |
Net increase (decrease) | (464,311) | (924,393) | $ (8,026,158) | $ (10,334,234) |
Class C |
|
|
|
|
Shares sold | 985,847 | 654,688 | $ 17,180,918 | $ 7,947,929 |
Shares redeemed | (891,510) | (906,545) | (15,514,588) | (10,144,084) |
Net increase (decrease) | 94,337 | (251,857) | $ 1,666,330 | $ (2,196,155) |
Institutional Class |
|
|
|
|
Shares sold | 1,270,106 | 753,599 | $ 25,258,423 | $ 10,483,415 |
Shares redeemed | (802,290) | (422,236) | (15,808,337) | (5,626,800) |
Net increase (decrease) | 467,816 | 331,363 | $ 9,450,086 | $ 4,856,615 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Technology
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) C | 5.01% | 2.36% | -1.39% |
Class T (incl. 3.50% sales charge) C | 7.24% | 2.58% | -1.41% |
Class B (incl. contingent deferred sales charge) A,C | 5.56% | 2.45% | -1.32% |
Class C (incl. contingent deferred sales charge) B,C | 9.54% | 2.84% | -1.49% |
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, Fidelity Advisor Utilities Fund 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, 2000, 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
Fidelity Advisor Utilities Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 11.42%, 11.13%, 10.56% and 10.54%, respectively (excluding sales charges), underperforming the S&P 500® but outperforming the 10.00% return of the MSCI® U.S. IM Utilities 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. At the industry level, the fund benefited versus the MSCI index from strong security selection in our three main areas of focus, independent power/energy trade, electric utilities and multi-utilities. On an individual security basis, the fund got a boost from underweighting Chicago-based Exelon, the nation's largest deregulated electric utility by market capitalization, which declined due to sluggish earnings growth. Independent power producer Constellation Energy Group rose on the strength of a recovery in power demand in Maryland. TECO Energy, a Florida-based multi-utility that produces coal, fared well, as higher coal prices propelled the company's earnings growth. An underweighting and timely ownership of Pennsylvania electric utility PPL also helped. I avoided the stock when it declined, in part because the company announced a costly acquisition of a German power producer. Ohio's American Electric Power, the largest electric utility in the Midwest, experienced improved industrial power demand that coincided with a recovery in manufacturing activity. Conversely, overweighting independent power/energy trade and underweighting gas utilities hurt. Not owning Virginia multi-utility Dominion Resources, a major index constituent, dampened performance. Dominion's share price rose, but I chose to focus on other, more-attractive regulated utilities. Untimely ownership of Utah-based gas utility Questar also detracted, as the fund wasn't able to fully capitalize on the company's spin-off of its exploration and production operations. Ohio-based FirstEnergy declined after its purchase of another deregulated electricity provider was frowned upon by the market. The share price of global power producer AES declined in part because of the company's announcement in May that it was reducing its earnings guidance for fiscal 2010. Exelon and Constellation Energy Group were not held at period end.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2010, the fund's Institutional Class shares returned 11.66%, underperforming the S&P 500® but outperforming the 10.00% return of the MSCI® U.S. IM Utilities 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. At the industry level, the fund benefited versus the MSCI index from strong security selection in our three main areas of focus, independent power/energy trade, electric utilities and multi-utilities. On an individual security basis, the fund got a boost from underweighting Chicago-based Exelon, the nation's largest deregulated electric utility by market capitalization, which declined due to sluggish earnings growth. Independent power producer Constellation Energy Group rose on the strength of a recovery in power demand in Maryland. TECO Energy, a Florida-based multi-utility that produces coal, fared well, as higher coal prices propelled the company's earnings growth. An underweighting and timely ownership of Pennsylvania electric utility PPL also helped. I avoided the stock when it declined, in part because the company announced a costly acquisition of a German power producer. Ohio's American Electric Power, the largest electric utility in the Midwest, experienced improved industrial power demand that coincided with a recovery in manufacturing activity. Conversely, overweighting independent power/energy trade and underweighting gas utilities hurt. Not owning Virginia multi-utility Dominion Resources, a major index constituent, dampened performance. Dominion's share price rose, but I chose to focus on other, more-attractive regulated utilities. Untimely ownership of Utah-based gas utility Questar also detracted, as the fund wasn't able to fully capitalize on the company's spin-off of its exploration and production operations. Ohio-based FirstEnergy declined after its purchase of another deregulated electricity provider was frowned upon by the market. The share price of global power producer AES declined in part because of the company's announcement in May that it was reducing its earnings guidance for fiscal 2010. Exelon and Constellation Energy Group 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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.22% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,064.80 | $ 6.25 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.74 | $ 6.11 |
Class T | 1.49% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.50 | $ 7.62 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.41 | $ 7.45 |
Class B | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,060.90 | $ 10.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Class C | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,061.20 | $ 10.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Institutional Class | .99% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,065.80 | $ 5.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.89 | $ 4.96 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Utilities Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
NextEra Energy, Inc. | 10.5 | 6.8 |
American Electric Power Co., Inc. | 9.1 | 9.5 |
Sempra Energy | 8.7 | 0.0 |
Public Service Enterprise Group, Inc. | 8.2 | 0.0 |
PPL Corp. | 6.9 | 0.0 |
PG&E Corp. | 5.0 | 8.8 |
NV Energy, Inc. | 5.0 | 3.6 |
National Grid PLC | 5.0 | 0.0 |
Entergy Corp. | 4.9 | 8.2 |
FirstEnergy Corp. | 4.9 | 9.1 |
| 68.2 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Electric Utilities | 52.4% |
|
| Multi-Utilities | 37.2% |
|
| Independent Power Producers & Energy Traders | 3.4% |
|
| Oil, Gas & Consumable Fuels | 3.1% |
|
| Gas Utilities | 2.9% |
|
| All Others* | 1.0% |
|
As of January 31, 2010 | |||
| Electric Utilities | 45.7% |
|
| Multi-Utilities | 35.3% |
|
 | Independent Power Producers & Energy Traders | 12.5% |
|
| Gas Utilities | 5.5% |
|
| All Others* | 1.0% |
|
* Includes short-term investments and net other assets. |
Utilities
Fidelity Advisor Utilities Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 52.4% | |||
Electric Utilities - 52.4% | |||
American Electric Power Co., Inc. | 343,573 | $ 12,361,757 | |
Companhia Paranaense de Energia-Copel (PN-B) sponsored ADR | 17,300 | 379,216 | |
Entergy Corp. | 85,200 | 6,603,852 | |
FirstEnergy Corp. | 174,400 | 6,574,880 | |
ITC Holdings Corp. | 111,047 | 6,300,807 | |
NextEra Energy, Inc. | 271,286 | 14,188,254 | |
NV Energy, Inc. | 527,965 | 6,705,156 | |
Pepco Holdings, Inc. | 65,547 | 1,108,400 | |
Pinnacle West Capital Corp. | 136,072 | 5,182,982 | |
PPL Corp. | 343,161 | 9,364,864 | |
Southern Co. | 58,400 | 2,063,272 | |
| 70,833,440 | ||
GAS UTILITIES - 2.9% | |||
Gas Utilities - 2.9% | |||
National Fuel Gas Co. New Jersey | 59,858 | 2,876,177 | |
Questar Corp. | 66,100 | 1,087,345 | |
| 3,963,522 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 3.4% | |||
Independent Power Producers & Energy Traders - 3.4% | |||
AES Corp. (a) | 442,100 | 4,558,051 | |
MULTI-UTILITIES - 37.2% | |||
Multi-Utilities - 37.2% | |||
Alliant Energy Corp. | 31,876 | 1,101,635 | |
CMS Energy Corp. | 405,900 | 6,461,928 | |
National Grid PLC | 834,900 | 6,684,647 | |
PG&E Corp. | 151,304 | 6,717,898 | |
Public Service Enterprise Group, Inc. | 338,703 | 11,143,329 | |
Sempra Energy | 237,200 | 11,800,700 | |
TECO Energy, Inc. | 392,249 | 6,409,349 | |
| 50,319,486 | ||
| |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 3.1% | |||
Coal & Consumable Fuels - 1.0% | |||
Massey Energy Co. | 45,900 | $ 1,403,622 | |
Oil & Gas Exploration & Production - 1.8% | |||
Canacol Energy Ltd. (a) | 943,200 | 1,055,188 | |
Pacific Rubiales Energy Corp. (a) | 57,900 | 1,388,992 | |
| 2,444,180 | ||
Oil & Gas Storage & Transport - 0.3% | |||
Chesapeake Midstream Partners | 16,500 | 377,850 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 4,225,652 | ||
TOTAL COMMON STOCKS (Cost $129,105,969) | 133,900,151 | ||
Money Market Funds - 0.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 899,773 | 899,773 | |
TOTAL INVESTMENT PORTFOLIO - 99.7% (Cost $130,005,742) | 134,799,924 | ||
NET OTHER ASSETS (LIABILITIES) - 0.3% | 460,344 | ||
NET ASSETS - 100% | $ 135,260,268 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,547 |
Fidelity Securities Lending Cash Central Fund | 5,660 |
Total | $ 8,207 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 133,900,151 | $ 127,215,504 | $ 6,684,647 | $ - |
Money Market Funds | 899,773 | 899,773 | - | - |
Total Investments in Securities: | $ 134,799,924 | $ 128,115,277 | $ 6,684,647 | $ - |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $196,362,484 of which $154,412,532, $13,867,918 and $28,082,034 will expire on July 31, 2011, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
The Fund intends to elect to defer to its fiscal year ending July 31, 2011 approximately $4,837,964 of losses recognized during the period November 1, 2009 to July 31, 2010. |
See accompanying notes which are an integral part of the financial statements.
Utilities
Fidelity Advisor Utilities Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $129,105,969) | $ 133,900,151 |
|
Fidelity Central Funds (cost $899,773) | 899,773 |
|
Total Investments (cost $130,005,742) |
| $ 134,799,924 |
Receivable for investments sold | 4,973,051 | |
Receivable for fund shares sold | 122,708 | |
Dividends receivable | 110,600 | |
Distributions receivable from Fidelity Central Funds | 276 | |
Other receivables | 12,776 | |
Total assets | 140,019,335 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,322,432 | |
Payable for fund shares redeemed | 248,156 | |
Accrued management fee | 62,252 | |
Distribution fees payable | 51,871 | |
Other affiliated payables | 36,645 | |
Other payables and accrued expenses | 37,711 | |
Total liabilities | 4,759,067 | |
|
|
|
Net Assets | $ 135,260,268 | |
Net Assets consist of: |
| |
Paid in capital | $ 333,187,270 | |
Undistributed net investment income | 1,286,115 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (204,003,841) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 4,790,724 | |
Net Assets | $ 135,260,268 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 16.59 | |
|
|
|
Maximum offering price per share (100/94.25 of $16.59) | $ 17.60 | |
Class T: | $ 16.59 | |
|
|
|
Maximum offering price per share (100/96.50 of $16.59) | $ 17.19 | |
Class B: | $ 16.38 | |
|
|
|
Class C: | $ 16.30 | |
|
|
|
Institutional Class: | $ 16.85 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,037,705 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 8,207 |
Total income |
| 5,045,914 |
|
|
|
Expenses | ||
Management fee | $ 758,623 | |
Transfer agent fees | 444,613 | |
Distribution fees | 647,138 | |
Accounting and security lending fees | 53,623 | |
Custodian fees and expenses | 9,780 | |
Independent trustees' compensation | 826 | |
Registration fees | 54,515 | |
Audit | 47,367 | |
Legal | 2,702 | |
Miscellaneous | 2,302 | |
Total expenses before reductions | 2,021,489 | |
Expense reductions | (47,050) | 1,974,439 |
Net investment income (loss) | 3,071,475 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,320,574 | |
Foreign currency transactions | (12,353) | |
Total net realized gain (loss) |
| 6,308,221 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 4,899,320 | |
Assets and liabilities in foreign currencies | (3,642) | |
Total change in net unrealized appreciation (depreciation) |
| 4,895,678 |
Net gain (loss) | 11,203,899 | |
Net increase (decrease) in net assets resulting from operations | $ 14,275,374 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,071,475 | $ 3,120,844 |
Net realized gain (loss) | 6,308,221 | (55,782,452) |
Change in net unrealized appreciation (depreciation) | 4,895,678 | (1,796,906) |
Net increase (decrease) in net assets resulting from operations | 14,275,374 | (54,458,514) |
Distributions to shareholders from net investment income | (3,192,017) | (2,162,549) |
Share transactions - net increase (decrease) | (13,238,224) | (29,372,654) |
Redemption fees | 1,956 | 4,076 |
Total increase (decrease) in net assets | (2,152,911) | (85,989,641) |
|
|
|
Net Assets | ||
Beginning of period | 137,413,179 | 223,402,820 |
End of period (including undistributed net investment income of $1,286,115 and undistributed net investment income of $1,435,445, respectively) | $ 135,260,268 | $ 137,413,179 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.27 | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .40 | .35 | .24 | .21 | .24 |
Net realized and unrealized gain (loss) | 1.32 | (5.10) | (.38) | 3.56 | 2.06 |
Total from investment operations | 1.72 | (4.75) | (.14) | 3.77 | 2.30 |
Distributions from net investment income | (.40) | (.26) | (.32) | (.23) | (.27) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.59 | $ 15.27 | $ 20.28 | $ 20.74 | $ 17.20 |
Total Return A,B | 11.42% | (23.44)% | (.82)% | 22.14% | 15.38% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.26% | 1.26% | 1.21% | 1.27% | 1.34% |
Expenses net of fee waivers, if any | 1.26% | 1.26% | 1.21% | 1.27% | 1.34% |
Expenses net of all reductions | 1.22% | 1.26% | 1.21% | 1.26% | 1.32% |
Net investment income (loss) | 2.49% | 2.37% | 1.11% | 1.04% | 1.51% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 64,890 | $ 66,064 | $ 105,219 | $ 94,842 | $ 40,599 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.27 | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .35 | .31 | .18 | .15 | .19 |
Net realized and unrealized gain (loss) | 1.33 | (5.10) | (.39) | 3.56 | 2.08 |
Total from investment operations | 1.68 | (4.79) | (.21) | 3.71 | 2.27 |
Distributions from net investment income | (.36) | (.20) | (.24) | (.18) | (.19) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.59 | $ 15.27 | $ 20.26 | $ 20.71 | $ 17.18 |
Total Return A,B | 11.13% | (23.61)% | (1.11)% | 21.74% | 15.20% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.52% | 1.52% | 1.47% | 1.54% | 1.60% |
Expenses net of fee waivers, if any | 1.52% | 1.52% | 1.47% | 1.54% | 1.60% |
Expenses net of all reductions | 1.49% | 1.52% | 1.47% | 1.54% | 1.58% |
Net investment income (loss) | 2.23% | 2.11% | .84% | .76% | 1.25% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 33,651 | $ 33,989 | $ 54,346 | $ 62,592 | $ 52,128 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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
Financial Highlights - Class B
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.08 | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .27 | .24 | .08 | .05 | .12 |
Net realized and unrealized gain (loss) | 1.31 | (5.04) | (.39) | 3.52 | 2.03 |
Total from investment operations | 1.58 | (4.80) | (.31) | 3.57 | 2.15 |
Distributions from net investment income | (.28) | (.13) | (.08) | (.07) | (.08) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.38 | $ 15.08 | $ 20.01 | $ 20.40 | $ 16.90 |
Total Return A,B | 10.56% | (23.97)% | (1.59)% | 21.18% | 14.57% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 2.01% | 2.01% | 1.96% | 2.04% | 2.09% |
Expenses net of fee waivers, if any | 2.01% | 2.01% | 1.96% | 2.04% | 2.09% |
Expenses net of all reductions | 1.98% | 2.01% | 1.95% | 2.03% | 2.06% |
Net investment income (loss) | 1.74% | 1.62% | .36% | .27% | .76% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 8,794 | $ 10,634 | $ 20,747 | $ 43,845 | $ 65,959 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.02 | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .27 | .24 | .08 | .06 | .13 |
Net realized and unrealized gain (loss) | 1.30 | (5.02) | (.39) | 3.51 | 2.04 |
Total from investment operations | 1.57 | (4.78) | (.31) | 3.57 | 2.17 |
Distributions from net investment income | (.29) | (.13) | (.14) | (.10) | (.10) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.30 | $ 15.02 | $ 19.93 | $ 20.38 | $ 16.91 |
Total Return A,B | 10.54% | (23.96)% | (1.58)% | 21.23% | 14.72% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 2.01% | 2.01% | 1.95% | 1.99% | 2.02% |
Expenses net of fee waivers, if any | 2.01% | 2.01% | 1.95% | 1.99% | 2.02% |
Expenses net of all reductions | 1.97% | 2.01% | 1.95% | 1.99% | 2.00% |
Net investment income (loss) | 1.74% | 1.62% | .36% | .32% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,415 | $ 22,352 | $ 37,387 | $ 43,292 | $ 32,823 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.51 | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .44 | .39 | .31 | .29 | .30 |
Net realized and unrealized gain (loss) | 1.35 | (5.17) | (.38) | 3.58 | 2.10 |
Total from investment operations | 1.79 | (4.78) | (.07) | 3.87 | 2.40 |
Distributions from net investment income | (.45) | (.23) | (.36) | (.30) | (.33) |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 16.85 | $ 15.51 | $ 20.52 | $ 20.95 | $ 17.38 |
Total Return A | 11.66% | (23.24)% | (.49)% | 22.54% | 15.95% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | 1.00% | 1.00% | .91% | .92% | .94% |
Expenses net of fee waivers, if any | 1.00% | 1.00% | .91% | .92% | .94% |
Expenses net of all reductions | .97% | 1.00% | .90% | .92% | .92% |
Net investment income (loss) | 2.75% | 2.63% | 1.41% | 1.39% | 1.91% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 6,511 | $ 4,373 | $ 5,704 | $ 12,822 | $ 6,479 |
Portfolio turnover rate D | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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.
Utilities
Notes to Financial Statements
For the period ended July 31, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 7,140,331 |
Gross unrealized depreciation | (5,149,542) |
Net unrealized appreciation (depreciation) | $ 1,990,789 |
|
|
Tax Cost | $ 132,809,135 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,286,115 |
Capital loss carryforward | $ (196,362,484) |
Net unrealized appreciation (depreciation) | $ 1,987,331 |
Utilities
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 3,192,017 | $ 2,162,549 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $286,648,743 and $300,228,488, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 163,817 | $ 3,767 |
Class T | .25% | .25% | 169,126 | 888 |
Class B | .75% | .25% | 96,659 | 72,568 |
Class C | .75% | .25% | 217,536 | 15,785 |
|
|
| $ 647,138 | $ 93,008 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 23,566 |
Class T | 6,328 |
Class B* | 24,054 |
Class C* | 955 |
| $ 54,903 |
* 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
5. 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 |
Class A | $ 212,559 | .32 |
Class T | 114,128 | .34 |
Class B | 31,788 | .33 |
Class C | 70,487 | .32 |
Institutional Class | 15,651 | .32 |
| $ 444,613 |
|
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 $2,040 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $545 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $5,660.
8. 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 $47,050 for the period.
Utilities
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 1,700,301 | $ 1,279,763 |
Class T | 782,544 | 508,856 |
Class B | 184,067 | 107,816 |
Class C | 413,366 | 209,682 |
Institutional Class | 111,739 | 56,432 |
Total | $ 3,192,017 | $ 2,162,549 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 582,593 | 856,135 | $ 9,269,210 | $ 12,539,810 |
Reinvestment of distributions | 96,455 | 73,926 | 1,532,370 | 1,138,401 |
Shares redeemed | (1,092,389) | (1,794,060) | (17,388,823) | (25,956,960) |
Net increase (decrease) | (413,341) | (863,999) | $ (6,587,243) | $ (12,278,749) |
Class T |
|
|
|
|
Shares sold | 214,231 | 257,339 | $ 3,421,542 | $ 3,753,639 |
Reinvestment of distributions | 46,549 | 31,967 | 741,068 | 480,828 |
Shares redeemed | (457,353) | (746,038) | (7,262,506) | (10,889,452) |
Net increase (decrease) | (196,573) | (456,732) | $ (3,099,896) | $ (6,654,985) |
Class B |
|
|
|
|
Shares sold | 89,148 | 154,111 | $ 1,411,608 | $ 2,249,187 |
Reinvestment of distributions | 10,582 | 6,919 | 167,069 | 98,250 |
Shares redeemed | (267,950) | (492,642) | (4,203,072) | (7,223,742) |
Net increase (decrease) | (168,220) | (331,612) | $ (2,624,395) | $ (4,876,305) |
Class C |
|
|
|
|
Shares sold | 188,570 | 216,794 | $ 2,992,972 | $ 3,077,077 |
Reinvestment of distributions | 20,486 | 11,490 | 322,145 | 162,462 |
Shares redeemed | (383,514) | (615,787) | (5,996,156) | (8,815,385) |
Net increase (decrease) | (174,458) | (387,503) | $ (2,681,039) | $ (5,575,846) |
Institutional Class |
|
|
|
|
Shares sold | 287,925 | 137,801 | $ 4,699,845 | $ 1,988,698 |
Reinvestment of distributions | 5,221 | 2,995 | 84,041 | 45,330 |
Shares redeemed | (188,687) | (136,905) | (3,029,537) | (2,020,797) |
Net increase (decrease) | 104,459 | 3,891 | $ 1,754,349 | $ 13,231 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
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 Consumer Discretionary Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Energy 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 Consumer Discretionary Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (collectively, the "Funds"), including the schedules of investments, as of July 31, 2010, 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, 2010, 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 Consumer Discretionary Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund as of July 31, 2010, 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 the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 20, 2010
Annual Report
Trustees and Officers
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, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 411 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.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
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 Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. 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 (75) | |
| 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (62) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). 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. Mr. Lautenbach is also 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 (65) | |
| 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (66) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (71) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000- |
David M. Thomas (61) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley 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, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010- |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). 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). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (63) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and is an employee of Fidelity Investments (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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| September 2009 | December 2009 |
Fidelity Advisor Electronics Fund |
|
|
Class A | 100% | -% |
Class T | 100% | -% |
Class B | -% | -% |
Class C | -% | -% |
Fidelity Advisor Financial Services Fund |
|
|
Class A | 51% | -% |
Class T | 60% | -% |
Class B | 81% | -% |
Class C | 76% | -% |
Fidelity Advisor Industrials Fund |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | -% | -% |
Class C | -% | -% |
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 2009 | December 2009 |
Fidelity Advisor Electronics Fund |
|
|
Class A | 100% | -% |
Class T | 100% | -% |
Class B | -% | -% |
Class C | -% | -% |
Fidelity Advisor Financial Services Fund |
|
|
Class A | 53% | -% |
Class T | 62% | -% |
Class B | 85% | -% |
Class C | 79% | -% |
Fidelity Advisor Industrials Fund |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | -% | -% |
Class C | -% | -% |
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 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Focus Funds
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2010 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.
In considering whether to renew the Advisory Contracts for each fund, the Board 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 is in the best interests of fund shareholders and that the compensation to be received by Fidelity under the management contracts is fair and reasonable. 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 Fidelity's competitors, 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 the 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 to act in the best interest of each fund.
Resources Dedicated to Investment Management and Support Services. The Board and the equity research subcommittee of the Board's Fund Oversight Committee 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 and market and securities data 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. The Board noted FMR's continued focus on strengthening the organization and discipline of equity portfolio management and research.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and restructuring and broadening the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) launching Class F of certain funds as a lower-fee class available to Freedom K and Freedom Index Funds; (iv) lowering the initial investment minimums and ongoing balance requirements for Real Estate High Income Fund; (v) eliminating subsequent purchase minimums for all funds and adding a waiver of the investment minimum requirement for new accounts opened with the proceeds of a systematic withdrawal plan; (vi) eliminating the withdrawal minimum and maximum limits for systematic withdrawals from Advisor funds; (vii) expanding sales load waivers on Class A shares for Destiny Planholders and expanding Institutional Class eligibility for Class O Destiny Planholders; and (viii) changing certain Class A and Class T sales charge structures to further align them with industry practices.
Annual Report
Investment Performance. The Board considered whether each fund has operated in accordance with 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 over multiple periods against a third-party-sponsored index that reflects the market sector in which the fund invests. 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 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, 2009, 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 five-year performance).
For each of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, and Advisor Technology, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2009, 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 five-year performance).
Advisor Biotechnology
The Board noted 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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Communications Equipment
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Consumer Discretionary
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Advisor Electronics
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Energy
The Board noted that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Financial Services
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Health Care
The Board noted that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Advisor Industrials
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Technology
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Utilities
The Board noted that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 and factoring in the unprecedented market events in recent years, the Board concluded that the nature, extent, and quality of investment management and support services and of shareholder and administrative 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.
Management Fee. 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 8% means that 92% 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 2009.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expenses. 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.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
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 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, and Class C of Advisor Communications Equipment ranked below its competitive median for 2009, the total expenses of Institutional Class ranked equal to its competitive median for 2009, and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
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 2009, the total expenses of Institutional Class ranked equal to its competitive median for 2009, and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, and Class C of Advisor Electronics ranked below its competitive median for 2009, the total expenses of Institutional Class ranked equal to its competitive median for 2009, and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each class of Advisor Energy ranked below its competitive median for 2009.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Financial Services ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Health Care ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Industrials ranked below its competitive median for 2009 and the total expenses of Class T ranked equal to its competitive median for 2009.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Technology ranked below its competitive median for 2009 and the total expenses of Class T ranked equal to its competitive median for 2009.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Utilities ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expenses and fees charged to other Fidelity clients, 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, including the findings of the Committee.
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 Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and 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 were satisfied that the profitability was not excessive in the circumstances.
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.
In February 2009, the Board and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, considering the findings of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, the rationale for the compensation structure, and how the compensation structure provides appropriate performance incentives; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) management and other fees paid by FMR to affiliated sub-advisers on behalf of the Fidelity funds; (vi) Fidelity's fee structures and rationale for recommending different fees among different categories of funds; (vii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; (viii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (ix) explanations regarding the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses for certain funds and classes.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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 Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
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-0910
1.789241.106
Fidelity Advisor
Focus Funds®
Institutional Class
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 Technology Fund
Fidelity Advisor Utilities Fund
Annual Report
July 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Note to shareholders | An explanation of the changes to the fund. | |
Fidelity Advisor Biotechnology Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Communications Equipment Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Consumer Discretionary Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Electronics Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Energy Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Financial Services Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Health Care Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Industrials Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Technology Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Utilities Fund | Performance | |
Management's Discussion of Fund Performance | ||
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults 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 funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets reversed course in late April 2010 when investor sentiment turned bearish due in great measure to concern that Europe's debt crisis would expand and slow or derail economic recovery. However, a bounceback in July helped to recover some of the ground that was lost. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the 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 can be tax advantages and cost benefits to consider as well. 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 saving plans).
A third 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 "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 by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders:
In January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Advisor Focus Funds. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Institutional Class | -3.51% | 1.34% | -3.14% |
A From December 27, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Advisor Biotechnology Fund - Institutional Class on December 27, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Fidelity Advisor Biotechnology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned -3.89%, -4.13%, -4.64% and -4.48%, respectively (excluding sales charges), trailing the S&P 500® but roughly in line with the -4.50% mark of the MSCI® U.S. IM Biotechnology 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock selection in the biotechnology category, where roughly 93% of the fund's net assets were positioned at period end, aided relative performance. At the stock level, underweighting two major benchmark components that performed poorly, Gilead Sciences and Amgen, bolstered the fund's relative performance, although they curbed its absolute return by a considerable margin. Alexion Pharmaceuticals also had a positive impact on relative performance, as did Acorda Therapeutics and a small out-of-index position in Delcath Systems, which makes equipment that facilitates delivering high doses of cancer drugs directly to the liver with minimal side effects. Given the stock's sizable advance, I sold Delcath Systems to nail down profits. Conversely, our out-of-index exposure to the pharmaceuticals group, which represented a little more than 6% of net assets at period end, detracted from performance. The largest relative detractor was primarily a story from the first six months: an unrewarding out-of-index stake in Antigenics. The stock lost more than half of its value in October, after the company was denied marketing approval for its kidney cancer drug, Oncophage. Auxilium Pharmaceuticals slumped due to a slow product launch, as well as investor concern about the limited size of the market for XIAFLEX, the company's drug for an uncommon hand deformity called Dupuytren's contracture. Underweighting major index constituent Genzyme held back performance, given the stock's strong showing, and a large underweighting in Celgene, a sizable index component that modestly outperformed the MSCI index, also detracted.
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund: During the past year, the fund's Institutional Class shares returned -3.51%, trailing the S&P 500® but ahead of the -4.50% mark of the MSCI® U.S. IM Biotechnology 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock selection in the biotechnology category, where roughly 93% of the fund's net assets were positioned at period end, aided relative performance. At the stock level, underweighting two major benchmark components that performed poorly, Gilead Sciences and Amgen, bolstered the fund's relative performance, although they curbed its absolute return by a considerable margin. Alexion Pharmaceuticals also had a positive impact on relative performance, as did Acorda Therapeutics and a small out-of-index position in Delcath Systems, which makes equipment that facilitates delivering high doses of cancer drugs directly to the liver with minimal side effects. Given the stock's sizable advance, I sold Delcath Systems to nail down profits. Conversely, our out-of-index exposure to the pharmaceuticals group, which represented a little more than 6% of net assets at period end, detracted from performance. The largest relative detractor was primarily a story from the first six months: an unrewarding out-of-index stake in Antigenics. The stock lost more than half of its value in October, after the company was denied marketing approval for its kidney cancer drug, Oncophage. Auxilium Pharmaceuticals slumped due to a slow product launch, as well as investor concern about the limited size of the market for XIAFLEX, the company's drug for an uncommon hand deformity called Dupuytren's contracture. Underweighting major index constituent Genzyme held back performance, given the stock's strong showing, and a large underweighting in Celgene, a sizable index component that modestly outperformed the MSCI index, also detracted.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.38% |
|
|
|
Actual |
| $ 1,000.00 | $ 959.70 | $ 6.71 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.95 | $ 6.90 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 958.70 | $ 8.01 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.13% |
|
|
|
Actual |
| $ 1,000.00 | $ 955.10 | $ 10.33 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.23 | $ 10.64 |
Class C | 2.13% |
|
|
|
Actual |
| $ 1,000.00 | $ 956.70 | $ 10.33 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.23 | $ 10.64 |
Institutional Class | 1.04% |
|
|
|
Actual |
| $ 1,000.00 | $ 960.80 | $ 5.06 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.64 | $ 5.21 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Biotechnology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Amgen, Inc. | 14.3 | 20.9 |
Gilead Sciences, Inc. | 10.6 | 6.8 |
Alexion Pharmaceuticals, Inc. | 6.9 | 6.0 |
Genzyme Corp. | 6.3 | 4.2 |
Acorda Therapeutics, Inc. | 4.9 | 4.3 |
United Therapeutics Corp. | 3.7 | 4.3 |
Vertex Pharmaceuticals, Inc. | 3.4 | 4.4 |
Celgene Corp. | 2.8 | 2.5 |
Dendreon Corp. | 2.7 | 3.2 |
Human Genome Sciences, Inc. | 2.6 | 2.8 |
| 58.2 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
 | Biotechnology | 92.8% |
|
 | Pharmaceuticals | 6.2% |
|
 | Health Care Equipment & Supplies | 0.1% |
|
 | All Others* | 0.9% |
|
As of January 31, 2010 | |||
| Biotechnology | 93.1% |
|
| Pharmaceuticals | 6.7% |
|
| Health Care Equipment & Supplies | 0.5% |
|
 | All Others † | (0.3)% |
|
* Includes short-term investments and net other assets. † Short-term investments and net other assets are not included in the pie chart. |
Biotechnology
Fidelity Advisor Biotechnology Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
BIOTECHNOLOGY - 92.8% | |||
Biotechnology - 92.8% | |||
Acadia Pharmaceuticals, Inc. (a) | 9,074 | $ 11,070 | |
Acorda Therapeutics, Inc. (a) | 80,016 | 2,587,717 | |
Affymax, Inc. (a) | 4,506 | 28,974 | |
Alexion Pharmaceuticals, Inc. (a) | 66,408 | 3,609,939 | |
Alkermes, Inc. (a) | 37,161 | 479,377 | |
Allos Therapeutics, Inc. (a)(d) | 118,231 | 569,873 | |
Alnylam Pharmaceuticals, Inc. (a)(d) | 13,498 | 207,194 | |
AMAG Pharmaceuticals, Inc. (a)(d) | 12,800 | 402,944 | |
Amgen, Inc. (a) | 137,989 | 7,524,539 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 37,784 | 714,873 | |
Antigenics, Inc. (a)(d) | 21,100 | 17,939 | |
Antigenics, Inc. warrants 1/9/18 (a)(e) | 452,000 | 307,198 | |
Arena Pharmaceuticals, Inc. (a)(d) | 57,520 | 457,284 | |
ArQule, Inc. (a) | 14,866 | 63,478 | |
AVEO Pharmaceuticals, Inc. | 2,400 | 18,576 | |
Biogen Idec, Inc. (a) | 22,826 | 1,275,517 | |
BioMarin Pharmaceutical, Inc. (a) | 60,073 | 1,312,595 | |
Celera Corp. (a) | 5,000 | 33,450 | |
Celgene Corp. (a) | 26,715 | 1,473,332 | |
Cephalon, Inc. (a) | 21,294 | 1,208,435 | |
Cepheid, Inc. (a) | 23,700 | 392,235 | |
Clinical Data, Inc. (a)(d) | 32,584 | 454,221 | |
Cubist Pharmaceuticals, Inc. (a) | 992 | 21,407 | |
Dendreon Corp. (a)(d) | 43,283 | 1,424,444 | |
Dynavax Technologies Corp. (a) | 25,600 | 56,576 | |
Enzon Pharmaceuticals, Inc. (a)(d) | 3,900 | 42,666 | |
Exelixis, Inc. (a) | 19,332 | 60,316 | |
Genomic Health, Inc. (a) | 1,000 | 12,890 | |
Genzyme Corp. (a) | 47,632 | 3,313,282 | |
Gilead Sciences, Inc. (a) | 166,402 | 5,544,515 | |
Halozyme Therapeutics, Inc. (a) | 46,500 | 333,405 | |
Human Genome Sciences, Inc. (a) | 53,508 | 1,387,998 | |
Idenix Pharmaceuticals, Inc. (a)(d) | 63,666 | 325,333 | |
ImmunoGen, Inc. (a) | 5,300 | 49,979 | |
Incyte Corp. (a) | 57,795 | 752,491 | |
Inhibitex, Inc. (a) | 38,500 | 72,765 | |
InterMune, Inc. (a) | 28,817 | 281,254 | |
Isis Pharmaceuticals, Inc. (a) | 34,800 | 344,172 | |
Lexicon Pharmaceuticals, Inc. (a) | 680,273 | 1,027,212 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 11,400 | 18,810 | |
MannKind Corp. (a)(d) | 32,300 | 223,193 | |
Martek Biosciences (a)(d) | 13,900 | 287,591 | |
Micromet, Inc. (a)(d) | 15,500 | 106,175 | |
Momenta Pharmaceuticals, Inc. (a) | 24,829 | 529,851 | |
| |||
Shares | Value | ||
Myrexis, Inc. (a) | 302 | $ 1,157 | |
Myriad Genetics, Inc. (a) | 3,424 | 49,682 | |
Neurocrine Biosciences, Inc. (a) | 47,581 | 270,260 | |
NPS Pharmaceuticals, Inc. (a) | 77,300 | 534,916 | |
ONYX Pharmaceuticals, Inc. (a) | 26,948 | 700,648 | |
OREXIGEN Therapeutics, Inc. (a)(d) | 27,000 | 140,400 | |
PDL BioPharma, Inc. | 164,088 | 1,020,627 | |
Pharmasset, Inc. (a) | 21,242 | 573,746 | |
Progenics Pharmaceuticals, Inc. (a) | 2,900 | 13,340 | |
Regeneron Pharmaceuticals, Inc. (a) | 9,849 | 238,247 | |
Rigel Pharmaceuticals, Inc. (a) | 31,077 | 251,724 | |
Sangamo Biosciences, Inc. (a)(d) | 3,098 | 11,679 | |
Savient Pharmaceuticals, Inc. (a)(d) | 28,255 | 387,094 | |
Seattle Genetics, Inc. (a) | 35,421 | 431,428 | |
SIGA Technologies, Inc. (a)(d) | 51,212 | 429,157 | |
Theratechnologies, Inc. (a) | 3,600 | 16,880 | |
Theravance, Inc. (a)(d) | 31,372 | 464,619 | |
United Therapeutics Corp. (a) | 39,798 | 1,945,724 | |
Vertex Pharmaceuticals, Inc. (a) | 53,404 | 1,797,579 | |
ZIOPHARM Oncology, Inc. (a) | 23,700 | 88,638 | |
Zymogenetics, Inc. (a) | 2,895 | 11,841 | |
| 48,746,471 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% | |||
Health Care Equipment - 0.0% | |||
Alsius Corp. | 14,200 | 0 | |
Aradigm Corp. (a) | 21,800 | 2,398 | |
|
| 2,398 | |
Health Care Supplies - 0.1% | |||
Alimera Sciences, Inc. (a) | 7,200 | 52,488 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 54,886 | ||
PHARMACEUTICALS - 6.2% | |||
Pharmaceuticals - 6.2% | |||
Adolor Corp. (a) | 196,299 | 217,892 | |
Akorn, Inc. (a) | 17,279 | 62,896 | |
Alexza Pharmaceuticals, Inc. (a) | 5,981 | 16,567 | |
Ardea Biosciences, Inc. (a) | 3,300 | 65,835 | |
Auxilium Pharmaceuticals, Inc. (a)(d) | 52,758 | 1,190,220 | |
AVANIR Pharmaceuticals Class A (a) | 33,900 | 108,480 | |
Biodel, Inc. (a)(d) | 62,269 | 242,849 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 12,500 | 95,750 | |
Elan Corp. PLC sponsored ADR (a) | 85,350 | 407,120 | |
Inspire Pharmaceuticals, Inc. (a) | 5,570 | 28,129 | |
Jazz Pharmaceuticals, Inc. (a) | 2,435 | 21,185 | |
Optimer Pharmaceuticals, Inc. (a) | 38,988 | 354,011 | |
ViroPharma, Inc. (a) | 31,988 | 421,282 | |
XenoPort, Inc. (a) | 6,700 | 41,138 | |
| 3,273,354 | ||
TOTAL COMMON STOCKS (Cost $48,215,385) | 52,074,711 | ||
Money Market Funds - 8.0% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.24% (b) | 1,322,129 | $ 1,322,129 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 2,907,100 | 2,907,100 | |
TOTAL MONEY MARKET FUNDS (Cost $4,229,229) | 4,229,229 | ||
TOTAL INVESTMENT PORTFOLIO - 107.1% (Cost $52,444,614) | 56,303,940 |
NET OTHER ASSETS (LIABILITIES) - (7.1)% | (3,741,183) | ||
NET ASSETS - 100% | $ 52,562,757 | ||
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 $307,198 or 0.6% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
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 | $ 866 |
Fidelity Securities Lending Cash Central Fund | 40,061 |
Total | $ 40,927 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 52,074,711 | $ 51,767,513 | $ 307,198 | $ - |
Money Market Funds | 4,229,229 | 4,229,229 | - | - |
Total Investments in Securities: | $ 56,303,940 | $ 55,996,742 | $ 307,198 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | - |
Proceeds of Sales | (852) |
Amortization/Accretion | - |
Transfers in to Level 3 | 852 |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at July 31, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $3,491,594 all of which will expire on July 31, 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
The Fund intends to elect to defer to its fiscal year ending July 31, 2011 approximately $2,681,229 of losses recognized during the period November 1, 2009 to July 31, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Advisor Biotechnology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,896,028) - See accompanying schedule: Unaffiliated issuers (cost $48,215,385) | $ 52,074,711 |
|
Fidelity Central Funds (cost $4,229,229) | 4,229,229 |
|
Total Investments (cost $52,444,614) |
| $ 56,303,940 |
Receivable for investments sold | 121,912 | |
Receivable for fund shares sold | 49,251 | |
Distributions receivable from Fidelity Central Funds | 4,508 | |
Other receivables | 2,388 | |
Total assets | 56,481,999 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 837,491 | |
Payable for fund shares redeemed | 70,452 | |
Accrued management fee | 24,047 | |
Distribution fees payable | 23,065 | |
Other affiliated payables | 14,906 | |
Other payables and accrued expenses | 42,181 | |
Collateral on securities loaned, at value | 2,907,100 | |
Total liabilities | 3,919,242 | |
|
|
|
Net Assets | $ 52,562,757 | |
Net Assets consist of: |
| |
Paid in capital | $ 56,361,699 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (7,658,268) | |
Net unrealized appreciation (depreciation) on investments | 3,859,326 | |
Net Assets | $ 52,562,757 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 6.67 | |
|
|
|
Maximum offering price per share (100/94.25 of $6.67) | $ 7.08 | |
Class T: | $ 6.50 | |
|
|
|
Maximum offering price per share (100/96.50 of $6.50) | $ 6.74 | |
Class B: | $ 6.17 | |
|
|
|
Class C: | $ 6.18 | |
|
|
|
Institutional Class: | $ 6.87 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,994 |
Special dividends |
| 75,315 |
Interest |
| 3,417 |
Income from Fidelity Central Funds (including $40,061 from security lending) |
| 40,927 |
Total income |
| 125,653 |
|
|
|
Expenses | ||
Management fee | $ 301,275 | |
Transfer agent fees | 180,221 | |
Distribution fees | 300,604 | |
Accounting and security lending fees | 21,652 | |
Custodian fees and expenses | 19,954 | |
Independent trustees' compensation | 314 | |
Registration fees | 51,116 | |
Audit | 43,078 | |
Legal | 308 | |
Miscellaneous | 853 | |
Total expenses before reductions | 919,375 | |
Expense reductions | (9,673) | 909,702 |
Net investment income (loss) | (784,049) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (2,345,145) | |
Foreign currency transactions | (345) | |
Total net realized gain (loss) |
| (2,345,490) |
Change in net unrealized appreciation (depreciation) on investment securities | 88,127 | |
Net gain (loss) | (2,257,363) | |
Net increase (decrease) in net assets resulting from operations | $ (3,041,412) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (784,049) | $ (837,247) |
Net realized gain (loss) | (2,345,490) | (282,180) |
Change in net unrealized appreciation (depreciation) | 88,127 | (7,383,033) |
Net increase (decrease) in net assets resulting from operations | (3,041,412) | (8,502,460) |
Share transactions - net increase (decrease) | 684,738 | 4,533,971 |
Redemption fees | 1,690 | 29,559 |
Total increase (decrease) in net assets | (2,354,984) | (3,938,930) |
|
|
|
Net Assets | ||
Beginning of period | 54,917,741 | 58,856,671 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $95, respectively) | $ 52,562,757 | $ 54,917,741 |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.94 | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.08) F | (.08) | (.09) G | (.09) | (.09) |
Net realized and unrealized gain (loss) | (.19) | (.79) | 1.20 | .51 | .10 |
Total from investment operations | (.27) | (.87) | 1.11 | .42 | .01 |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.67 | $ 6.94 | $ 7.81 | $ 7.23 | $ 6.81 |
Total Return A, B | (3.89)% | (11.14)% | 15.95% | 6.17% | .15% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.39% | 1.40% | 1.37% | 1.42% | 1.48% |
Expenses net of fee waivers, if any | 1.39% | 1.40% | 1.37% | 1.40% | 1.40% |
Expenses net of all reductions | 1.38% | 1.40% | 1.37% | 1.40% | 1.37% |
Net investment income (loss) | (1.15)% F | (1.27)% | (1.24)% G | (1.25)% | (1.29)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,154 | $ 19,858 | $ 18,249 | $ 13,081 | $ 12,539 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (1.29)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.78 | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) F | (.09) | (.11) G | (.11) | (.11) |
Net realized and unrealized gain (loss) | (.19) | (.78) | 1.18 | .51 | .10 |
Total from investment operations | (.28) | (.87) | 1.07 | .40 | (.01) |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.50 | $ 6.78 | $ 7.65 | $ 7.11 | $ 6.71 |
Total Return A, B | (4.13)% | (11.37)% | 15.64% | 5.96% | (.15)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.69% | 1.71% | 1.69% | 1.75% | 1.79% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
Expenses net of all reductions | 1.64% | 1.65% | 1.65% | 1.65% | 1.62% |
Net investment income (loss) | (1.41)% F | (1.52)% | (1.53)% G | (1.49)% | (1.54)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,684 | $ 13,356 | $ 15,123 | $ 13,008 | $ 13,808 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (1.55)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) F | (.12) | (.14) G | (.14) | (.14) |
Net realized and unrealized gain (loss) | (.18) | (.75) | 1.13 | .50 | .10 |
Total from investment operations | (.30) | (.87) | .99 | .36 | (.04) |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.17 | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 |
Total Return A, B | (4.64)% | (11.85)% | 14.96% | 5.52% | (.61)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.14% | 2.15% | 2.12% | 2.17% | 2.23% |
Expenses net of fee waivers, if any | 2.14% | 2.15% | 2.12% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.12% | 2.15% | 2.12% |
Net investment income (loss) | (1.90)% F | (2.02)% | (2.00)% G | (1.99)% | (2.04)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 6,297 | $ 7,377 | $ 11,044 | $ 12,656 | $ 14,938 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (2.04)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) F | (.12) | (.13) G | (.14) | (.14) |
Net realized and unrealized gain (loss) | (.17) | (.75) | 1.12 | .50 | .09 |
Total from investment operations | (.29) | (.87) | .99 | .36 | (.05) |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 6.18 | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 |
Total Return A, B | (4.48)% | (11.85)% | 14.96% | 5.52% | (.76)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 2.14% | 2.15% | 2.12% | 2.16% | 2.17% |
Expenses net of fee waivers, if any | 2.14% | 2.15% | 2.12% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.12% | 2.15% | 2.12% |
Net investment income (loss) | (1.90)% F | (2.02)% | (2.00)% G | (1.99)% | (2.04)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,421 | $ 12,426 | $ 13,323 | $ 11,813 | $ 13,787 |
Portfolio turnover rate E | 130% | 73% | 132% | 120% | 62% |
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 (2.04)%.
G 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)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.12 | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.06) E | (.06) | (.07) F | (.07) | (.07) |
Net realized and unrealized gain (loss) | (.19) | (.82) | 1.23 | .53 | .09 |
Total from investment operations | (.25) | (.88) | 1.16 | .46 | .02 |
Distributions from net realized gain | - | - | (.53) | - | - |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 6.87 | $ 7.12 | $ 8.00 | $ 7.37 | $ 6.91 |
Total Return A | (3.51)% | (11.00)% | 16.35% | 6.66% | .29% |
Ratios to Average Net Assets C, G |
|
|
|
|
|
Expenses before reductions | 1.07% | 1.11% | 1.06% | 1.06% | 1.05% |
Expenses net of fee waivers, if any | 1.07% | 1.11% | 1.06% | 1.06% | 1.05% |
Expenses net of all reductions | 1.06% | 1.11% | 1.06% | 1.06% | 1.03% |
Net investment income (loss) | (.83)% E | (.98)% | (.94)% F | (.91)% | (.94)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,008 | $ 1,901 | $ 1,117 | $ 991 | $ 1,268 |
Portfolio turnover rate D | 130% | 73% | 132% | 120% | 62% |
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 (.97)%.
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 (1.02)%.
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Biotechnology
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds,including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, market discount, net operating losses, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 8,321,628 |
Gross unrealized depreciation | (5,947,747) |
Net unrealized appreciation (depreciation) | $ 2,373,881 |
|
|
Tax Cost | $ 53,930,059 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (3,491,594) |
Net unrealized appreciation (depreciation) | $ 2,373,881 |
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.
4. Operating Policies.
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 $69,198,208 and $69,783,530, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 50,984 | $ 673 |
Class T | .25% | .25% | 62,407 | 291 |
Class B | .75% | .25% | 68,085 | 51,174 |
Class C | .75% | .25% | 119,128 | 19,251 |
|
|
| $ 300,604 | $ 71,389 |
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% for certain purchases of Class A (1.00% to .50% prior to July 12, 2010) shares and .25% for certain purchases of Class T shares.
Biotechnology
6. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 17,352 |
Class T | 6,728 |
Class B* | 13,265 |
Class C* | 1,272 |
| $ 38,617 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 66,544 | .33 |
Class T | 46,477 | .37 |
Class B | 22,391 | .33 |
Class C | 38,945 | .33 |
Institutional Class | 5,864 | .26 |
| $ 180,221 |
|
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 $995 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $216 and is reflected in Miscellaneous expenses 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.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class T | 1.65% | $ 4,575 |
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 $5,098 for the period.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,118,865 | 2,341,295 | $ 7,975,997 | $ 15,410,062 |
Shares redeemed | (959,085) | (1,815,151) | (6,583,930) | (11,129,933) |
Net increase (decrease) | 159,780 | 526,144 | $ 1,392,067 | $ 4,280,129 |
Class T |
|
|
|
|
Shares sold | 412,827 | 826,391 | $ 2,848,621 | $ 5,258,554 |
Shares redeemed | (585,419) | (832,503) | (3,906,373) | (5,110,823) |
Net increase (decrease) | (172,592) | (6,112) | $ (1,057,752) | $ 147,731 |
Class B |
|
|
|
|
Shares sold | 304,652 | 365,766 | $ 1,993,007 | $ 2,311,576 |
Shares redeemed | (424,638) | (730,232) | (2,696,945) | (4,256,288) |
Net increase (decrease) | (119,986) | (364,466) | $ (703,938) | $ (1,944,712) |
Class C |
|
|
|
|
Shares sold | 489,582 | 793,743 | $ 3,216,700 | $ 5,016,886 |
Shares redeemed | (559,923) | (688,414) | (3,577,484) | (3,988,392) |
Net increase (decrease) | (70,341) | 105,329 | $ (360,784) | $ 1,028,494 |
Institutional Class |
|
|
|
|
Shares sold | 453,122 | 390,521 | $ 3,410,559 | $ 2,696,069 |
Shares redeemed | (282,175) | (263,268) | (1,995,414) | (1,673,740) |
Net increase (decrease) | 170,947 | 127,253 | $ 1,415,145 | $ 1,022,329 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Biotechnology
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Institutional Class B | 19.19% | 2.94% | -1.09% |
A From December 27, 2000.
B Prior to October 1, 2006, Fidelity Advisor Communications Eqipment Fund 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
Fidelity Advisor Communications Equipment Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 19.09%, 18.65%, 18.01% and 18.18%, respectively (excluding sales charges), topping the S&P 500® and the 6.65% gain of the S&P® Custom Communications Equipment Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus its industry benchmark, favorable stock selection within the fund's core area of communications equipment was the biggest positive factor. Additionally, out-of-benchmark positions in a number of industries helped, including semiconductors, Internet software/services and computer hardware. The fund's focus on mid- and small-cap stocks also was beneficial. At the stock level, Acme Packet was the fund's top contributor on both a relative and absolute basis. The company makes session border control equipment used to integrate Internet Protocol (IP) capabilities with corporate phone systems. Also adding value were F5 Networks and longtime holding Starent Networks, which was acquired on favorable terms in December. Underweighting two major index components that performed poorly, handset maker Nokia and wireless component supplier QUALCOMM, further aided our results. Conversely, untimely ownership of Motorola detracted from performance. Underweighting Telefonaktiebolaget LM Ericsson, a Swedish networking gear provider, and Harris, a maker of communications equipment for military applications, also detracted in view of those stocks' strong gains. Additionally, overweighting Tekelec, a provider of communication network software and systems, was counterproductive. The stock fell in May after the company reduced its financial guidance.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund: During the past year, the fund's Institutional Class shares returned 19.19%, topping the S&P 500 and the 6.65% gain of the S&P® Custom Communications Equipment Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus its industry benchmark, favorable stock selection within the fund's core area of communications equipment was the biggest positive factor. Additionally, out-of-benchmark positions in a number of industries helped, including semiconductors, Internet software/services and computer hardware. The fund's focus on mid- and small-cap stocks also was beneficial. At the stock level, Acme Packet was the fund's top contributor on both a relative and absolute basis. The company makes session border control equipment used to integrate Internet Protocol (IP) capabilities with corporate phone systems. Also adding value were F5 Networks and longtime holding Starent Networks, which was acquired on favorable terms in December. Underweighting two major index components that performed poorly, handset maker Nokia and wireless component supplier QUALCOMM, further aided our results. Conversely, untimely ownership of Motorola detracted from performance. Underweighting Telefonaktiebolaget LM Ericsson, a Swedish networking gear provider, and Harris, a maker of communications equipment for military applications, also detracted in view of those stocks' strong gains. Additionally, overweighting Tekelec, a provider of communication network software and systems, was counterproductive. The stock fell in May after the company reduced its financial guidance.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,143.80 | $ 7.44 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,141.70 | $ 8.76 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,138.40 | $ 11.40 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,140.00 | $ 11.41 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,144.30 | $ 6.11 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Communications Equipment
Fidelity Advisor Communications Equipment Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
QUALCOMM, Inc. | 11.4 | 9.7 |
Cisco Systems, Inc. | 8.7 | 13.5 |
Telefonaktiebolaget LM Ericsson | 8.6 | 4.2 |
Motorola, Inc. | 6.4 | 3.8 |
Research In Motion Ltd. | 6.4 | 6.0 |
Juniper Networks, Inc. | 4.6 | 5.3 |
F5 Networks, Inc. | 4.3 | 2.7 |
Acme Packet, Inc. | 4.0 | 2.1 |
Riverbed Technology, Inc. | 3.1 | 1.3 |
Apple, Inc. | 2.4 | 0.0 |
| 59.9 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Communications Equipment | 79.5% |
|
 | Semiconductors & Semiconductor Equipment | 4.8% |
|
 | Computers & Peripherals | 4.3% |
|
 | Wireless Telecommunication Services | 3.9% |
|
 | Internet Software & Services | 2.6% |
|
| All Others* | 4.9% |
|
As of January 31, 2010 | |||
| Communications Equipment | 79.8% |
|
| Semiconductors & Semiconductor Equipment | 6.7% |
|
| Wireless Telecommunication Services | 4.0% |
|
| Electronic Equipment & Components | 3.2% |
|
| Internet Software & Services | 2.1% |
|
| All Others* | 4.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Communications Equipment Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 100.9% | |||
Shares | Value | ||
AUTOMOBILES - 0.2% | |||
Automobile Manufacturers - 0.2% | |||
BYD Co. Ltd. (H Shares) | 3,500 | $ 24,084 | |
COMMUNICATIONS EQUIPMENT - 79.4% | |||
Communications Equipment - 79.4% | |||
Acme Packet, Inc. (a) | 20,235 | 571,841 | |
Adtran, Inc. | 10,483 | 331,053 | |
ADVA AG Optical Networking (a) | 15,658 | 95,448 | |
Alcatel-Lucent SA sponsored ADR (a) | 500 | 1,490 | |
Arris Group, Inc. (a) | 6,771 | 63,106 | |
Aruba Networks, Inc. (a) | 4,951 | 84,068 | |
Aviat Networks, Inc. (a) | 5,667 | 22,895 | |
BigBand Networks, Inc. (a) | 10,500 | 32,760 | |
Blue Coat Systems, Inc. (a) | 6,300 | 137,970 | |
Brocade Communications Systems, Inc. (a) | 5,309 | 26,280 | |
BYD Electronic International Co. Ltd. | 24,000 | 13,379 | |
Ceragon Networks Ltd. (a) | 200 | 1,504 | |
Ciena Corp. (a) | 1,059 | 13,862 | |
Cisco Systems, Inc. (a) | 54,069 | 1,247,372 | |
CommScope, Inc. (a) | 4,198 | 85,387 | |
Comverse Technology, Inc. (a) | 906 | 6,795 | |
DG FastChannel, Inc. (a) | 2,700 | 102,951 | |
Digi International, Inc. (a) | 2,700 | 22,437 | |
DragonWave, Inc. (a) | 2,400 | 14,616 | |
EchoStar Holding Corp. Class A (a) | 2,120 | 40,492 | |
EMCORE Corp. (a) | 4,600 | 4,148 | |
Extreme Networks, Inc. (a) | 5,400 | 15,444 | |
F5 Networks, Inc. (a) | 7,030 | 617,445 | |
Finisar Corp. (a)(d) | 12,112 | 194,155 | |
Harmonic, Inc. (a) | 11,860 | 82,664 | |
Harris Corp. | 3,400 | 151,402 | |
Infinera Corp. (a) | 2,800 | 25,340 | |
Ixia (a) | 700 | 7,686 | |
JDS Uniphase Corp. (a) | 23,573 | 255,767 | |
Juniper Networks, Inc. (a) | 23,514 | 653,219 | |
Motorola, Inc. (a) | 122,374 | 916,581 | |
Nokia Corp. sponsored ADR | 7,600 | 72,276 | |
Oclaro, Inc. (a) | 13,197 | 162,719 | |
Oplink Communications, Inc. (a) | 3,174 | 51,133 | |
Opnext, Inc. (a) | 15,501 | 27,902 | |
Polycom, Inc. (a) | 10,600 | 314,608 | |
QUALCOMM, Inc. | 42,820 | 1,630,580 | |
Research In Motion Ltd. (a) | 15,900 | 914,727 | |
Riverbed Technology, Inc. (a) | 11,979 | 444,301 | |
Sandvine Corp. (a) | 8,930 | 13,726 | |
Sandvine Corp. (U.K.) (a) | 56,400 | 88,900 | |
ShoreTel, Inc. (a) | 21,276 | 106,380 | |
Sierra Wireless, Inc. (a) | 9,200 | 86,366 | |
Tekelec (a) | 2,600 | 36,764 | |
Telefonaktiebolaget LM Ericsson | 112,107 | 1,233,177 | |
| |||
Shares | Value | ||
Tellabs, Inc. | 41,367 | $ 288,742 | |
ZTE Corp. (H Shares) | 10,450 | 33,432 | |
| 11,345,290 | ||
COMPUTERS & PERIPHERALS - 4.3% | |||
Computer Hardware - 3.6% | |||
Apple, Inc. (a) | 1,300 | 334,425 | |
Compal Electronics, Inc. | 28 | 37 | |
HTC Corp. | 9,400 | 172,793 | |
| 507,255 | ||
Computer Storage & Peripherals - 0.7% | |||
Isilon Systems, Inc. (a) | 2,150 | 37,711 | |
Novatel Wireless, Inc. (a) | 4,698 | 31,477 | |
QLogic Corp. (a) | 2,200 | 35,024 | |
| 104,212 | ||
TOTAL COMPUTERS & PERIPHERALS | 611,467 | ||
ELECTRICAL EQUIPMENT - 0.0% | |||
Electrical Components & Equipment - 0.0% | |||
A123 Systems, Inc. | 100 | 1,078 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 2.6% | |||
Electronic Components - 0.6% | |||
Prime View International Co. Ltd. (a) | 16,000 | 23,209 | |
Universal Display Corp. (a) | 2,800 | 57,708 | |
| 80,917 | ||
Electronic Manufacturing Services - 2.0% | |||
Foxconn International Holdings Ltd. (a) | 2,000 | 1,406 | |
Plexus Corp. (a) | 1,000 | 29,200 | |
SMART Modular Technologies (WWH), Inc. (a) | 4,416 | 23,891 | |
Trimble Navigation Ltd. (a) | 8,219 | 233,173 | |
| 287,670 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 368,587 | ||
INTERNET SOFTWARE & SERVICES - 2.6% | |||
Internet Software & Services - 2.6% | |||
Akamai Technologies, Inc. (a) | 6,100 | 233,996 | |
Equinix, Inc. (a) | 300 | 28,053 | |
Limelight Networks, Inc. (a) | 6,765 | 28,751 | |
NetEase.com, Inc. sponsored ADR (a) | 200 | 7,660 | |
Rackspace Hosting, Inc. (a) | 3,000 | 56,100 | |
Tencent Holdings Ltd. | 1,100 | 21,200 | |
| 375,760 | ||
IT SERVICES - 0.2% | |||
Data Processing & Outsourced Services - 0.2% | |||
Amadeus IT Holding SA Class A (a) | 700 | 12,317 | |
NeuStar, Inc. Class A (a) | 700 | 16,261 | |
| 28,578 | ||
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - CONTINUED | |||
IT Consulting & Other Services - 0.0% | |||
Yucheng Technologies Ltd. (a) | 1,200 | $ 3,816 | |
TOTAL IT SERVICES | 32,394 | ||
MEDIA - 0.5% | |||
Cable & Satellite - 0.5% | |||
Virgin Media, Inc. | 3,050 | 65,667 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.8% | |||
Semiconductors - 4.8% | |||
Actel Corp. (a) | 451 | 6,612 | |
Altera Corp. | 1,200 | 33,264 | |
Applied Micro Circuits Corp. (a) | 2,758 | 32,986 | |
ARM Holdings PLC sponsored ADR | 1,600 | 24,720 | |
Avago Technologies Ltd. | 1,300 | 28,288 | |
Cavium Networks, Inc. (a) | 3,249 | 87,171 | |
Ceva, Inc. (a) | 2,900 | 37,033 | |
Conexant Systems, Inc. (a) | 1,280 | 2,637 | |
CSR PLC (a) | 2,483 | 13,303 | |
Entropic Communications, Inc. (a) | 4,200 | 32,886 | |
Exar Corp. (a) | 143 | 1,000 | |
Hittite Microwave Corp. (a) | 2,300 | 105,708 | |
Ikanos Communications, Inc. (a) | 3,985 | 6,974 | |
Infineon Technologies AG (a) | 1,076 | 7,263 | |
Microsemi Corp. (a) | 449 | 7,166 | |
Netlogic Microsystems, Inc. (a) | 2,302 | 68,047 | |
Omnivision Technologies, Inc. (a) | 600 | 13,386 | |
ON Semiconductor Corp. (a) | 7,285 | 49,174 | |
Pericom Semiconductor Corp. (a) | 1,700 | 15,538 | |
Pixelplus Co. Ltd. ADR (a) | 900 | 711 | |
PLX Technology, Inc. (a) | 900 | 3,438 | |
PMC-Sierra, Inc. (a) | 3,100 | 25,110 | |
Standard Microsystems Corp. (a) | 1,200 | 26,424 | |
TriQuint Semiconductor, Inc. (a) | 5,000 | 34,650 | |
Xilinx, Inc. | 900 | 25,128 | |
| 688,617 | ||
SOFTWARE - 2.4% | |||
Application Software - 1.9% | |||
AsiaInfo Holdings, Inc. (a) | 2,800 | 57,120 | |
Citrix Systems, Inc. (a) | 1,592 | 87,592 | |
Cyberlink Corp. | 8,000 | 33,388 | |
KongZhong Corp. sponsored ADR (a) | 100 | 604 | |
NetScout Systems, Inc. (a) | 1,200 | 19,020 | |
Smith Micro Software, Inc. (a) | 2,768 | 27,209 | |
Synchronoss Technologies, Inc. (a) | 708 | 13,799 | |
Taleo Corp. Class A (a) | 100 | 2,460 | |
TeleNav, Inc. | 300 | 1,632 | |
Ulticom, Inc. (a) | 3,441 | 32,621 | |
| 275,445 | ||
Home Entertainment Software - 0.1% | |||
Giant Interactive Group, Inc. ADR (d) | 2,000 | 13,460 | |
| |||
Shares | Value | ||
Systems Software - 0.4% | |||
Allot Communications Ltd. (a) | 300 | $ 1,452 | |
Fortinet, Inc. | 1,350 | 24,314 | |
Opnet Technologies, Inc. | 400 | 6,096 | |
TeleCommunication Systems, Inc. | 6,977 | 25,047 | |
| 56,909 | ||
TOTAL SOFTWARE | 345,814 | ||
WIRELESS TELECOMMUNICATION SERVICES - 3.9% | |||
Wireless Telecommunication Services - 3.9% | |||
American Tower Corp. Class A (a) | 1,890 | 87,394 | |
Crown Castle International Corp. (a) | 2,000 | 79,020 | |
Leap Wireless International, Inc. (a) | 300 | 3,567 | |
SBA Communications Corp. | 2,152 | 77,859 | |
SOFTBANK CORP. | 800 | 23,928 | |
Sprint Nextel Corp. (a) | 39,300 | 179,601 | |
Syniverse Holdings, Inc. (a) | 4,821 | 107,653 | |
| 559,022 | ||
TOTAL COMMON STOCKS (Cost $12,578,643) | 14,417,780 | ||
Convertible Bonds - 0.1% | ||||
| Principal Amount |
| ||
COMMUNICATIONS EQUIPMENT - 0.1% | ||||
Communications Equipment - 0.1% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 20,000 | 17,142 | ||
Money Market Funds - 10.5% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.24% (b) | 166,105 | 166,105 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 1,334,500 | 1,334,500 | |
TOTAL MONEY MARKET FUNDS (Cost $1,500,605) | 1,500,605 | ||
TOTAL INVESTMENT PORTFOLIO - 111.5% (Cost $14,099,248) | 15,935,527 |
NET OTHER ASSETS (LIABILITIES) - (11.5)% | (1,648,509) | ||
NET ASSETS - 100% | $ 14,287,018 | ||
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 | $ 566 |
Fidelity Securities Lending Cash Central Fund | 286 |
Total | $ 852 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 14,417,780 | $ 14,417,780 | $ - | $ - |
Convertible Bonds | 17,142 | - | 17,142 | - |
Money Market Funds | 1,500,605 | 1,500,605 | - | - |
Total Investments in Securities: | $ 15,935,527 | $ 15,918,385 | $ 17,142 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 78.8% |
Sweden | 8.6% |
Canada | 7.8% |
Taiwan | 1.7% |
Others (Individually Less Than 1%) | 3.1% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $1,187,448 of which $207,917, $393,298 and $586,233 will expire on July 31, 2016, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Advisor Communications Equipment Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,292,800) - See accompanying schedule: Unaffiliated issuers (cost $12,598,643) | $ 14,434,922 |
|
Fidelity Central Funds (cost $1,500,605) | 1,500,605 |
|
Total Investments (cost $14,099,248) |
| $ 15,935,527 |
Receivable for investments sold | 77,979 | |
Receivable for fund shares sold | 50,808 | |
Dividends receivable | 6,145 | |
Interest receivable | 12 | |
Distributions receivable from Fidelity Central Funds | 262 | |
Receivable from investment adviser for expense reductions | 2,389 | |
Other receivables | 1,682 | |
Total assets | 16,074,804 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 361,188 | |
Payable for fund shares redeemed | 37,308 | |
Accrued management fee | 6,537 | |
Distribution fees payable | 5,973 | |
Other affiliated payables | 3,987 | |
Other payables and accrued expenses | 38,293 | |
Collateral on securities loaned, at value | 1,334,500 | |
Total liabilities | 1,787,786 | |
|
|
|
Net Assets | $ 14,287,018 | |
Net Assets consist of: |
| |
Paid in capital | $ 13,824,183 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,373,449) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,836,284 | |
Net Assets | $ 14,287,018 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 8.67 | |
|
|
|
Maximum offering price per share (100/94.25 of $8.67) | $ 9.20 | |
Class T: | $ 8.46 | |
|
|
|
Maximum offering price per share (100/96.50 of $8.46) | $ 8.77 | |
Class B: | $ 8.06 | |
|
|
|
Class C: | $ 8.06 | |
|
|
|
Institutional Class: | $ 8.88 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,775 |
Interest |
| 57 |
Income from Fidelity Central Funds |
| 852 |
Total income |
| 8,684 |
|
|
|
Expenses | ||
Management fee | $ 79,403 | |
Transfer agent fees | 47,204 | |
Distribution fees | 73,414 | |
Accounting and security lending fees | 5,530 | |
Custodian fees and expenses | 8,840 | |
Independent trustees' compensation | 79 | |
Registration fees | 49,485 | |
Audit | 43,935 | |
Legal | 59 | |
Miscellaneous | 160 | |
Total expenses before reductions | 308,109 | |
Expense reductions | (74,216) | 233,893 |
Net investment income (loss) | (225,209) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 955,864 | |
Foreign currency transactions | (534) | |
Total net realized gain (loss) |
| 955,330 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,311,446 | |
Assets and liabilities in foreign currencies | 429 | |
Total change in net unrealized appreciation (depreciation) |
| 1,311,875 |
Net gain (loss) | 2,267,205 | |
Net increase (decrease) in net assets resulting from operations | $ 2,041,996 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (225,209) | $ (3,392) |
Net realized gain (loss) | 955,330 | (2,045,448) |
Change in net unrealized appreciation (depreciation) | 1,311,875 | 1,654,393 |
Net increase (decrease) in net assets resulting from operations | 2,041,996 | (394,447) |
Share transactions - net increase (decrease) | 1,341,807 | 4,154,179 |
Redemption fees | 1,464 | 239 |
Total increase (decrease) in net assets | 3,385,267 | 3,759,971 |
|
|
|
Net Assets | ||
Beginning of period | 10,901,751 | 7,141,780 |
End of period | $ 14,287,018 | $ 10,901,751 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.28 | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.11) | .02 F | (.08) | (.09) | (.09) |
Net realized and unrealized gain (loss) | 1.50 | (.56) | (1.45) | 2.29 | (.32) |
Total from investment operations | 1.39 | (.54) | (1.53) | 2.20 | (.41) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.67 | $ 7.28 | $ 7.82 | $ 9.49 | $ 7.29 |
Total Return A, B | 19.09% | (6.91)% | (16.43)% | 30.18% | (5.32)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.90% | 3.15% | 2.25% | 2.24% | 2.13% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
Expenses net of all reductions | 1.38% | 1.40% | 1.39% | 1.40% | 1.32% |
Net investment income (loss) | (1.32)% | .26% F | (.91)% | (1.00)% | (1.05)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,860 | $ 3,476 | $ 2,459 | $ 2,825 | $ 3,145 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 (.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.13 | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.13) | - F, H | (.10) | (.11) | (.11) |
Net realized and unrealized gain (loss) | 1.46 | (.55) | (1.42) | 2.26 | (.31) |
Total from investment operations | 1.33 | (.55) | (1.52) | 2.15 | (.42) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.46 | $ 7.13 | $ 7.68 | $ 9.34 | $ 7.19 |
Total Return A, B | 18.65% | (7.16)% | (16.59)% | 29.90% | (5.52)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.20% | 3.52% | 2.62% | 2.57% | 2.51% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
Expenses net of all reductions | 1.63% | 1.65% | 1.65% | 1.64% | 1.57% |
Net investment income (loss) | (1.57)% | .01% F | (1.16)% | (1.25)% | (1.30)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,273 | $ 2,396 | $ 2,138 | $ 3,271 | $ 2,932 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.13)%.
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 reductions from 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.
Communications Equipment
Financial Highlights - Class B
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.83 | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.03) F | (.14) | (.14) | (.14) |
Net realized and unrealized gain (loss) | 1.39 | (.53) | (1.36) | 2.18 | (.31) |
Total from investment operations | 1.23 | (.56) | (1.50) | 2.04 | (.45) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.06 | $ 6.83 | $ 7.39 | $ 9.03 | $ 6.99 |
Total Return A, B | 18.01% | (7.58)% | (16.94)% | 29.18% | (6.05)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.68% | 3.98% | 3.03% | 3.00% | 2.94% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.15% | 2.15% | 2.07% |
Net investment income (loss) | (2.07)% | (.49)% F | (1.67)% | (1.75)% | (1.80)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,408 | $ 1,281 | $ 1,219 | $ 2,225 | $ 2,406 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.63)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.82 | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.03) F | (.14) | (.14) | (.15) |
Net realized and unrealized gain (loss) | 1.40 | (.53) | (1.37) | 2.18 | (.30) |
Total from investment operations | 1.24 | (.56) | (1.51) | 2.04 | (.45) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 8.06 | $ 6.82 | $ 7.38 | $ 9.03 | $ 6.99 |
Total Return A, B | 18.18% | (7.59)% | (17.06)% | 29.18% | (6.05)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.67% | 3.63% | 3.02% | 2.98% | 2.86% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.13% | 2.15% | 2.15% | 2.15% | 2.07% |
Net investment income (loss) | (2.07)% | (.49)% F | (1.67)% | (1.75)% | (1.81)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,029 | $ 2,792 | $ 1,097 | $ 1,745 | $ 1,768 |
Portfolio turnover rate E | 106% | 97% | 63% | 58% | 174% |
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 $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.63)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.45 | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.09) | .03 E | (.06) | (.07) | (.07) |
Net realized and unrealized gain (loss) | 1.52 | (.56) | (1.47) | 2.33 | (.33) |
Total from investment operations | 1.43 | (.53) | (1.53) | 2.26 | (.40) |
Distributions from net realized gain | - | - | (.14) | - | - |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 8.88 | $ 7.45 | $ 7.98 | $ 9.65 | $ 7.39 |
Total Return A | 19.19% | (6.64)% | (16.16)% | 30.58% | (5.13)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | 1.54% | 2.44% | 1.94% | 1.87% | 1.70% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.15% | 1.15% |
Expenses net of all reductions | 1.13% | 1.15% | 1.14% | 1.15% | 1.07% |
Net investment income (loss) | (1.07)% | .51% E | (.66)% | (.75)% | (.80)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,717 | $ 957 | $ 229 | $ 324 | $ 379 |
Portfolio turnover rate D | 106% | 97% | 63% | 58% | 174% |
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 (.63)%.
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 reductions from 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
Notes to Financial Statements
For the period ended July 31, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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. 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, 2009, dividend income has been reduced $46,400 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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, losses deferred due to wash sales and excise tax regulations.
Communications Equipment
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 2,694,088 |
Gross unrealized depreciation | (1,043,810) |
Net unrealized appreciation (depreciation) | $ 1,650,278 |
|
|
Tax Cost | $ 14,285,249 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (1,187,448) |
Net unrealized appreciation (depreciation) | $ 1,650,283 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $16,003,292 and $14,522,551, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 11,122 | $ 326 |
Class T | .25% | .25% | 15,332 | 28 |
Class B | .75% | .25% | 15,463 | 11,615 |
Class C | .75% | .25% | 31,497 | 8,293 |
|
|
| $ 73,414 | $ 20,262 |
Annual Report
Notes to Financial Statements - continued
5. 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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares. For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 6,542 |
Class T | 2,909 |
Class B* | 5,037 |
Class C* | 2,244 |
| $ 16,732 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 14,840 | .33 |
Class T | 11,726 | .38 |
Class B | 5,228 | .34 |
Class C | 10,557 | .34 |
Institutional Class | 4,853 | .24 |
| $ 47,204 |
|
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 $572 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $55 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $286.
Communications Equipment
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class A | 1.40% | $ 22,307 |
Class T | 1.65% | 16,765 |
Class B | 2.15% | 8,223 |
Class C | 2.15% | 16,271 |
Institutional Class | 1.15% | 7,769 |
|
| $ 71,335 |
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 $2,881 for the period.
9. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 379,066 | 355,106 | $ 3,104,413 | $ 2,309,221 |
Shares redeemed | (295,518) | (192,148) | (2,391,964) | (977,112) |
Net increase (decrease) | 83,548 | 162,958 | $ 712,449 | $ 1,332,109 |
Class T |
|
|
|
|
Shares sold | 156,340 | 141,676 | $ 1,239,925 | $ 842,215 |
Shares redeemed | (105,545) | (84,049) | (829,604) | (471,168) |
Net increase (decrease) | 50,795 | 57,627 | $ 410,321 | $ 371,047 |
Class B |
|
|
|
|
Shares sold | 104,878 | 79,696 | $ 798,141 | $ 489,378 |
Shares redeemed | (117,849) | (57,101) | (896,172) | (282,381) |
Net increase (decrease) | (12,971) | 22,595 | $ (98,031) | $ 206,997 |
Class C |
|
|
|
|
Shares sold | 234,346 | 334,255 | $ 1,790,479 | $ 2,000,139 |
Shares redeemed | (267,515) | (73,743) | (1,967,047) | (434,705) |
Net increase (decrease) | (33,169) | 260,512 | $ (176,568) | $ 1,565,434 |
Institutional Class |
|
|
|
|
Shares sold | 263,129 | 116,053 | $ 2,147,225 | $ 776,070 |
Shares redeemed | (198,313) | (16,263) | (1,653,589) | (97,478) |
Net increase (decrease) | 64,816 | 99,790 | $ 493,636 | $ 678,592 |
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.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 24.62% | -0.17% | 1.67% |
A Prior to October 1, 2006, Fidelity Advisor Consumer Discretionary Fund 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, 2000. 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
Fidelity Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from John Harris, Portfolio Manager of Fidelity Advisor® Consumer Discretionary Fund: For the 12-month period ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 24.27%, 23.94%, 23.33% and 23.41%, respectively, (excluding sales charges), underperforming the 27.86% gain of its sector benchmark, the MSCI® U.S. IM Consumer Discretionary 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - but solidly outperforming the S&P 500®. The fund's biggest disappointment was our sizable overweighting in home-improvement retailer Lowe's, one of the fund's largest holdings and biggest detractor in both relative and absolute terms. Although the stock performed well early on, wobbly housing reports later in the period drove it down. On the flip side, however, our beneficial underweighting of Lowe's competitor Home Depot offset some of the negative impact. The automobile industry was another weak spot, as overweightings in certain markets and poor stock picking in automotive retail and in auto parts and equipment hurt. The fund's relative return also took a hit from our underweighting in automaker Ford Motor since the company performed well as the only domestic automaker not to require government assistance. Jewelry retailer Zale detracted on disappointing revenue trends in its industry and company-specific problems. Several positions in casinos and gaming also hurt, including gaming machine manufacturers WMS Industries and Bally Technologies. On the positive side, casino operator Las Vegas Sands was the fund's top individual contributor, benefiting from accelerating growth in China's Macau market and the opening of the company's Singapore property. An overweighting and strong security selection in hotels, resorts and cruise lines helped, representing a cyclical play on an improving economy and increased leisure spending by consumers. Standouts in this area included Wyndham Worldwide and Starwood Hotels & Resorts Worldwide. Some of the stocks I've discussed were sold prior to period end.
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund: For the 12-month period ending July 31, 2010, the fund's Institutional Class shares returned 24.62%, underperforming the 27.86% gain of its sector benchmark, the MSCI® U.S. IM Consumer Discretionary 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - but solidly outperforming the S&P 500®. The fund's biggest disappointment was our sizable overweighting in home-improvement retailer Lowe's, one of the fund's largest holdings and biggest detractor in both relative and absolute terms. Although the stock performed well early on, wobbly housing reports later in the period drove down its value. On the flip side, however, our beneficial underweighting of Lowe's competitor Home Depot offset some of the negative impact. The automobile industry was another weak spot, as overweightings in certain markets and poor stock picking in automotive retail and in auto parts and equipment hurt. The fund's relative return also took a hit from our underweighting in automaker Ford Motor since the company performed well as the only domestic automaker not to require government assistance. Jewelry retailer Zale detracted on disappointing revenue trends in its industry and company-specific problems. Several positions in casinos and gaming also hurt, including gaming machine manufacturers WMS Industries and Bally Technologies. On the positive side, casino operator Las Vegas Sands was the fund's top individual contributor, benefiting from accelerating growth in China's Macau market and the opening of the company's Singapore property. An overweighting and strong security selection in hotels, resorts and cruise lines helped, representing a cyclical play on an improving economy and increased leisure spending by consumers. Standouts in this area included Wyndham Worldwide and Starwood Hotels & Resorts Worldwide. Some of the stocks I've discussed were sold prior to 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.
Consumer Discretionary
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,100.10 | $ 7.29 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,098.00 | $ 8.58 |
Hypothetical A |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,094.90 | $ 11.17 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.11% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,095.80 | $ 10.96 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.33 | $ 10.54 |
Institutional Class | 1.04% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,101.20 | $ 5.42 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.64 | $ 5.21 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Consumer Discretionary Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
McDonald's Corp. | 6.1 | 5.4 |
Lowe's Companies, Inc. | 5.8 | 5.7 |
The Walt Disney Co. | 5.7 | 5.5 |
Target Corp. | 4.2 | 6.1 |
Comcast Corp. Class A (special) (non-vtg.) | 3.6 | 0.0 |
Amazon.com, Inc. | 3.6 | 3.8 |
DIRECTV | 3.4 | 1.7 |
Time Warner, Inc. | 3.3 | 1.4 |
Time Warner Cable, Inc. | 2.6 | 1.8 |
Advance Auto Parts, Inc. | 2.3 | 2.4 |
| 40.6 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Media | 26.6% |
|
| Specialty Retail | 21.8% |
|
| Hotels, Restaurants & Leisure | 21.4% |
|
| Multiline Retail | 5.5% |
|
| Household Durables | 4.8% |
|
| All Others* | 19.9% |
|
As of January 31, 2010 | |||
| Media | 21.1% |
|
| Specialty Retail | 21.1% |
|
| Hotels, Restaurants & Leisure | 20.4% |
|
| Multiline Retail | 7.9% |
|
| Internet & Catalog Retail | 4.7% |
|
| All Others* | 24.8% |
|
* Includes short-term investments and net other assets. |
Consumer Discretionary
Fidelity Advisor Consumer Discretionary Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
AUTO COMPONENTS - 3.1% | |||
Auto Parts & Equipment - 3.1% | |||
Autoliv, Inc. | 3,400 | $ 195,296 | |
Gentex Corp. | 18,100 | 348,787 | |
Johnson Controls, Inc. | 24,254 | 698,758 | |
Tenneco, Inc. (a) | 10,903 | 300,923 | |
| 1,543,764 | ||
AUTOMOBILES - 2.5% | |||
Automobile Manufacturers - 2.5% | |||
Bayerische Motoren Werke AG (BMW) | 6,536 | 351,907 | |
Ford Motor Co. (a) | 70,564 | 901,102 | |
| 1,253,009 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.5% | |||
Diversified Support Services - 0.5% | |||
Viad Corp. | 11,100 | 220,890 | |
DISTRIBUTORS - 0.2% | |||
Distributors - 0.2% | |||
Li & Fung Ltd. | 20,000 | 91,664 | |
DIVERSIFIED CONSUMER SERVICES - 3.1% | |||
Education Services - 1.7% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 10,130 | 467,297 | |
Navitas Ltd. | 52,468 | 205,570 | |
Strayer Education, Inc. | 600 | 143,640 | |
| 816,507 | ||
Specialized Consumer Services - 1.4% | |||
Sotheby's Class A (ltd. vtg.) | 16,000 | 434,080 | |
Steiner Leisure Ltd. (a) | 6,100 | 259,311 | |
| 693,391 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 1,509,898 | ||
FOOD & STAPLES RETAILING - 0.8% | |||
Hypermarkets & Super Centers - 0.8% | |||
BJ's Wholesale Club, Inc. (a) | 3,968 | 180,742 | |
Costco Wholesale Corp. | 3,483 | 197,521 | |
| 378,263 | ||
HOTELS, RESTAURANTS & LEISURE - 21.4% | |||
Casinos & Gaming - 5.3% | |||
Bally Technologies, Inc. (a) | 14,600 | 471,580 | |
Las Vegas Sands Corp. unit | 1,410 | 635,092 | |
MGM Mirage, Inc. (a)(d) | 24,247 | 263,322 | |
Penn National Gaming, Inc. (a) | 7,312 | 200,276 | |
Pinnacle Entertainment, Inc. (a) | 12,800 | 138,880 | |
Shuffle Master, Inc. (a) | 32,500 | 285,675 | |
WMS Industries, Inc. (a) | 16,500 | 635,415 | |
| 2,630,240 | ||
| |||
Shares | Value | ||
Hotels, Resorts & Cruise Lines - 4.0% | |||
Home Inns & Hotels Management, Inc. sponsored ADR (a) | 6,000 | $ 252,420 | |
Starwood Hotels & Resorts Worldwide, Inc. | 16,900 | 818,805 | |
Wyndham Worldwide Corp. | 35,067 | 895,261 | |
| 1,966,486 | ||
Restaurants - 12.1% | |||
BJ's Restaurants, Inc. (a) | 10,600 | 270,300 | |
Darden Restaurants, Inc. | 10,600 | 444,034 | |
McDonald's Corp. | 43,500 | 3,033,255 | |
P.F. Chang's China Bistro, Inc. (d) | 6,493 | 268,810 | |
Papa John's International, Inc. (a) | 10,025 | 253,933 | |
Ruth's Hospitality Group, Inc. (a) | 56,219 | 227,125 | |
Starbucks Corp. | 37,459 | 930,856 | |
Texas Roadhouse, Inc. Class A (a) | 21,600 | 291,168 | |
The Cheesecake Factory, Inc. (a) | 11,700 | 274,248 | |
| 5,993,729 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 10,590,455 | ||
HOUSEHOLD DURABLES - 4.8% | |||
Home Furnishings - 1.3% | |||
La-Z-Boy, Inc. (a) | 30,400 | 260,224 | |
Tempur-Pedic International, Inc. (a) | 12,400 | 380,308 | |
| 640,532 | ||
Homebuilding - 1.4% | |||
Lennar Corp. Class A | 35,811 | 528,928 | |
Toll Brothers, Inc. (a) | 10,600 | 184,016 | |
| 712,944 | ||
Household Appliances - 2.1% | |||
Stanley Black & Decker, Inc. | 13,960 | 809,959 | |
Whirlpool Corp. | 2,600 | 216,580 | |
| 1,026,539 | ||
TOTAL HOUSEHOLD DURABLES | 2,380,015 | ||
INTERNET & CATALOG RETAIL - 4.5% | |||
Internet Retail - 4.5% | |||
Amazon.com, Inc. (a) | 15,000 | 1,768,350 | |
Expedia, Inc. | 19,700 | 446,796 | |
Ocado Group PLC (a) | 4,000 | 10,477 | |
| 2,225,623 | ||
INTERNET SOFTWARE & SERVICES - 1.3% | |||
Internet Software & Services - 1.3% | |||
eBay, Inc. (a) | 11,200 | 234,192 | |
Google, Inc. Class A (a) | 310 | 150,304 | |
Monster Worldwide, Inc. (a)(d) | 17,465 | 239,620 | |
| 624,116 | ||
Common Stocks - continued | |||
Shares | Value | ||
LEISURE EQUIPMENT & PRODUCTS - 0.6% | |||
Leisure Products - 0.6% | |||
Polaris Industries, Inc. | 4,800 | $ 286,560 | |
MEDIA - 26.6% | |||
Advertising - 3.3% | |||
Interpublic Group of Companies, Inc. (a) | 57,100 | 521,894 | |
Lamar Advertising Co. Class A (a) | 21,096 | 576,976 | |
National CineMedia, Inc. | 30,386 | 545,125 | |
| 1,643,995 | ||
Broadcasting - 0.9% | |||
Discovery Communications, Inc. | 8,784 | 301,994 | |
Scripps Networks Interactive, Inc. Class A | 2,900 | 123,627 | |
| 425,621 | ||
Cable & Satellite - 11.4% | |||
Comcast Corp. Class A (special) (non-vtg.) | 96,088 | 1,773,784 | |
DIRECTV (a) | 45,195 | 1,679,446 | |
Time Warner Cable, Inc. | 22,239 | 1,271,404 | |
Virgin Media, Inc. (d) | 41,800 | 899,954 | |
| 5,624,588 | ||
Movies & Entertainment - 11.0% | |||
The Walt Disney Co. | 83,227 | 2,803,918 | |
Time Warner, Inc. | 52,085 | 1,638,594 | |
Viacom, Inc. Class B (non-vtg.) | 30,746 | 1,015,848 | |
| 5,458,360 | ||
TOTAL MEDIA | 13,152,564 | ||
MULTILINE RETAIL - 5.5% | |||
Department Stores - 1.3% | |||
Macy's, Inc. | 35,234 | 657,114 | |
General Merchandise Stores - 4.2% | |||
Target Corp. | 39,916 | 2,048,489 | |
TOTAL MULTILINE RETAIL | 2,705,603 | ||
SPECIALTY RETAIL - 21.8% | |||
Apparel Retail - 5.6% | |||
Citi Trends, Inc. (a) | 7,901 | 248,012 | |
Inditex SA | 3,647 | 241,231 | |
J. Crew Group, Inc. (a) | 6,700 | 238,721 | |
Ross Stores, Inc. | 9,200 | 484,472 | |
TJX Companies, Inc. | 21,800 | 905,136 | |
Urban Outfitters, Inc. (a) | 19,778 | 636,060 | |
| 2,753,632 | ||
Automotive Retail - 2.3% | |||
Advance Auto Parts, Inc. | 20,800 | 1,113,424 | |
| |||
Shares | Value | ||
Computer & Electronics Retail - 2.3% | |||
Best Buy Co., Inc. | 24,149 | $ 837,004 | |
hhgregg, Inc. (a) | 13,430 | 272,495 | |
| 1,109,499 | ||
Home Improvement Retail - 7.4% | |||
Home Depot, Inc. | 16,790 | 478,683 | |
Lowe's Companies, Inc. | 138,623 | 2,875,041 | |
Lumber Liquidators Holdings, Inc. (a) | 12,725 | 315,835 | |
| 3,669,559 | ||
Homefurnishing Retail - 2.2% | |||
Bed Bath & Beyond, Inc. (a) | 29,006 | 1,098,747 | |
Specialty Stores - 2.0% | |||
Cabela's, Inc. Class A (a)(d) | 7,150 | 111,469 | |
Hengdeli Holdings Ltd. | 534,000 | 244,743 | |
OfficeMax, Inc. (a) | 21,905 | 313,022 | |
Tractor Supply Co. | 4,900 | 340,599 | |
| 1,009,833 | ||
TOTAL SPECIALTY RETAIL | 10,754,694 | ||
TEXTILES, APPAREL & LUXURY GOODS - 2.4% | |||
Apparel, Accessories & Luxury Goods - 2.4% | |||
G-III Apparel Group Ltd. (a) | 9,168 | 236,534 | |
Phillips-Van Heusen Corp. | 10,300 | 534,467 | |
Polo Ralph Lauren Corp. Class A | 5,492 | 433,923 | |
| 1,204,924 | ||
TOTAL COMMON STOCKS (Cost $48,242,113) | 48,922,042 | ||
Money Market Funds - 4.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 393,218 | 393,218 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 1,933,116 | 1,933,116 | |
TOTAL MONEY MARKET FUNDS (Cost $2,326,334) | 2,326,334 | ||
TOTAL INVESTMENT PORTFOLIO - 103.8% (Cost $50,568,447) | 51,248,376 | ||
NET OTHER ASSETS (LIABILITIES) - (3.8)% | (1,862,743) | ||
NET ASSETS - 100% | $ 49,385,633 | ||
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 | $ 1,024 |
Fidelity Securities Lending Cash Central Fund | 6,534 |
Total | $ 7,558 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 48,922,042 | $ 48,286,950 | $ 635,092 | $ - |
Money Market Funds | 2,326,334 | 2,326,334 | - | - |
Total Investments in Securities: | $ 51,248,376 | $ 50,613,284 | $ 635,092 | $ - |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $2,978,434 all of which will expire on July 31, 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Advisor Consumer Discretionary Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,905,403) - See accompanying schedule: Unaffiliated issuers (cost $48,242,113) | $ 48,922,042 |
|
Fidelity Central Funds (cost $2,326,334) | 2,326,334 |
|
Total Investments (cost $50,568,447) |
| $ 51,248,376 |
Receivable for investments sold | 1,166,959 | |
Receivable for fund shares sold | 81,423 | |
Dividends receivable | 25,449 | |
Distributions receivable from Fidelity Central Funds | 458 | |
Other receivables | 7,630 | |
Total assets | 52,530,295 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1 | |
Payable for investments purchased | 1,060,153 | |
Payable for fund shares redeemed | 58,061 | |
Accrued management fee | 22,929 | |
Distribution fees payable | 17,662 | |
Other affiliated payables | 13,092 | |
Other payables and accrued expenses | 39,648 | |
Collateral on securities loaned, at value | 1,933,116 | |
Total liabilities | 3,144,662 | |
|
|
|
Net Assets | $ 49,385,633 | |
Net Assets consist of: |
| |
Paid in capital | $ 52,106,769 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,401,070) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 679,934 | |
Net Assets | $ 49,385,633 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 12.75 | |
|
|
|
Maximum offering price per share (100/94.25 of $12.75) | $ 13.53 | |
Class T: | $ 12.32 | |
|
|
|
Maximum offering price per share (100/96.50 of $12.32) | $ 12.77 | |
Class B: | $ 11.42 | |
|
|
|
Class C: | $ 11.44 | |
|
|
|
Institutional Class: | $ 13.27 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 527,792 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 7,558 |
Total income |
| 535,356 |
|
|
|
Expenses | ||
Management fee | $ 241,648 | |
Transfer agent fees | 130,698 | |
Distribution fees | 188,832 | |
Accounting and security lending fees | 17,218 | |
Custodian fees and expenses | 20,074 | |
Independent trustees' compensation | 248 | |
Registration fees | 51,490 | |
Audit | 43,251 | |
Legal | 169 | |
Miscellaneous | 519 | |
Total expenses before reductions | 694,147 | |
Expense reductions | (19,431) | 674,716 |
Net investment income (loss) | (139,360) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,027,554 | |
Foreign currency transactions | (408) | |
Total net realized gain (loss) |
| 6,027,146 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,905,027 | |
Assets and liabilities in foreign currencies | 6 | |
Total change in net unrealized appreciation (depreciation) |
| 1,905,033 |
Net gain (loss) | 7,932,179 | |
Net increase (decrease) in net assets resulting from operations | $ 7,792,819 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (139,360) | $ 41,542 |
Net realized gain (loss) | 6,027,146 | (6,306,395) |
Change in net unrealized appreciation (depreciation) | 1,905,033 | 3,085,863 |
Net increase (decrease) in net assets resulting from operations | 7,792,819 | (3,178,990) |
Distributions to shareholders from net investment income | (6,476) | (36,930) |
Share transactions - net increase (decrease) | 9,354,979 | 5,542,508 |
Redemption fees | 1,671 | 4,036 |
Total increase (decrease) in net assets | 17,142,993 | 2,330,624 |
|
|
|
Net Assets | ||
Beginning of period | 32,242,640 | 29,912,016 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $5,602, respectively) | $ 49,385,633 | $ 32,242,640 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.26 | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | .04 | .02 | .02 F | (.04) |
Net realized and unrealized gain (loss) | 2.51 | (1.16) | (3.09) | 1.83 | (.07) |
Total from investment operations | 2.49 | (1.12) | (3.07) | 1.85 | (.11) |
Distributions from net investment income | - | (.03) | - | (.05) | - |
Distributions from net realized gain | - | - | (1.41) | (2.30) | (.12) |
Total distributions | - | (.03) | (1.41) | (2.35) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 12.75 | $ 10.26 | $ 11.41 | $ 15.89 | $ 16.39 |
Total Return A, B | 24.27% | (9.81)% | (21.24)% | 11.67% | (.69)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.62% | 1.40% | 1.42% | 1.42% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
Expenses net of all reductions | 1.39% | 1.40% | 1.40% | 1.39% | 1.39% |
Net investment income (loss) | (.15)% | .42% | .15% | .11% F | (.23)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 19,423 | $ 13,010 | $ 11,899 | $ 19,708 | $ 16,935 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.94 | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.05) | .01 | (.01) | (.02) F | (.07) |
Net realized and unrealized gain (loss) | 2.43 | (1.12) | (3.00) | 1.79 | (.07) |
Total from investment operations | 2.38 | (1.11) | (3.01) | 1.77 | (.14) |
Distributions from net investment income | - | (.02) | - | (.03) | - |
Distributions from net realized gain | - | - | (1.39) | (2.30) | (.12) |
Total distributions | - | (.02) | (1.39) | (2.33) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 12.32 | $ 9.94 | $ 11.07 | $ 15.47 | $ 16.03 |
Total Return A, B | 23.94% | (10.04)% | (21.41)% | 11.43% | (.89)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.71% | 1.89% | 1.64% | 1.69% | 1.69% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.64% | 1.65% | 1.65% |
Expenses net of all reductions | 1.64% | 1.65% | 1.62% | 1.61% | 1.62% |
Net investment income (loss) | (.40)% | .17% | (.08)% | (.10)% F | (.46)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 8,018 | $ 6,738 | $ 9,095 | $ 14,787 | $ 14,267 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.26 | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | (.03) | (.07) | (.10) F | (.15) |
Net realized and unrealized gain (loss) | 2.26 | (1.06) | (2.81) | 1.70 | (.07) |
Total from investment operations | 2.16 | (1.09) | (2.88) | 1.60 | (.22) |
Distributions from net realized gain | - | - | (1.33) | (2.30) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.42 | $ 9.26 | $ 10.35 | $ 14.56 | $ 15.26 |
Total Return A, B | 23.33% | (10.53)% | (21.80)% | 10.82% | (1.45)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.21% | 2.38% | 2.14% | 2.20% | 2.19% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.14% | 2.15% | 2.15% |
Expenses net of all reductions | 2.14% | 2.15% | 2.14% | 2.15% | 2.14% |
Net investment income (loss) | (.90)% | (.33)% | (.60)% | (.64)% F | (.98)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,643 | $ 3,550 | $ 5,090 | $ 11,081 | $ 14,088 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.27 | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | (.03) | (.07) | (.10) F | (.15) |
Net realized and unrealized gain (loss) | 2.27 | (1.07) | (2.81) | 1.71 | (.07) |
Total from investment operations | 2.17 | (1.10) | (2.88) | 1.61 | (.22) |
Distributions from net realized gain | - | - | (1.34) | (2.30) | (.12) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 11.44 | $ 9.27 | $ 10.37 | $ 14.59 | $ 15.28 |
Total Return A, B | 23.41% | (10.61)% | (21.77)% | 10.88% | (1.45)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 2.12% | 2.38% | 2.15% | 2.16% | 2.12% |
Expenses net of fee waivers, if any | 2.12% | 2.15% | 2.15% | 2.15% | 2.12% |
Expenses net of all reductions | 2.11% | 2.15% | 2.14% | 2.15% | 2.12% |
Net investment income (loss) | (.87)% | (.33)% | (.60)% | (.64)% F | (.95)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 9,288 | $ 2,955 | $ 3,430 | $ 8,051 | $ 7,160 |
Portfolio turnover rate E | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.66 | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .02 | .06 | .06 | .06 E | - G |
Net realized and unrealized gain (loss) | 2.60 | (1.20) | (3.22) | 1.89 | (.07) |
Total from investment operations | 2.62 | (1.14) | (3.16) | 1.95 | (.07) |
Distributions from net investment income | (.01) | (.04) | - | (.06) | - |
Distributions from net realized gain | - | - | (1.41) | (2.30) | (.12) |
Total distributions | (.01) | (.04) | (1.41) | (2.36) | (.12) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 13.27 | $ 10.66 | $ 11.84 | $ 16.41 | $ 16.82 |
Total Return A | 24.62% | (9.59)% | (21.09)% | 12.04% | (.44)% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | 1.09% | 1.15% | 1.14% | 1.15% | 1.18% |
Expenses net of fee waivers, if any | 1.09% | 1.15% | 1.14% | 1.15% | 1.15% |
Expenses net of all reductions | 1.08% | 1.15% | 1.14% | 1.14% | 1.14% |
Net investment income (loss) | .16% | .67% | .40% | .36% E | .02% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 9,013 | $ 5,990 | $ 398 | $ 1,385 | $ 1,144 |
Portfolio turnover rate D | 163% | 99% | 63% | 164% | 81% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs)and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 gain distributions from the Fidelity Central Funds, foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 3,664,746 |
Gross unrealized depreciation | (3,407,453) |
Net unrealized appreciation (depreciation) | $ 257,293 |
|
|
Tax Cost | $ 50,991,083 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (2,978,434) |
Net unrealized appreciation (depreciation) | $ 257,298 |
Consumer Discretionary
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 6,476 | $ 36,930 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, short-term securities, aggregated $77,876,759 and $68,684,462, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 43,803 | $ - |
Class T | .25% | .25% | 38,298 | - |
Class B | .75% | .25% | 37,556 | 28,167 |
Class C | .75% | .25% | 69,175 | 9,486 |
|
|
| $ 188,832 | $ 37,653 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 16,991 |
Class T | 2,251 |
Class B* | 8,073 |
Class C* | 998 |
| $ 28,313 |
* 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
5. 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 applicable class were as follows:
| Amount | % of |
Class A | $ 56,967 | .32 |
Class T | 25,990 | .34 |
Class B | 12,319 | .33 |
Class C | 19,217 | .28 |
Institutional Class | 16,205 | .22 |
| $ 130,698 |
|
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 $2,710 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $165 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $6,534.
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class A | 1.40% | $ 7,175 |
Class T | 1.65% | 4,856 |
Class B | 2.15% | 2,076 |
|
| $ 14,107 |
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 $5,324 for the period.
Consumer Discretionary
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ - | $ 24,249 |
Class T | - | 11,523 |
Institutional Class | 6,476 | 1,158 |
Total | $ 6,476 | $ 36,930 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 790,157 | 816,977 | $ 9,916,430 | $ 7,713,175 |
Reinvestment of distributions | - | 2,650 | - | 22,145 |
Shares redeemed | (535,046) | (593,853) | (6,621,987) | (5,358,348) |
Net increase (decrease) | 255,111 | 225,774 | $ 3,294,443 | $ 2,376,972 |
Class T |
|
|
|
|
Shares sold | 124,293 | 78,811 | $ 1,532,286 | $ 695,608 |
Reinvestment of distributions | - | 1,356 | - | 11,014 |
Shares redeemed | (151,532) | (223,538) | (1,774,930) | (1,973,930) |
Net increase (decrease) | (27,239) | (143,371) | $ (242,644) | $ (1,267,308) |
Class B |
|
|
|
|
Shares sold | 84,992 | 72,993 | $ 960,028 | $ 620,027 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (149,463) | (181,364) | (1,626,686) | (1,535,455) |
Net increase (decrease) | (64,471) | (108,371) | $ (666,658) | $ (915,428) |
Class C |
|
|
|
|
Shares sold | 651,335 | 90,426 | $ 6,961,979 | $ 763,994 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (158,268) | (102,729) | (1,769,753) | (841,041) |
Net increase (decrease) | 493,067 | (12,303) | $ 5,192,226 | $ (77,047) |
Institutional Class |
|
|
|
|
Shares sold | 718,370 | 581,111 | $ 9,586,550 | $ 5,891,294 |
Reinvestment of distributions | 555 | 104 | 6,322 | 903 |
Shares redeemed | (601,861) | (52,903) | (7,815,260) | (466,878) |
Net increase (decrease) | 117,064 | 528,312 | $ 1,777,612 | $ 5,425,319 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Institutional Class | 9.10% | -2.01% | -3.14% |
A From December 27, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Electronics Fund - Institutional Class on December 27, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Fidelity Advisor Electronics Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Stephen Barwikowski and Christopher Lin, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 8.74%, 8.50%, 8.08% and 8.09%, respectively (excluding sales charges), compared with 13.84% for the broadly based S&P 500® and 10.34% for the MSCI® U.S. IM Semiconductors & Semiconductor Equipment 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, weak stock picking and an underweighting in semiconductors, by far the fund's largest investment category, worked against us. Secondarily, out-of-index exposure to communications equipment was counterproductive, as was security selection in the semiconductor equipment group. Underweighting benchmark components Cree, a maker of light-emitting diode (LED) lights, and Cirrus Logic, a supplier of audio chips, hampered performance, given those stocks' strong gains. I sold Cirrus Logic by period end. Untimely ownership of Advanced Micro Devices, an Intel competitor in the manufacture of microprocessors for personal computers, and Marvell Technology Group, a maker of chips for data storage and handset applications, also had a negative impact on the fund's results. In the case of silicon wafer manufacturer MEMC Electronic Materials, the company reported disappointing financial results due in part to its expansion into solar project installation, a business with solid potential that was underestimated by the market, in our opinion. Another holding with ties to the solar power industry, SunPower, struggled amid greater competition and concern about its balance sheet. Conversely, out-of-index representation in the computer storage/peripherals and electronic manufacturing services groups aided relative performance. At the stock level, underweighting Intel in the first half of the period added value. Another holding that bolstered results was SanDisk, which was helped by its status as a key supplier of flash memory to Apple. Other contributors included Avago Technologies, a provider of analog semiconductors for wireless telecommunications, and two Germany-based success stories from the period's first half: chip maker Infineon Technologies and Aixtron, a semiconductor equipment maker with a rapidly growing business producing equipment for manufacturing LED lights. SanDisk, Infineon and Aixtron were out-of-index positions, and the latter two stocks were sold by period end.
Comments from Stephen Barwikowski and Christopher Lin, Co-Portfolio Managers of Fidelity® Advisor Electronics Fund: During the past year, the fund's Institutional Class shares returned 9.10%, , compared with 13.84% for the broadly based S&P 500® and 10.34% for the MSCI® U.S. IM Semiconductors & Semiconductor Equipment 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, weak stock picking and an underweighting in semiconductors, by far the fund's largest investment category, worked against us. Secondarily, out-of-index exposure to communications equipment was counterproductive, as was security selection in the semiconductor equipment group. Underweighting benchmark components Cree, a maker of light-emitting diode (LED) lights, and Cirrus Logic, a supplier of audio chips, hampered performance, given those stocks' strong gains. I sold Cirrus Logic by period end. Untimely ownership of Advanced Micro Devices, an Intel competitor in the manufacture of microprocessors for personal computers, and Marvell Technology Group, a maker of chips for data storage and handset applications, also had a negative impact on the fund's results. In the case of silicon wafer manufacturer MEMC Electronic Materials, the company reported disappointing financial results due in part to its expansion into solar project installation, a business with solid potential that was underestimated by the market, in our opinion. Another holding with ties to the solar power industry, SunPower, struggled amid greater competition and concern about its balance sheet. Conversely, out-of-index representation in the computer storage/peripherals and electronic manufacturing services groups aided relative performance. At the stock level, underweighting Intel in the first half of the period added value. Another holding that bolstered results was SanDisk, which was helped by its status as a key supplier of flash memory to Apple. Other contributors included Avago Technologies, a provider of analog semiconductors for wireless telecommunications, and two Germany-based success stories from the period's first half: chip maker Infineon Technologies and Aixtron, a semiconductor equipment maker with a rapidly growing business producing equipment for manufacturing LED lights. SanDisk, Infineon and Aixtron were out-of-index positions, and the latter two stocks were sold by 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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,031.80 | $ 7.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,030.90 | $ 8.31 |
Hypothetical A |
| $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,029.20 | $ 10.82 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,029.30 | $ 10.82 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,033.90 | $ 5.80 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Electronics
Fidelity Advisor Electronics Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Intel Corp. | 18.0 | 23.6 |
Marvell Technology Group Ltd. | 7.6 | 4.5 |
Applied Materials, Inc. | 5.2 | 5.5 |
Micron Technology, Inc. | 4.5 | 4.6 |
Advanced Micro Devices, Inc. | 4.3 | 0.5 |
Texas Instruments, Inc. | 4.1 | 6.5 |
Amkor Technology, Inc. | 3.8 | 2.3 |
QUALCOMM, Inc. | 3.5 | 2.2 |
Avago Technologies Ltd. | 3.0 | 1.9 |
Intersil Corp. Class A | 2.8 | 1.5 |
| 56.8 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Semiconductors & Semiconductor Equipment | 89.6% |
|
| Electronic Equipment & Components | 4.3% |
|
| Communications Equipment | 3.7% |
|
| Computers & Peripherals | 1.5% |
|
| Internet Software & Services | 0.3% |
|
| All Others* | 0.6% |
|
As of January 31, 2010 | |||
| Semiconductors & Semiconductor Equipment | 88.4% |
|
| Electronic Equipment & Components | 3.5% |
|
| Computers & Peripherals | 2.6% |
|
| Communications Equipment | 2.2% |
|
| Electrical Equipment | 0.5% |
|
| All Others* | 2.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Electronics Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 3.7% | |||
Communications Equipment - 3.7% | |||
QUALCOMM, Inc. | 12,981 | $ 494,316 | |
Research In Motion Ltd. (a) | 500 | 28,765 | |
| 523,081 | ||
COMPUTERS & PERIPHERALS - 1.5% | |||
Computer Storage & Peripherals - 1.5% | |||
SanDisk Corp. (a) | 500 | 21,850 | |
Seagate Technology (a) | 8,100 | 101,655 | |
Western Digital Corp. (a) | 3,573 | 94,291 | |
| 217,796 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 4.3% | |||
Electronic Components - 0.1% | |||
Universal Display Corp. (a) | 300 | 6,183 | |
Electronic Manufacturing Services - 3.9% | |||
Benchmark Electronics, Inc. (a) | 5,865 | 97,946 | |
Flextronics International Ltd. (a) | 39,826 | 247,718 | |
Jabil Circuit, Inc. | 8,262 | 119,882 | |
SMART Modular Technologies (WWH), Inc. (a) | 600 | 3,246 | |
Tyco Electronics Ltd. | 2,200 | 59,400 | |
Viasystems Group, Inc. (a) | 1,597 | 24,626 | |
| 552,818 | ||
Technology Distributors - 0.3% | |||
Avnet, Inc. (a) | 1,869 | 47,005 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 606,006 | ||
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
Google, Inc. Class A (a) | 100 | 48,485 | |
LIFE SCIENCES TOOLS & SERVICES - 0.0% | |||
Life Sciences Tools & Services - 0.0% | |||
Arrowhead Research Corp. warrants 5/21/17 (a) | 64,879 | 1 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 89.5% | |||
Semiconductor Equipment - 18.6% | |||
Advanced Energy Industries, Inc. (a) | 200 | 3,522 | |
Amkor Technology, Inc. (a)(d) | 93,853 | 541,532 | |
Applied Materials, Inc. | 62,471 | 737,158 | |
ASM International NV unit (a) | 5,100 | 129,744 | |
ASML Holding NV | 3,230 | 103,974 | |
Brooks Automation, Inc. (a) | 300 | 2,289 | |
Cabot Microelectronics Corp. (a) | 100 | 3,269 | |
Cohu, Inc. | 100 | 1,568 | |
Cymer, Inc. (a) | 4,218 | 140,375 | |
Entegris, Inc. (a) | 1,561 | 7,196 | |
KLA-Tencor Corp. | 2,930 | 92,793 | |
Lam Research Corp. (a) | 9,190 | 387,726 | |
Mattson Technology, Inc. (a) | 1,196 | 3,504 | |
MEMC Electronic Materials, Inc. (a) | 20,736 | 198,236 | |
| |||
Shares | Value | ||
Novellus Systems, Inc. (a) | 1,200 | $ 32,052 | |
Teradyne, Inc. (a) | 2,500 | 26,900 | |
Tessera Technologies, Inc. (a) | 300 | 5,094 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 5,400 | 152,604 | |
Verigy Ltd. (a) | 8,300 | 73,870 | |
| 2,643,406 | ||
Semiconductors - 70.9% | |||
Actel Corp. (a) | 100 | 1,466 | |
Advanced Micro Devices, Inc. (a)(d) | 81,700 | 611,933 | |
Alpha & Omega Semiconductor Ltd. (a) | 3,400 | 42,194 | |
Altera Corp. | 11,838 | 328,149 | |
Analog Devices, Inc. | 2,600 | 77,246 | |
Applied Micro Circuits Corp. (a) | 928 | 11,099 | |
Atheros Communications, Inc. (a) | 3,309 | 87,490 | |
Atmel Corp. (a) | 30,548 | 159,766 | |
Avago Technologies Ltd. | 19,492 | 424,146 | |
Broadcom Corp. Class A | 10,940 | 394,168 | |
Conexant Systems, Inc. (a)(d) | 14,276 | 29,409 | |
Cree, Inc. (a) | 200 | 14,168 | |
CSR PLC (a) | 4,200 | 22,502 | |
Fairchild Semiconductor International, Inc. (a) | 33,049 | 300,085 | |
Ikanos Communications, Inc. (a) | 7,700 | 13,475 | |
Integrated Device Technology, Inc. (a) | 18,103 | 105,178 | |
Intel Corp. | 124,142 | 2,557,322 | |
International Rectifier Corp. (a) | 5,600 | 109,368 | |
Intersil Corp. Class A | 35,674 | 405,257 | |
LSI Corp. (a) | 58,185 | 234,486 | |
Marvell Technology Group Ltd. (a) | 72,311 | 1,078,880 | |
Micron Technology, Inc. (a) | 88,060 | 641,077 | |
Monolithic Power Systems, Inc. (a) | 8,368 | 147,444 | |
Motech Industries, Inc. | 1 | 4 | |
National Semiconductor Corp. | 15,201 | 209,774 | |
NVIDIA Corp. (a) | 31,453 | 289,053 | |
ON Semiconductor Corp. (a) | 39,616 | 267,408 | |
PMC-Sierra, Inc. (a) | 25,536 | 206,842 | |
Samsung Electronics Co. Ltd. | 60 | 41,091 | |
Skyworks Solutions, Inc. (a) | 3,450 | 60,479 | |
Standard Microsystems Corp. (a) | 6,254 | 137,713 | |
SunPower Corp. Class B (a) | 5,490 | 63,355 | |
Texas Instruments, Inc. | 23,512 | 580,511 | |
Volterra Semiconductor Corp. (a) | 2,600 | 58,552 | |
Xilinx, Inc. | 13,656 | 381,276 | |
| 10,092,366 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 12,735,772 | ||
TOTAL COMMON STOCKS (Cost $16,571,876) | 14,131,141 | ||
Convertible Bonds - 0.1% | ||||
| Principal Amount | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | ||||
Semiconductors - 0.1% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 10,000 | $ 8,138 | ||
Money Market Funds - 5.2% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.24% (b) | 61,013 | 61,013 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 682,750 | 682,750 | |
TOTAL MONEY MARKET FUNDS (Cost $743,763) | 743,763 | ||
TOTAL INVESTMENT PORTFOLIO - 104.6% (Cost $17,325,639) | 14,883,042 | ||
NET OTHER ASSETS (LIABILITIES) - (4.6)% | (652,584) | ||
NET ASSETS - 100% | $ 14,230,458 | ||
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 | $ 490 |
Fidelity Securities Lending Cash Central Fund | 377 |
Total | $ 867 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 14,131,141 | $ 14,131,140 | $ - | $ 1 |
Convertible Bonds | 8,138 | - | 8,138 | - |
Money Market Funds | 743,763 | 743,763 | - | - |
Total Investments in Securities: | $ 14,883,042 | $ 14,874,903 | $ 8,138 | $ 1 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (23,884) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 23,885 |
Transfers out of Level 3 | - |
Ending Balance | $ 1 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at July 31, 2010 | $ (23,884) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.5% |
Bermuda | 7.9% |
Singapore | 5.2% |
Netherlands | 1.6% |
Others (Individually Less Than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $12,180,956 of which $4,122,383, $2,265,871, $279,201, $310,663 and $5,202,838 will expire on July 31, 2011, 2012, 2013, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Electronics
Fidelity Advisor Electronics Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $641,415) - See accompanying schedule: Unaffiliated issuers (cost $16,581,876) | $ 14,139,279 |
|
Fidelity Central Funds (cost $743,763) | 743,763 |
|
Total Investments (cost $17,325,639) |
| $ 14,883,042 |
Receivable for investments sold | 357,233 | |
Receivable for fund shares sold | 40,592 | |
Dividends receivable | 3,347 | |
Interest receivable | 139 | |
Distributions receivable from Fidelity Central Funds | 125 | |
Receivable from investment adviser for expense reductions | 5,469 | |
Other receivables | 172 | |
Total assets | 15,290,119 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 8,335 | |
Payable for investments purchased | 260,378 | |
Payable for fund shares redeemed | 45,314 | |
Accrued management fee | 6,851 | |
Distribution fees payable | 6,526 | |
Other affiliated payables | 4,319 | |
Other payables and accrued expenses | 45,188 | |
Collateral on securities loaned, at value | 682,750 | |
Total liabilities | 1,059,661 | |
|
|
|
Net Assets | $ 14,230,458 | |
Net Assets consist of: |
| |
Paid in capital | $ 29,255,743 | |
Accumulated net investment loss | (688) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (12,582,023) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (2,442,574) | |
Net Assets | $ 14,230,458 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 7.14 | |
|
|
|
Maximum offering price per share (100/94.25 of $7.14) | $ 7.58 | |
Class T: | $ 7.00 | |
|
|
|
Maximum offering price per share (100/96.50 of $7.00) | $ 7.25 | |
Class B: | $ 6.69 | |
|
|
|
Class C: | $ 6.68 | |
|
|
|
Institutional Class: | $ 7.33 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 189,180 |
Interest |
| 9,144 |
Income from Fidelity Central Funds |
| 867 |
Total income |
| 199,191 |
|
|
|
Expenses | ||
Management fee | $ 89,248 | |
Transfer agent fees | 54,911 | |
Distribution fees | 86,081 | |
Accounting and security lending fees | 6,238 | |
Custodian fees and expenses | 33,640 | |
Independent trustees' compensation | 91 | |
Registration fees | 48,981 | |
Audit | 42,228 | |
Legal | 134 | |
Miscellaneous | 215 | |
Total expenses before reductions | 361,767 | |
Expense reductions | (93,231) | 268,536 |
Net investment income (loss) | (69,345) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,767,944 | |
Foreign currency transactions | (727) | |
Total net realized gain (loss) |
| 2,767,217 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,525,247) | |
Assets and liabilities in foreign currencies | 40 | |
Total change in net unrealized appreciation (depreciation) |
| (1,525,207) |
Net gain (loss) | 1,242,010 | |
Net increase (decrease) in net assets resulting from operations | $ 1,172,665 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (69,345) | $ 34,721 |
Net realized gain (loss) | 2,767,217 | (3,412,258) |
Change in net unrealized appreciation (depreciation) | (1,525,207) | 2,662,881 |
Net increase (decrease) in net assets resulting from operations | 1,172,665 | (714,656) |
Distributions to shareholders from net investment income | (30,683) | - |
Share transactions - net increase (decrease) | (1,121,329) | 612,433 |
Redemption fees | 1,611 | 572 |
Total increase (decrease) in net assets | 22,264 | (101,651) |
|
|
|
Net Assets | ||
Beginning of period | 14,208,194 | 14,309,845 |
End of period (including accumulated net investment loss of $688 and undistributed net investment income of $33,992, respectively) | $ 14,230,458 | $ 14,208,194 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.59 | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.01) | .04 | - G | (.03) | (.04) |
Net realized and unrealized gain (loss) | .59 | (.24) | (2.32) | 1.76 | (.62) |
Total from investment operations | .58 | (.20) | (2.32) | 1.73 | (.66) |
Distributions from net investment income | (.03) | - | - | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 7.14 | $ 6.59 | $ 6.79 | $ 9.11 | $ 7.38 |
Total Return A, B | 8.74% | (2.95)% | (25.47)% | 23.44% | (8.21)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.97% | 2.44% | 1.72% | 1.60% | 1.50% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
Expenses net of all reductions | 1.39% | 1.40% | 1.39% | 1.38% | 1.36% |
Net investment income (loss) | (.15)% | .69% | (.02)% | (.35)% | (.52)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,394 | $ 5,433 | $ 3,970 | $ 7,551 | $ 7,916 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.46 | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.03) | .02 | (.02) | (.05) | (.06) |
Net realized and unrealized gain (loss) | .58 | (.23) | (2.29) | 1.74 | (.61) |
Total from investment operations | .55 | (.21) | (2.31) | 1.69 | (.67) |
Distributions from net investment income | (.01) | - | - | - | - |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 7.00 | $ 6.46 | $ 6.67 | $ 8.98 | $ 7.29 |
Total Return A, B | 8.50% | (3.15)% | (25.72)% | 23.18% | (8.42)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.26% | 2.77% | 2.02% | 1.89% | 1.82% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
Expenses net of all reductions | 1.64% | 1.65% | 1.64% | 1.64% | 1.61% |
Net investment income (loss) | (.40)% | .44% | (.27)% | (.60)% | (.77)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,862 | $ 4,195 | $ 4,635 | $ 8,103 | $ 9,048 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.19 | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.06) | - G | (.06) | (.09) | (.10) |
Net realized and unrealized gain (loss) | .56 | (.24) | (2.21) | 1.69 | (.58) |
Total from investment operations | .50 | (.24) | (2.27) | 1.60 | (.68) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 6.69 | $ 6.19 | $ 6.43 | $ 8.70 | $ 7.10 |
Total Return A, B | 8.08% | (3.73)% | (26.09)% | 22.54% | (8.74)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.73% | 3.22% | 2.48% | 2.36% | 2.29% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.15% | 2.15% | 2.14% | 2.13% | 2.11% |
Net investment income (loss) | (.90)% | (.06)% | (.77)% | (1.10)% | (1.27)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,073 | $ 1,197 | $ 2,027 | $ 4,572 | $ 6,123 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.18 | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.06) | - G | (.06) | (.09) | (.10) |
Net realized and unrealized gain (loss) | .56 | (.24) | (2.21) | 1.69 | (.58) |
Total from investment operations | .50 | (.24) | (2.27) | 1.60 | (.68) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 6.68 | $ 6.18 | $ 6.42 | $ 8.69 | $ 7.09 |
Total Return A, B | 8.09% | (3.74)% | (26.12)% | 22.57% | (8.75)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.72% | 3.21% | 2.47% | 2.34% | 2.26% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.15% |
Expenses net of all reductions | 2.14% | 2.15% | 2.14% | 2.13% | 2.11% |
Net investment income (loss) | (.90)% | (.06)% | (.77)% | (1.10)% | (1.27)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,256 | $ 3,016 | $ 3,325 | $ 8,389 | $ 7,009 |
Portfolio turnover rate E | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.75 | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .01 | .05 | .02 | (.01) | (.02) |
Net realized and unrealized gain (loss) | .60 | (.24) | (2.38) | 1.80 | (.62) |
Total from investment operations | .61 | (.19) | (2.36) | 1.79 | (.64) |
Distributions from net investment income | (.03) | - | - | - | - |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 7.33 | $ 6.75 | $ 6.94 | $ 9.30 | $ 7.51 |
Total Return A | 9.10% | (2.74)% | (25.38)% | 23.83% | (7.85)% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | 1.64% | 2.16% | 1.47% | 1.26% | 1.11% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.15% | 1.11% |
Expenses net of all reductions | 1.14% | 1.15% | 1.14% | 1.13% | 1.07% |
Net investment income (loss) | .11% | .94% | .23% | (.10)% | (.23)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 645 | $ 367 | $ 353 | $ 730 | $ 750 |
Portfolio turnover rate D | 87% | 92% | 93% | 97% | 95% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds,including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Electronics
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 700,582 |
Gross unrealized depreciation | (3,544,246) |
Net unrealized appreciation (depreciation) | $ (2,843,664) |
|
|
Tax Cost | $ 17,726,706 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (12,180,956) |
Net unrealized appreciation (depreciation) | $ (2,843,641) |
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 30,683 | $ - |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $13,287,875 and $13,904,771, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 15,085 | $ 421 |
Class T | .25% | .25% | 22,598 | 168 |
Class B | .75% | .25% | 12,907 | 9,699 |
Class C | .75% | .25% | 35,491 | 5,274 |
|
|
| $ 86,081 | $ 15,562 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 7,857 |
Class T | 3,294 |
Class B* | 1,380 |
Class C* | 1,830 |
| $ 14,361 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 20,190 | .34 |
Class T | 16,723 | .37 |
Class B | 4,366 | .34 |
Class C | 11,892 | .34 |
Institutional Class | 1,740 | .30 |
| $ 54,911 |
|
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 $1,468 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $63 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $377.
Electronics
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense | Reimbursement |
Class A | 1.40% | $ 34,223 |
Class T | 1.65% | 27,426 |
Class B | 2.15% | 7,476 |
Class C | 2.15% | 20,144 |
Institutional Class | 1.15% | 2,834 |
|
| $ 92,103 |
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 $1,128 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 22,913 | $ - |
Class T | 5,704 | - |
Institutional Class | 2,066 | - |
Total | $ 30,683 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 463,925 | 454,229 | $ 3,450,517 | $ 2,515,743 |
Reinvestment of distributions | 3,053 | - | 21,642 | - |
Shares redeemed | (536,272) | (214,204) | (3,911,247) | (1,126,041) |
Net increase (decrease) | (69,294) | 240,025 | $ (439,088) | $ 1,389,702 |
Class T |
|
|
|
|
Shares sold | 149,748 | 211,424 | $ 1,082,460 | $ 1,046,750 |
Reinvestment of distributions | 793 | - | 5,519 | - |
Shares redeemed | (248,392) | (256,279) | (1,826,132) | (1,247,787) |
Net increase (decrease) | (97,851) | (44,855) | $ (738,153) | $ (201,037) |
Class B |
|
|
|
|
Shares sold | 71,160 | 57,656 | $ 500,056 | $ 278,136 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (103,890) | (179,676) | (717,856) | (832,636) |
Net increase (decrease) | (32,730) | (122,020) | $ (217,800) | $ (554,500) |
Class C |
|
|
|
|
Shares sold | 184,365 | 132,135 | $ 1,261,735 | $ 684,005 |
Reinvestment of distributions | - | - | - | - |
Shares redeemed | (184,552) | (162,035) | (1,259,598) | (721,474) |
Net increase (decrease) | (187) | (29,900) | $ 2,137 | $ (37,469) |
Institutional Class |
|
|
|
|
Shares sold | 94,039 | 29,924 | $ 728,440 | $ 158,084 |
Reinvestment of distributions | 194 | - | 1,410 | - |
Shares redeemed | (60,662) | (26,319) | (458,275) | (142,347) |
Net increase (decrease) | 33,571 | 3,605 | $ 271,575 | $ 15,737 |
Annual Report
Notes to Financial Statements - continued
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Electronics
Fidelity 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' distributions from 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, 2010 |
| Past 1 | Past 5 | Past 10 |
Institutional Class |
| 7.60% | 3.80% | 8.81% |
A Prior to October 1, 2006, Fidelity Advisor Energy Fund 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, 2000. 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.
Energy
Fidelity Advisor Energy Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 7.28%, 7.03%, 6.45% and 6.49%, respectively (excluding sales charges), falling short of the S&P 500® but ahead of the 6.26% return of the MSCI® U.S. IM Energy 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, the fund benefited from a significant underweighting and solid security selection in the sluggish integrated oil and gas segment, specifically a large underweighting in benchmark goliath Exxon Mobil, whose stock price fell more than 13%. Overweighting the outperforming coal and consumable fuels segment also helped, aided by a 52% increase in coal prices. An overweighting in the oil/gas equipment and services group further contributed. Among individual stocks, top contributors included coal producer Massey Energy and oil-field services providers BJ Services and Smith International, both of which were being acquired. Conversely, poor stock picking in the oil/gas exploration and production group hurt returns and accounted for two of the fund's three biggest detractors. As gas prices fell in the second half of the period, so did the value of our holdings in natural gas firms Petrohawk Energy and Southwestern Energy and global energy services firm Weatherford International. An underweighting in integrated oil and gas firm ConocoPhillips hurt, as the company's stock rose after a restructuring. Another detractor was Transocean, which owned the Deepwater Horizon rig that exploded in the Gulf of Mexico.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the year ending July 31, 2010, the fund's Institutional Class shares returned 7.60%, falling short of the S&P 500®, but ahead of the 6.26% return of the MSCI® U.S. IM Energy 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, the fund benefited from a significant underweighting and solid security selection in the sluggish integrated oil and gas segment, specifically a large underweighting in benchmark goliath Exxon Mobil, whose stock price fell more than 13%. Overweighting the outperforming coal and consumable fuels segment also helped, aided by a 52% increase in coal prices. An overweighting in the oil/gas equipment and services group further contributed. Among individual stocks, top contributors included coal producer Massey Energy and oil-field services providers BJ Services and Smith International, both of which were being acquired. Conversely, poor stock picking in the oil/gas exploration and production group hurt returns and accounted for two of the fund's three biggest detractors. As gas prices fell in the second half of the period, so did the value of our holdings in natural gas firms Petrohawk Energy and Southwestern Energy and global energy services firm Weatherford International. An underweighting in integrated oil and gas firm ConocoPhillips hurt, as the company's stock rose after a restructuring. Another detractor was Transocean, which owned the Deepwater Horizon rig that exploded in the Gulf of Mexico.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.18% |
|
|
|
Actual |
| $ 1,000.00 | $ 957.50 | $ 5.73 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.94 | $ 5.91 |
Class T | 1.40% |
|
|
|
Actual |
| $ 1,000.00 | $ 956.40 | $ 6.79 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 953.90 | $ 9.35 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 954.20 | $ 9.30 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 959.10 | $ 4.37 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Energy
Fidelity Advisor Energy Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Exxon Mobil Corp. | 18.7 | 6.0 |
Chevron Corp. | 10.2 | 0.2 |
Schlumberger Ltd. | 5.1 | 6.9 |
Marathon Oil Corp. | 4.9 | 3.1 |
Baker Hughes, Inc. | 4.2 | 0.7 |
Occidental Petroleum Corp. | 3.5 | 5.2 |
Southwestern Energy Co. | 3.4 | 5.2 |
Halliburton Co. | 3.4 | 1.8 |
Apache Corp. | 2.9 | 1.8 |
National Oilwell Varco, Inc. | 2.5 | 3.1 |
| 58.8 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Oil, Gas & Consumable Fuels | 65.6% |
|
| Energy Equipment & Services | 30.6% |
|
| Construction & Engineering | 1.4% |
|
| Semiconductors & Semiconductor Equipment | 1.4% |
|
| Metals & Mining | 0.2% |
|
| All Others* | 0.8% |
|
As of January 31, 2010 | |||
| Oil, Gas & Consumable Fuels | 57.5% |
|
| Energy Equipment & Services | 37.2% |
|
| Electrical Equipment | 2.2% |
|
| Construction & Engineering | 0.7% |
|
| Gas Utilities | 0.6% |
|
| All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Energy Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 1.4% | |||
Construction & Engineering - 1.4% | |||
Jacobs Engineering Group, Inc. (a) | 87,271 | $ 3,191,500 | |
KBR, Inc. | 223,300 | 4,997,454 | |
| 8,188,954 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Itron, Inc. (a) | 21,147 | 1,376,035 | |
ENERGY EQUIPMENT & SERVICES - 30.6% | |||
Oil & Gas Drilling - 7.1% | |||
Atwood Oceanics, Inc. (a) | 36,175 | 983,960 | |
Ensco International Ltd. ADR | 191,385 | 8,001,807 | |
Helmerich & Payne, Inc. | 140,453 | 5,692,560 | |
Hercules Offshore, Inc. (a) | 164,594 | 418,069 | |
Nabors Industries Ltd. (a) | 256,122 | 4,715,206 | |
Noble Corp. | 408,289 | 13,269,393 | |
Northern Offshore Ltd. (a) | 514,100 | 990,363 | |
Pride International, Inc. (a) | 39,400 | 937,326 | |
Transocean Ltd. (a) | 153,272 | 7,082,699 | |
| 42,091,383 | ||
Oil & Gas Equipment & Services - 23.5% | |||
Baker Hughes, Inc. | 514,605 | 24,839,983 | |
Cameron International Corp. (a) | 112,200 | 4,441,998 | |
Complete Production Services, Inc. (a) | 55,054 | 1,059,790 | |
Core Laboratories NV | 46,400 | 3,584,400 | |
Dresser-Rand Group, Inc. (a) | 35,900 | 1,335,839 | |
Halliburton Co. | 676,831 | 20,223,710 | |
National Oilwell Varco, Inc. | 384,057 | 15,039,672 | |
Oceaneering International, Inc. (a) | 188,400 | 9,322,032 | |
Oil States International, Inc. (a) | 25,900 | 1,189,846 | |
Schlumberger Ltd. | 505,500 | 30,158,130 | |
Smith International, Inc. | 318,111 | 13,195,244 | |
Superior Energy Services, Inc. (a) | 115,184 | 2,625,043 | |
TSC Offshore Group Ltd. (a) | 1,705,000 | 294,136 | |
Weatherford International Ltd. (a) | 665,564 | 10,782,137 | |
Willbros Group, Inc. (a) | 209,594 | 1,917,785 | |
| 140,009,745 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 182,101,128 | ||
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
Zhongyu Gas Holdings Ltd. (a) | 6,538,000 | 639,701 | |
METALS & MINING - 0.2% | |||
Diversified Metals & Mining - 0.2% | |||
Walter Energy, Inc. | 19,700 | 1,404,610 | |
OIL, GAS & CONSUMABLE FUELS - 65.6% | |||
Coal & Consumable Fuels - 5.7% | |||
Alpha Natural Resources, Inc. (a) | 332,064 | 12,728,013 | |
Arch Coal, Inc. | 163,629 | 3,876,371 | |
| |||
Shares | Value | ||
Cloud Peak Energy, Inc. | 2,100 | $ 32,235 | |
CONSOL Energy, Inc. | 189,713 | 7,110,443 | |
International Coal Group, Inc. (a) | 163,454 | 735,543 | |
Massey Energy Co. | 304,179 | 9,301,794 | |
| 33,784,399 | ||
Integrated Oil & Gas - 37.8% | |||
BP PLC sponsored ADR | 80,950 | 3,114,147 | |
Chevron Corp. | 795,983 | 60,661,864 | |
Exxon Mobil Corp. | 1,865,299 | 111,321,047 | |
Marathon Oil Corp. | 879,146 | 29,407,434 | |
Occidental Petroleum Corp. | 263,979 | 20,571,883 | |
Suncor Energy, Inc. | 600 | 19,781 | |
| 225,096,156 | ||
Oil & Gas Exploration & Production - 15.5% | |||
Anadarko Petroleum Corp. | 261,084 | 12,834,889 | |
Apache Corp. | 179,339 | 17,141,222 | |
Canadian Natural Resources Ltd. (d) | 41,300 | 1,422,268 | |
EXCO Resources, Inc. | 336,798 | 4,886,939 | |
Newfield Exploration Co. (a) | 174,350 | 9,320,751 | |
Niko Resources Ltd. | 15,800 | 1,704,270 | |
OPTI Canada, Inc. (a) | 143,700 | 230,658 | |
Painted Pony Petroleum Ltd. Class A (a) | 123,500 | 792,937 | |
Petrobank Energy & Resources Ltd. (a) | 23,400 | 964,045 | |
Petrohawk Energy Corp. (a) | 275,878 | 4,350,596 | |
QEP Resources, Inc. (a) | 77,700 | 2,674,434 | |
Southwestern Energy Co. (a) | 563,000 | 20,521,350 | |
Talisman Energy, Inc. | 165,200 | 2,820,429 | |
Ultra Petroleum Corp. (a) | 24,089 | 1,020,651 | |
Whiting Petroleum Corp. (a) | 135,010 | 11,882,230 | |
| 92,567,669 | ||
Oil & Gas Refining & Marketing - 6.6% | |||
CVR Energy, Inc. (a) | 39,200 | 317,520 | |
Frontier Oil Corp. | 472,723 | 5,809,766 | |
Holly Corp. | 224,132 | 5,991,048 | |
Petroplus Holdings AG | 67,010 | 1,038,396 | |
Sunoco, Inc. | 326,578 | 11,649,037 | |
Tesoro Corp. | 167,000 | 2,155,970 | |
Valero Energy Corp. | 519,363 | 8,823,977 | |
Western Refining, Inc. (a)(d) | 188,200 | 997,460 | |
World Fuel Services Corp. | 88,608 | 2,308,238 | |
| 39,091,412 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 390,539,636 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.4% | |||
Semiconductor Equipment - 0.1% | |||
centrotherm photovoltaics AG (a) | 25,223 | 1,024,037 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - 1.3% | |||
First Solar, Inc. (a)(d) | 50,200 | $ 6,297,590 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 226,595 | 1,348,240 | |
| 7,645,830 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 8,669,867 | ||
TOTAL COMMON STOCKS (Cost $615,340,541) | 592,919,931 | ||
Convertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% | ||||
Semiconductors - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 320,000 | 260,400 | ||
Money Market Funds - 2.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.24% (b) | 3,947,361 | $ 3,947,361 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 10,741,700 | 10,741,700 | |
TOTAL MONEY MARKET FUNDS (Cost $14,689,061) | 14,689,061 | ||
TOTAL INVESTMENT PORTFOLIO - 102.0% (Cost $630,349,602) | 607,869,392 | ||
NET OTHER ASSETS (LIABILITIES) - (2.0)% | (12,147,703) | ||
NET ASSETS - 100% | $ 595,721,689 | ||
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 | $ 10,924 |
Fidelity Securities Lending Cash Central Fund | 181,909 |
Total | $ 192,833 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 592,919,931 | $ 592,919,931 | $ - | $ - |
Convertible Bonds | 260,400 | - | 260,400 | - |
Money Market Funds | 14,689,061 | 14,689,061 | - | - |
Total Investments in Securities: | $ 607,869,392 | $ 607,608,992 | $ 260,400 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.9% |
Switzerland | 5.4% |
Netherlands Antilles | 5.1% |
United Kingdom | 1.8% |
Canada | 1.5% |
Others (Individually Less Than 1%) | 1.3% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $108,925,305 of which $106,222,894 and $2,702,411 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,941,001) - See accompanying schedule: Unaffiliated issuers (cost $615,660,541) | $ 593,180,331 |
|
Fidelity Central Funds (cost $14,689,061) | 14,689,061 |
|
Total Investments (cost $630,349,602) |
| $ 607,869,392 |
Receivable for investments sold | 8,358,277 | |
Receivable for fund shares sold | 399,330 | |
Dividends receivable | 132,929 | |
Interest receivable | 4,433 | |
Distributions receivable from Fidelity Central Funds | 5,420 | |
Other receivables | 8,464 | |
Total assets | 616,778,245 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 8,368,052 | |
Payable for fund shares redeemed | 1,225,480 | |
Accrued management fee | 272,533 | |
Distribution fees payable | 243,375 | |
Other affiliated payables | 163,198 | |
Other payables and accrued expenses | 42,218 | |
Collateral on securities loaned, at value | 10,741,700 | |
Total liabilities | 21,056,556 | |
|
|
|
Net Assets | $ 595,721,689 | |
Net Assets consist of: |
| |
Paid in capital | $ 741,162,000 | |
Accumulated net investment loss | (116) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (122,960,068) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (22,480,127) | |
Net Assets | $ 595,721,689 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 27.70 | |
|
|
|
Maximum offering price per share (100/94.25 of $27.70) | $ 29.39 | |
Class T: | $ 28.33 | |
|
|
|
Maximum offering price per share (100/96.50 of $28.33) | $ 29.36 | |
Class B: | $ 26.06 | |
|
|
|
Class C: | $ 26.25 | |
|
|
|
Institutional Class: | $ 28.87 | |
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
Fidelity Advisor Energy Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,544,549 |
Interest |
| 15,263 |
Income from Fidelity Central Funds |
| 192,833 |
Total income |
| 6,752,645 |
|
|
|
Expenses | ||
Management fee | $ 3,655,489 | |
Transfer agent fees | 1,976,034 | |
Distribution fees | 3,295,603 | |
Accounting and security lending fees | 248,793 | |
Custodian fees and expenses | 33,180 | |
Independent trustees' compensation | 3,840 | |
Registration fees | 100,943 | |
Audit | 52,085 | |
Legal | 3,134 | |
Miscellaneous | 10,347 | |
Total expenses before reductions | 9,379,448 | |
Expense reductions | (37,926) | 9,341,522 |
Net investment income (loss) | (2,588,877) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 85,319,102 | |
Foreign currency transactions | (100,116) | |
Total net realized gain (loss) |
| 85,218,986 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (40,712,080) | |
Assets and liabilities in foreign currencies | 25 | |
Total change in net unrealized appreciation (depreciation) |
| (40,712,055) |
Net gain (loss) | 44,506,931 | |
Net increase (decrease) in net assets resulting from operations | $ 41,918,054 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,588,877) | $ (2,256,368) |
Net realized gain (loss) | 85,218,986 | (205,660,800) |
Change in net unrealized appreciation (depreciation) | (40,712,055) | (183,346,614) |
Net increase (decrease) in net assets resulting from operations | 41,918,054 | (391,263,782) |
Distributions to shareholders from net realized gain | - | (137,595,735) |
Share transactions - net increase (decrease) | (40,286,664) | 82,598,513 |
Redemption fees | 43,053 | 78,335 |
Total increase (decrease) in net assets | 1,674,443 | (446,182,669) |
|
|
|
Net Assets | ||
Beginning of period | 594,047,246 | 1,040,229,915 |
End of period (including accumulated net investment loss of $116 and accumulated net investment loss of $108, respectively) | $ 595,721,689 | $ 594,047,246 |
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.82 | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.05) | (.04) | (.17) | (.02) F | (.04) |
Net realized and unrealized gain (loss) | 1.93 | (17.48) | 5.59 | 8.42 | 12.30 |
Total from investment operations | 1.88 | (17.52) | 5.42 | 8.40 | 12.26 |
Distributions from net realized gain | - | (6.90) | (3.46) | (6.51) | (6.81) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 27.70 | $ 25.82 | $ 50.24 | $ 48.28 | $ 46.39 |
Total Return A, B | 7.28% | (38.86)% | 11.52% | 22.08% | 32.90% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.20% | 1.22% | 1.14% | 1.19% | 1.21% |
Expenses net of fee waivers, if any | 1.20% | 1.22% | 1.14% | 1.19% | 1.21% |
Expenses net of all reductions | 1.19% | 1.21% | 1.14% | 1.19% | 1.17% |
Net investment income (loss) | (.16)% | (.14)% | (.32)% | (.05)% F | (.09)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 214,407 | $ 216,595 | $ 355,200 | $ 268,108 | $ 204,391 |
Portfolio turnover rate E | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.47 | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.11) | (.10) | (.29) | (.11)F | (.13) |
Net realized and unrealized gain (loss) | 1.97 | (17.93) | 5.72 | 8.61 | 12.49 |
Total from investment operations | 1.86 | (18.03) | 5.43 | 8.50 | 12.36 |
Distributions from net realized gain | - | (6.90) | (3.29) | (6.42) | (6.65) |
Redemption fees added to paid in capital C | - H | -H | -H | -H | .01 |
Net asset value, end of period | $ 28.33 | $ 26.47 | $ 51.40 | $ 49.26 | $ 47.18 |
Total Return A, B | 7.03% | (38.99)% | 11.27% | 21.84% | 32.60% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.41% | 1.45% | 1.36% | 1.40% | 1.42% |
Expenses net of fee waivers, if any | 1.41% | 1.45% | 1.36% | 1.40% | 1.42% |
Expenses net of all reductions | 1.41% | 1.45% | 1.35% | 1.39% | 1.38% |
Net investment income (loss) | (.37)% | (.38)% | (.54)% | (.26)% F | (.29)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 219,051 | $ 224,376 | $ 407,784 | $ 382,222 | $ 362,272 |
Portfolio turnover rate E | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 24.48 | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.25) | (.22) | (.56) | (.34) F | (.35) |
Net realized and unrealized gain (loss) | 1.83 | (16.75) | 5.41 | 8.17 | 11.98 |
Total from investment operations | 1.58 | (16.97) | 4.85 | 7.83 | 11.63 |
Distributions from net realized gain | - | (6.90) | (3.14) | (6.29) | (6.43) |
Redemption fees added to paid in capital C | - H | -H | -H | -H | .01 |
Net asset value, end of period | $ 26.06 | $ 24.48 | $ 48.35 | $ 46.64 | $ 45.10 |
Total Return A, B | 6.45% | (39.31)% | 10.62% | 21.18% | 31.86% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.96% | 1.93% | 1.96% | 1.96% |
Expenses net of fee waivers, if any | 1.96% | 1.96% | 1.93% | 1.96% | 1.96% |
Expenses net of all reductions | 1.95% | 1.96% | 1.93% | 1.95% | 1.92% |
Net investment income (loss) | (.92)% | (.89)% | (1.11)% | (.82)% F | (.84)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 44,330 | $ 47,795 | $ 98,602 | $ 116,487 | $ 130,973 |
Portfolio turnover rate E | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 24.65 | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.25) | (.21) | (.54) | (.32)F | (.34) |
Net realized and unrealized gain (loss) | 1.85 | (16.87) | 5.45 | 8.20 | 12.06 |
Total from investment operations | 1.60 | (17.08) | 4.91 | 7.88 | 11.72 |
Distributions from net realized gain | - | (6.90) | (3.16) | (6.33) | (6.50) |
Redemption fees added to paid in capitalC | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 26.25 | $ 24.65 | $ 48.63 | $ 46.88 | $ 45.33 |
Total ReturnA, B | 6.49% | (39.31)% | 10.71% | 21.22% | 31.96% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.94% | 1.96% | 1.87% | 1.91% | 1.92% |
Expenses net of fee waivers, if any | 1.94% | 1.96% | 1.87% | 1.91% | 1.92% |
Expenses net of all reductions | 1.93% | 1.95% | 1.87% | 1.91% | 1.88% |
Net investment income (loss) | (.90)% | (.88)% | (1.05)% | (.77)% F | (.79)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 90,596 | $ 86,650 | $ 156,393 | $ 135,072 | $ 125,424 |
Portfolio turnover rateE | 103% | 148% | 90% | 80% | 139% |
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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Institutional Class
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.83 | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)B | .04 | .03 | (.02) | .11E | .12 |
Net realized and unrealized gain (loss) | 2.00 | (18.06) | 5.74 | 8.67 | 12.56 |
Total from investment operations | 2.04 | (18.03) | 5.72 | 8.78 | 12.68 |
Distributions from net realized gain | - | (6.90) | (3.64) | (6.58) | (6.97) |
Redemption fees added to paid in capital B | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 28.87 | $ 26.83 | $ 51.76 | $ 49.68 | $ 47.48 |
Total ReturnA | 7.60% | (38.68)% | 11.83% | 22.47% | 33.35% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .90% | .95% | .85% | .88% | .87% |
Expenses net of fee waivers, if any | .90% | .95% | .85% | .88% | .87% |
Expenses net of all reductions | .90% | .94% | .85% | .88% | .83% |
Net investment income (loss) | .14% | .13% | (.03)% | .25% E | .26% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 27,338 | $ 18,631 | $ 22,250 | $ 17,127 | $ 19,553 |
Portfolio turnover rate D | 103% | 148% | 90% | 80% | 139% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Energy
3. Significant Accounting Policies - continued
Security Valuation - continued
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, net operating losses, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 38,811,239 |
Gross unrealized depreciation | (75,326,212) |
Net unrealized appreciation (depreciation) | $ (36,514,973) |
|
|
Tax Cost | $ 644,384,365 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (108,925,305) |
Net unrealized appreciation (depreciation) | $ (36,514,890) |
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Long-term Capital Gains | $ - | $ 137,595,735 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $652,847,020 and $697,223,654, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 595,584 | $ 12,445 |
Class T | .25% | .25% | 1,219,542 | 6,862 |
Class B | .75% | .25% | 504,338 | 378,914 |
Class C | .75% | .25% | 976,139 | 167,819 |
|
|
| $ 3,295,603 | $ 566,040 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
Energy
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 169,334 |
Class T | 29,608 |
Class B* | 97,377 |
Class C* | 12,015 |
| $ 308,334 |
* 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 |
Class A | $ 758,087 | .32 |
Class T | 689,022 | .28 |
Class B | 165,953 | .33 |
Class C | 298,434 | .31 |
Institutional Class | 64,538 | .27 |
| $ 1,976,034 |
|
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 $5,171 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $2,602 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $181,909.
Annual Report
Notes to Financial Statements - continued
8. 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 $37,926 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net realized gain |
|
|
Class A | $ - | $ 46,997,290 |
Class T | - | 53,170,678 |
Class B | - | 13,492,835 |
Class C | - | 21,034,743 |
Institutional Class | - | 2,900,189 |
Total | $ - | $ 137,595,735 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 2,475,060 | 3,517,345 | $ 72,154,427 | $ 85,305,714 |
Reinvestment of distributions | - | 1,158,188 | - | 42,134,872 |
Shares redeemed | (3,122,404) | (3,358,560) | (89,993,205) | (88,397,497) |
Net increase (decrease) | (647,344) | 1,316,973 | $ (17,838,778) | $ 39,043,089 |
Class T |
|
|
|
|
Shares sold | 1,265,490 | 2,191,463 | $ 38,114,553 | $ 53,583,018 |
Reinvestment of distributions | - | 1,332,408 | - | 49,792,078 |
Shares redeemed | (2,010,804) | (2,980,646) | (59,843,042) | (77,608,101) |
Net increase (decrease) | (745,314) | 543,225 | $ (21,728,489) | $ 25,766,995 |
Class B |
|
|
|
|
Shares sold | 320,063 | 529,128 | $ 8,832,050 | $ 12,513,157 |
Reinvestment of distributions | - | 339,485 | - | 11,786,924 |
Shares redeemed | (571,409) | (955,690) | (15,635,733) | (23,571,286) |
Net increase (decrease) | (251,346) | (87,077) | $ (6,803,683) | $ 728,795 |
Class C |
|
|
|
|
Shares sold | 819,751 | 1,217,008 | $ 22,984,733 | $ 28,382,837 |
Reinvestment of distributions | - | 507,064 | - | 17,726,948 |
Shares redeemed | (883,306) | (1,425,212) | (24,290,742) | (35,998,056) |
Net increase (decrease) | (63,555) | 298,860 | $ (1,306,009) | $ 10,111,729 |
Institutional Class |
|
|
|
|
Shares sold | 669,423 | 470,080 | $ 20,180,428 | $ 12,030,140 |
Reinvestment of distributions | - | 54,219 | - | 2,044,586 |
Shares redeemed | (416,730) | (259,760) | (12,790,133) | (7,126,821) |
Net increase (decrease) | 252,693 | 264,539 | $ 7,390,295 | $ 6,947,905 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Energy
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class | 9.99% | -8.23% | -0.70% |
$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, 2000. 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.
Financial Services
Fidelity Advisor Financial Services Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 9.61%, 9.26%, 8.78% and 8.79%, respectively (excluding sales charges). Performance lagged both the S&P 500® and the 16.64% gain of the MSCI® U.S. IM Financials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Industry allocations caused the fund to lag the MSCI index, as a sizable overweighting in the weak-performing investment banking/brokerage segment more than offset the benefit of an underweighting in other diversified financial services. Individual detractors included Xinyuan Real Estate, a Chinese real estate developer hurt by signs the country's economy was slowing, and China Finance Online, a financial services technology provider vulnerable to a market downturn. In addition, Gleacher, a small-cap investment bank, suffered from an earnings shortfall. Some of these stocks were not in the index, and Xinyuan was not held at period end. Top contributors included Genworth Financial, a multi-line insurer that reported strong earnings, and Citigroup, a diversified financial services company that benefited from a successful capital raise, improved credit conditions and expectations that the U.S. Treasury would sell its stake in the company.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2010, the fund's Institutional Class shares returned 9.99%. Performance lagged both the S&P 500® and the 16.64% gain of the MSCI® U.S. IM Financials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Industry allocations caused the fund to lag the MSCI index, as a sizable overweighting in the weak performing investment banking/brokerage segment more than offset the benefit from an underweighting in other diversified financial services. Individual detractors included Xinyuan Real Estate, a Chinese real estate developer hurt by signs the country's economy was slowing, and China Finance Online, a financial services technology provider vulnerable to a market downturn. In addition, Gleacher, a small-cap investment bank, suffered from an earnings shortfall. Some of these stocks were not in the index, and Xinyuan was not held at period end. Top contributors included Genworth Financial, a multi-line insurer that reported strong earnings, and Citigroup, a diversified financial services company that benefited from a successful capital raise, improved credit conditions and expectations that the U.S. Treasury would sell its stake in the company.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.25% |
|
|
|
Actual |
| $ 1,000.00 | $ 990.40 | $ 6.17 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | 1.50% |
|
|
|
Actual |
| $ 1,000.00 | $ 988.50 | $ 7.40 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.36 | $ 7.50 |
Class B | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 986.30 | $ 9.85 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 987.20 | $ 9.85 |
Hypothetical A |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 992.50 | $ 4.84 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.93 | $ 4.91 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Financial Services
Fidelity Advisor Financial Services Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
SunTrust Banks, Inc. | 5.5 | 1.2 |
Regions Financial Corp. | 5.3 | 1.9 |
Zions Bancorporation | 5.1 | 4.8 |
Synovus Financial Corp. | 5.1 | 0.0 |
Citigroup, Inc. | 4.9 | 4.8 |
JPMorgan Chase & Co. | 4.9 | 5.0 |
Morgan Stanley | 4.8 | 4.2 |
Moody's Corp. | 4.5 | 2.6 |
MasterCard, Inc. Class A | 4.3 | 0.4 |
Visa, Inc. Class A | 4.1 | 0.0 |
| 48.5 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Commercial Banks | 40.9% |
|
| Diversified Financial Services | 19.4% |
|
| Capital Markets | 18.4% |
|
 | IT Services | 11.2% |
|
| Insurance | 4.6% |
|
| All Others* | 5.5% |
|
As of January 31, 2010 | |||
| Commercial Banks | 39.9% |
|
| Capital Markets | 23.9% |
|
| Diversified Financial Services | 18.0% |
|
| Insurance | 7.1% |
|
| Media | 4.7% |
|
| All Others* | 6.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Financial Services Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 100.3% | |||
Shares | Value | ||
CAPITAL MARKETS - 18.4% | |||
Asset Management & Custody Banks - 4.8% | |||
AllianceBernstein Holding LP | 49,852 | $ 1,330,051 | |
EFG International | 147,899 | 1,746,587 | |
Franklin Resources, Inc. | 12,178 | 1,224,863 | |
Janus Capital Group, Inc. | 36,400 | 381,472 | |
Legg Mason, Inc. | 41,453 | 1,197,577 | |
Northern Trust Corp. | 14,340 | 673,837 | |
T. Rowe Price Group, Inc. | 8,400 | 405,132 | |
U.S. Global Investments, Inc. Class A | 31,848 | 192,043 | |
| 7,151,562 | ||
Diversified Capital Markets - 0.6% | |||
Credit Suisse Group sponsored ADR | 20,600 | 934,622 | |
Investment Banking & Brokerage - 13.0% | |||
Evercore Partners, Inc. Class A | 54,700 | 1,284,356 | |
GFI Group, Inc. | 433,378 | 2,552,596 | |
Gleacher & Co., Inc. (a) | 353,770 | 707,540 | |
Goldman Sachs Group, Inc. | 18,623 | 2,808,721 | |
Jefferies Group, Inc. | 125,209 | 3,091,410 | |
MF Global Holdings Ltd. (a) | 269,125 | 1,730,474 | |
Morgan Stanley | 268,500 | 7,246,815 | |
| 19,421,912 | ||
TOTAL CAPITAL MARKETS | 27,508,096 | ||
COMMERCIAL BANKS - 40.9% | |||
Diversified Banks - 7.2% | |||
Banco Macro SA sponsored ADR | 12,643 | 480,055 | |
BBVA Banco Frances SA sponsored ADR | 69,283 | 547,336 | |
China Citic Bank Corp. Ltd. Class H | 5,057,000 | 3,411,481 | |
China Merchants Bank Co. Ltd. (H Shares) | 135,600 | 362,240 | |
Comerica, Inc. | 57,900 | 2,221,044 | |
U.S. Bancorp, Delaware | 93,800 | 2,241,820 | |
Wells Fargo & Co. | 54,500 | 1,511,285 | |
| 10,775,261 | ||
Regional Banks - 33.7% | |||
Atlantic Southern Financial Group, Inc. (a)(d) | 14,602 | 14,894 | |
Bancorp New Jersey, Inc. | 3,062 | 37,448 | |
BancTrust Financial Group, Inc. (d) | 28,700 | 88,396 | |
Bar Harbor Bankshares | 1,132 | 30,338 | |
BB&T Corp. | 44,400 | 1,102,452 | |
Boston Private Financial Holdings, Inc. | 31,200 | 206,232 | |
Bridge Capital Holdings (a) | 4,470 | 41,571 | |
Cathay General Bancorp | 14,700 | 172,872 | |
Chicopee Bancorp, Inc. (a) | 2,500 | 28,450 | |
Citizens Banking Corp., Michigan (a) | 1,044,600 | 944,527 | |
City National Corp. | 44,600 | 2,527,482 | |
CoBiz, Inc. (d) | 223,900 | 1,412,809 | |
Evans Bancorp, Inc. | 2,675 | 34,775 | |
Fifth Third Bancorp | 68,362 | 868,881 | |
First Interstate Bancsystem, Inc. | 40,500 | 538,650 | |
| |||
Shares | Value | ||
Glacier Bancorp, Inc. | 114,617 | $ 1,831,580 | |
Huntington Bancshares, Inc. | 79,800 | 483,588 | |
Landmark Bancorp, Inc. | 1,183 | 18,632 | |
Marshall & Ilsley Corp. | 303,900 | 2,136,417 | |
MidWestOne Financial Group, Inc. (d) | 3,400 | 50,966 | |
Monroe Bancorp | 5,250 | 23,730 | |
Nara Bancorp, Inc. (a) | 36,404 | 261,017 | |
Oriental Financial Group, Inc. | 45,100 | 638,616 | |
PNC Financial Services Group, Inc. | 1,445 | 85,819 | |
Preferred Bank, Los Angeles California (a)(d) | 8,800 | 16,720 | |
Regions Financial Corp. | 1,071,981 | 7,857,621 | |
Salisbury Bancorp, Inc. | 1,500 | 33,900 | |
Savannah Bancorp, Inc. | 29,131 | 284,027 | |
Southwest Bancorp, Inc., Oklahoma | 7,300 | 106,215 | |
Sterling Bancshares, Inc. | 48,200 | 250,158 | |
Sun Bancorp, Inc., New Jersey (a) | 21,747 | 116,129 | |
SunTrust Banks, Inc. | 316,266 | 8,207,103 | |
SVB Financial Group (a) | 33,612 | 1,451,702 | |
Synovus Financial Corp. (d) | 2,902,900 | 7,605,598 | |
Umpqua Holdings Corp. | 92,884 | 1,163,837 | |
United Security Bancshares, California (d) | 6,861 | 28,816 | |
Valley National Bancorp | 23,205 | 336,705 | |
Washington Trust Bancorp, Inc. | 2,600 | 50,336 | |
West Bancorp., Inc. (a) | 6,500 | 43,485 | |
Western Alliance Bancorp. (a) | 10,800 | 78,516 | |
Wintrust Financial Corp. | 53,619 | 1,668,623 | |
Zions Bancorporation | 346,234 | 7,682,932 | |
| 50,562,565 | ||
TOTAL COMMERCIAL BANKS | 61,337,826 | ||
CONSUMER FINANCE - 2.6% | |||
Consumer Finance - 2.6% | |||
Capital One Financial Corp. | 34,000 | 1,439,220 | |
SLM Corp. (a) | 205,203 | 2,462,436 | |
| 3,901,656 | ||
DIVERSIFIED FINANCIAL SERVICES - 19.4% | |||
Other Diversified Financial Services - 13.1% | |||
Bank of America Corp. | 353,559 | 4,963,968 | |
Citigroup, Inc. (a) | 1,806,220 | 7,405,502 | |
JPMorgan Chase & Co. | 181,372 | 7,305,664 | |
| 19,675,134 | ||
Specialized Finance - 6.3% | |||
CME Group, Inc. | 8,400 | 2,341,920 | |
IntercontinentalExchange, Inc. (a) | 1,400 | 147,868 | |
JSE Ltd. | 20,600 | 200,513 | |
Moody's Corp. (d) | 287,451 | 6,769,471 | |
| 9,459,772 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 29,134,906 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOTELS, RESTAURANTS & LEISURE - 0.3% | |||
Casinos & Gaming - 0.3% | |||
Wynn Macau Ltd. | 252,800 | $ 430,256 | |
INSURANCE - 4.6% | |||
Life & Health Insurance - 0.1% | |||
Symetra Financial Corp. | 19,000 | 221,540 | |
Multi-Line Insurance - 3.2% | |||
Genworth Financial, Inc. Class A (a) | 267,635 | 3,634,483 | |
Hartford Financial Services Group, Inc. | 47,700 | 1,116,657 | |
| 4,751,140 | ||
Property & Casualty Insurance - 1.3% | |||
ACE Ltd. | 16,500 | 875,820 | |
CNA Financial Corp. (a) | 30,695 | 861,302 | |
United Fire & Casualty Co. | 9,000 | 192,960 | |
| 1,930,082 | ||
TOTAL INSURANCE | 6,902,762 | ||
INTERNET SOFTWARE & SERVICES - 0.9% | |||
Internet Software & Services - 0.9% | |||
China Finance Online Co. Ltd. ADR (a)(d) | 168,015 | 1,328,999 | |
IT SERVICES - 11.2% | |||
Data Processing & Outsourced Services - 11.2% | |||
CoreLogic, Inc. (a) | 106,180 | 2,126,785 | |
Euronet Worldwide, Inc. (a) | 59,803 | 938,907 | |
MasterCard, Inc. Class A | 30,319 | 6,368,203 | |
MoneyGram International, Inc. (a) | 476,265 | 1,243,052 | |
Visa, Inc. Class A | 83,519 | 6,126,119 | |
| 16,803,066 | ||
MEDIA - 0.9% | |||
Advertising - 0.0% | |||
SearchMedia Holdings Ltd. (a) | 4,261 | 13,550 | |
Publishing - 0.9% | |||
McGraw-Hill Companies, Inc. | 45,190 | 1,386,881 | |
TOTAL MEDIA | 1,400,431 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.3% | |||
Real Estate Development - 0.3% | |||
Central China Real Estate Ltd. | 1,753,000 | 451,368 | |
| |||
Shares | Value | ||
SPECIALTY RETAIL - 0.1% | |||
Home Improvement Retail - 0.1% | |||
Home Depot, Inc. | 6,600 | $ 188,166 | |
THRIFTS & MORTGAGE FINANCE - 0.7% | |||
Thrifts & Mortgage Finance - 0.7% | |||
BofI Holding, Inc. (a) | 16,300 | 254,606 | |
Cheviot Financial Corp. | 20,185 | 161,480 | |
First Financial Northwest, Inc. | 4,800 | 21,888 | |
Mayflower Bancorp, Inc. | 3,946 | 30,621 | |
Ocean Shore Holding Co. | 17,768 | 187,630 | |
Osage Bancshares, Inc. | 8,968 | 67,260 | |
Washington Federal, Inc. | 21,404 | 372,430 | |
| 1,095,915 | ||
TOTAL COMMON STOCKS (Cost $155,144,907) | 150,483,447 | ||
Money Market Funds - 8.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 820,281 | 820,281 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 11,896,853 | 11,896,853 | |
TOTAL MONEY MARKET FUNDS (Cost $12,717,134) | 12,717,134 | ||
TOTAL INVESTMENT PORTFOLIO - 108.8% (Cost $167,862,041) | 163,200,581 | ||
NET OTHER ASSETS (LIABILITIES) - (8.8)% | (13,213,219) | ||
NET ASSETS - 100% | $ 149,987,362 | ||
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 | $ 7,073 |
Fidelity Securities Lending Cash Central Fund | 89,737 |
Total | $ 96,810 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $78,880,478 of which $55,672,202 and $23,208,276 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Fidelity Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,459,892) - See accompanying schedule: Unaffiliated issuers (cost $155,144,907) | $ 150,483,447 |
|
Fidelity Central Funds (cost $12,717,134) | 12,717,134 |
|
Total Investments (cost $167,862,041) |
| $ 163,200,581 |
Receivable for investments sold | 244,211 | |
Receivable for fund shares sold | 44,181 | |
Dividends receivable | 108,764 | |
Distributions receivable from Fidelity Central Funds | 3,912 | |
Other receivables | 18,130 | |
Total assets | 163,619,779 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,239,530 | |
Payable for fund shares redeemed | 278,222 | |
Accrued management fee | 68,217 | |
Distribution fees payable | 61,958 | |
Other affiliated payables | 42,223 | |
Other payables and accrued expenses | 45,414 | |
Collateral on securities loaned, at value | 11,896,853 | |
Total liabilities | 13,632,417 | |
|
|
|
Net Assets | $ 149,987,362 | |
Net Assets consist of: |
| |
Paid in capital | $ 237,730,063 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (83,082,221) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (4,660,480) | |
Net Assets | $ 149,987,362 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 10.35 | |
|
|
|
Maximum offering price per share (100/94.25 of $10.35) | $ 10.98 | |
Class T: | $ 10.32 | |
|
|
|
Maximum offering price per share (100/96.50 of $10.32) | $ 10.69 | |
Class B: | $ 10.09 | |
|
|
|
Class C: | $ 10.00 | |
|
|
|
Institutional Class: | $ 10.55 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,707,384 |
Interest |
| 47 |
Income from Fidelity Central Funds |
| 96,810 |
Total income |
| 1,804,241 |
|
|
|
Expenses | ||
Management fee | $ 898,528 | |
Transfer agent fees | 521,166 | |
Distribution fees | 818,349 | |
Accounting and security lending fees | 64,789 | |
Custodian fees and expenses | 49,120 | |
Independent trustees' compensation | 1,022 | |
Registration fees | 55,469 | |
Audit | 47,900 | |
Legal | 996 | |
Miscellaneous | 2,562 | |
Total expenses before reductions | 2,459,901 | |
Expense reductions | (88,191) | 2,371,710 |
Net investment income (loss) | (567,469) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,142,373 | |
Foreign currency transactions | 47,666 | |
Total net realized gain (loss) |
| 36,190,039 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (22,169,925) | |
Assets and liabilities in foreign currencies | 697 | |
Total change in net unrealized appreciation (depreciation) |
| (22,169,228) |
Net gain (loss) | 14,020,811 | |
Net increase (decrease) in net assets resulting from operations | $ 13,453,342 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (567,469) | $ 2,607,315 |
Net realized gain (loss) | 36,190,039 | (88,858,385) |
Change in net unrealized appreciation (depreciation) | (22,169,228) | 30,047,773 |
Net increase (decrease) in net assets resulting from operations | 13,453,342 | (56,203,297) |
Distributions to shareholders from net investment income | (1,313,190) | (3,219,822) |
Distributions to shareholders from net realized gain | - | (320,528) |
Total distributions | (1,313,190) | (3,540,350) |
Share transactions - net increase (decrease) | (11,450,926) | 1,444,825 |
Redemption fees | 4,230 | 13,297 |
Total increase (decrease) in net assets | 693,456 | (58,285,525) |
|
|
|
Net Assets | ||
Beginning of period | 149,293,906 | 207,579,431 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $1,248,708, respectively) | $ 149,987,362 | $ 149,293,906 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.53 | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.01) | .19 | .30 | .23 | .20 |
Net realized and unrealized gain (loss) | .93 | (3.58) | (6.41) | .92 | 2.02 |
Total from investment operations | .92 | (3.39) | (6.11) | 1.15 | 2.22 |
Distributions from net investment income | (.10) | (.24) | (.27) | (.22) | (.26) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.63) |
Total distributions | (.10) | (.26) | (1.73) | (3.47) H | (1.89) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.35 | $ 9.53 | $ 13.18 | $ 21.02 | $ 23.34 |
Total Return A, B | 9.61% | (25.87)% | (31.67)% | 4.54% | 10.32% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.27% | 1.29% | 1.21% | 1.23% | 1.25% |
Expenses net of fee waivers, if any | 1.27% | 1.29% | 1.21% | 1.23% | 1.25% |
Expenses net of all reductions | 1.22% | 1.28% | 1.21% | 1.22% | 1.23% |
Net investment income (loss) | (.09)% | 2.12% | 1.75% | 1.01% | .87% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 69,723 | $ 68,245 | $ 90,037 | $ 106,722 | $ 85,356 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.52 | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | .16 | .26 | .18 | .15 |
Net realized and unrealized gain (loss) | .92 | (3.56) | (6.41) | .91 | 2.02 |
Total from investment operations | .88 | (3.40) | (6.15) | 1.09 | 2.17 |
Distributions from net investment income | (.08) | (.20) | (.19) | (.16) | (.15) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.63) |
Total distributions | (.08) | (.22) | (1.65) | (3.41)H | (1.78) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.32 | $ 9.52 | $ 13.14 | $ 20.94 | $ 23.26 |
Total Return A, B | 9.26% | (26.00)% | (31.85)% | 4.25% | 10.11% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.53% | 1.55% | 1.47% | 1.46% | 1.47% |
Expenses net of fee waivers, if any | 1.53% | 1.55% | 1.47% | 1.46% | 1.47% |
Expenses net of all reductions | 1.47% | 1.54% | 1.47% | 1.46% | 1.46% |
Net investment income (loss) | (.35)% | 1.86% | 1.50% | .77% | .65% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 33,310 | $ 34,927 | $ 53,526 | $ 95,426 | $ 113,344 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.33 | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) | .12 | .18 | .06 | .03 |
Net realized and unrealized gain (loss) | .91 | (3.50) | (6.29) | .89 | 1.97 |
Total from investment operations | .82 | (3.38) | (6.11) | .95 | 2.00 |
Distributions from net investment income | (.06) | (.12) | (.04) | (.02) | (.01) |
Distributions from net realized gain | - | (.02) | (1.44) | (3.25) | (1.57) |
Total distributions | (.06) | (.14) | (1.48) | (3.26)H | (1.58) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.09 | $ 9.33 | $ 12.85 | $ 20.44 | $ 22.75 |
Total Return A, B | 8.78% | (26.35)% | (32.21)% | 3.71% | 9.52% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.02% | 2.04% | 1.96% | 1.98% | 1.99% |
Expenses net of fee waivers, if any | 2.02% | 2.04% | 1.96% | 1.98% | 1.99% |
Expenses net of all reductions | 1.97% | 2.03% | 1.96% | 1.98% | 1.98% |
Net investment income (loss) | (.85)% | 1.38% | 1.01% | .25% | .13% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 10,992 | $ 12,477 | $ 20,420 | $ 64,837 | $ 113,652 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.25 | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) | .12 | .17 | .06 | .04 |
Net realized and unrealized gain (loss) | .90 | (3.48) | (6.24) | .90 | 1.98 |
Total from investment operations | .81 | (3.36) | (6.07) | .96 | 2.02 |
Distributions from net investment income | (.06) | (.15) | (.09) | (.05) | (.02) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.60) |
Total distributions | (.06) | (.17) | (1.55) | (3.30)H | (1.62) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 10.00 | $ 9.25 | $ 12.78 | $ 20.40 | $ 22.74 |
Total Return A, B | 8.79% | (26.38)% | (32.18)% | 3.75% | 9.58% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 2.02% | 2.04% | 1.96% | 1.94% | 1.94% |
Expenses net of fee waivers, if any | 2.02% | 2.04% | 1.96% | 1.94% | 1.94% |
Expenses net of all reductions | 1.96% | 2.03% | 1.96% | 1.94% | 1.93% |
Net investment income (loss) | (.84)% | 1.37% | 1.01% | .29% | .18% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 30,804 | $ 29,849 | $ 37,777 | $ 55,219 | $ 62,469 |
Portfolio turnover rate E | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.69 | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .02 | .21 | .36 | .31 | .29 |
Net realized and unrealized gain (loss) | .95 | (3.63) | (6.51) | .93 | 2.05 |
Total from investment operations | .97 | (3.42) | (6.15) | 1.24 | 2.34 |
Distributions from net investment income | (.11) | (.25) | (.33) | (.30) | (.37) |
Distributions from net realized gain | - | (.02) | (1.46) | (3.25) | (1.63) |
Total distributions | (.11) | (.27) | (1.79) | (3.55) G | (2.00) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 10.55 | $ 9.69 | $ 13.38 | $ 21.32 | $ 23.63 |
Total Return A | 9.99% | (25.68)% | (31.47)% | 4.88% | 10.78% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .99% | 1.04% | .93% | .89% | .86% |
Expenses net of fee waivers, if any | .99% | 1.04% | .93% | .89% | .86% |
Expenses net of all reductions | .94% | 1.03% | .92% | .88% | .85% |
Net investment income (loss) | .19% | 2.37% | 2.04% | 1.34% | 1.26% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,158 | $ 3,797 | $ 5,819 | $ 8,474 | $ 11,892 |
Portfolio turnover rate D | 254% | 269% | 48% | 53% | 33% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Financial Services
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 gain distributions from the Fidelity Central Funds, foreign currency transactions, partnerships, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 8,146,053 |
Gross unrealized depreciation | (17,009,256) |
Net unrealized appreciation (depreciation) | $ (8,863,203) |
|
|
Tax Cost | $ 172,063,784 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ - |
Capital loss carryforward | $ (78,880,478) |
Net unrealized appreciation (depreciation) | $ (8,862,224) |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 1,313,190 | $ 3,219,822 |
Long-term Capital Gains | - | 320,528 |
Total | $ 1,313,190 | $ 3,540,350 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $396,434,784 and $406,742,858, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 185,547 | $ 1,757 |
Class T | .25% | .25% | 183,356 | 1,004 |
Class B | .75% | .25% | 126,266 | 94,883 |
Class C | .75% | .25% | 323,180 | 58,297 |
|
|
| $ 818,349 | $ 155,941 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 30,993 |
Class T | 7,776 |
Class B* | 29,738 |
Class C* | 6,418 |
| $ 74,925 |
* 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.
Financial Services
5. 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 applicable class were as follows:
| Amount | % of |
Class A | $ 239,982 | .32 |
Class T | 121,430 | .33 |
Class B | 41,153 | .33 |
Class C | 104,299 | .32 |
Institutional Class | 14,302 | .29 |
| $ 521,166 |
|
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 $22,566 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $638 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $89,737.
8. 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 $88,191 for the period.
Annual Report
Notes to Financial Statements - continued
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 686,640 | $ 1,698,174 |
Class T | 298,090 | 781,807 |
Class B | 78,308 | 182,682 |
Class C | 206,470 | 461,265 |
Institutional Class | 43,682 | 95,894 |
Total | $ 1,313,190 | $ 3,219,822 |
From net realized gain |
|
|
Class A | $ - | $ 139,687 |
Class T | - | 80,989 |
Class B | - | 31,565 |
Class C | - | 60,568 |
Institutional Class | - | 7,719 |
Total | $ - | $ 320,528 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 2,082,714 | 2,723,908 | $ 22,402,196 | $ 24,853,928 |
Reinvestment of distributions | 58,808 | 159,397 | 610,428 | 1,638,390 |
Shares redeemed | (2,567,565) | (2,556,039) | (27,335,650) | (22,026,835) |
Net increase (decrease) | (426,043) | 327,266 | $ (4,323,026) | $ 4,465,483 |
Class T |
|
|
|
|
Shares sold | 481,524 | 995,392 | $ 5,227,941 | $ 8,604,735 |
Reinvestment of distributions | 27,047 | 77,111 | 280,751 | 791,775 |
Shares redeemed | (952,462) | (1,475,806) | (10,134,806) | (12,935,480) |
Net increase (decrease) | (443,891) | (403,303) | $ (4,626,114) | $ (3,538,970) |
Class B |
|
|
|
|
Shares sold | 217,909 | 506,058 | $ 2,331,426 | $ 4,460,037 |
Reinvestment of distributions | 6,452 | 19,064 | 65,677 | 185,301 |
Shares redeemed | (472,669) | (776,048) | (4,904,869) | (6,568,493) |
Net increase (decrease) | (248,308) | (250,926) | $ (2,507,766) | $ (1,923,155) |
Class C |
|
|
|
|
Shares sold | 749,668 | 1,273,214 | $ 8,032,665 | $ 11,448,111 |
Reinvestment of distributions | 17,064 | 43,964 | 172,172 | 431,812 |
Shares redeemed | (913,840) | (1,045,476) | (9,328,999) | (8,677,353) |
Net increase (decrease) | (147,108) | 271,702 | $ (1,124,162) | $ 3,202,570 |
Institutional Class |
|
|
|
|
Shares sold | 278,977 | 270,723 | $ 3,114,760 | $ 2,262,133 |
Reinvestment of distributions | 3,007 | 6,287 | 31,721 | 65,572 |
Shares redeemed | (184,671) | (320,256) | (2,016,339) | (3,088,808) |
Net increase (decrease) | 97,313 | (43,246) | $ 1,130,142 | $ (761,103) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Financial Services
Fidelity 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' distributions from 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, 2010 |
| Past 1 | Past 5 | Past 10 |
Institutional Class |
| 11.19% | 1.18% | 1.70% |
$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, 2000. 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.
Health Care
Fidelity Advisor Health Care Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 10.85%, 10.61%, 10.04% and 10.13%, respectively (excluding sales charges), underperforming the S&P 500® but substantially outperforming the 5.95% gain of the MSCI® U.S. IM Health Care 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Good stock picking in biotechnology, health care equipment, pharmaceuticals, life science tools/services and health care supplies helped fund performance, but an underweighting in pharmaceuticals and poor stock picking in fertilizers/agricultural chemicals, health care distributors and drug retail hurt. The largest contribution came from an underweighting in Johnson & Johnson, a large-cap pharma stock that lost ground. Overweightings in Illumina (technology for genetic analysis), Edwards Lifesciences (transcatheter heart valves) and Express Scripts (pharmacy benefit management) helped, as did an underweighting in Gilead Sciences (biotechnology). Detractors included Medco Health Solutions (pharmacy benefit management), Covance (drug-research outsourcing) and, from outside the index, Monsanto (agriculture) - a position that was sold by period end. We were also hurt by not owning Bristol-Myers Squibb, a drug stock that gained ground.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2010, the fund's Institutional Class shares returned 11.19%, underperforming the S&P 500® but substantially outperforming the 5.95% gain of the MSCI® U.S. IM Health Care 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Good stock picking in biotechnology, health care equipment, pharmaceuticals, life science tools/services and health care supplies helped fund performance, but an underweighting in pharmaceuticals and poor stock picking in fertilizers/agricultural chemicals, health care distributors and drug retail hurt. The largest contribution came from an underweighting in Johnson & Johnson, a large-cap pharma stock that lost ground. Overweightings in Illumina (technology for genetic analysis), Edwards Lifesciences (transcatheter heart valves) and Express Scripts (pharmacy benefit management) helped, as did an underweighting in Gilead Sciences (biotechnology). Detractors included Medco Health Solutions (pharmacy benefit management), Covance (drug-research outsourcing) and, from outside the index, Monsanto (agriculture) - a position that was sold by period end. We were also hurt by not owning Bristol-Myers Squibb, a drug stock that gained ground.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 967.90 | $ 5.81 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.45% |
|
|
|
Actual |
| $ 1,000.00 | $ 967.00 | $ 7.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.60 | $ 7.25 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 964.40 | $ 9.45 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 964.80 | $ 9.35 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Institutional Class | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 969.60 | $ 4.59 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Health Care
Fidelity Advisor Health Care Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Medco Health Solutions, Inc. | 5.1 | 5.1 |
Merck & Co., Inc. | 5.0 | 4.0 |
Illumina, Inc. | 5.0 | 3.7 |
Pfizer, Inc. | 4.8 | 8.1 |
Express Scripts, Inc. | 4.1 | 4.3 |
Covidien PLC | 3.5 | 5.7 |
Biogen Idec, Inc. | 2.9 | 3.2 |
Valeant Pharmaceuticals International | 2.8 | 0.0 |
C. R. Bard, Inc. | 2.8 | 3.2 |
Gilead Sciences, Inc. | 2.4 | 0.6 |
| 38.4 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Pharmaceuticals | 22.4% |
|
| Biotechnology | 21.4% |
|
| Health Care Providers & Services | 20.4% |
|
| Health Care Equipment & Supplies | 16.5% |
|
| Life Sciences Tools & Services | 10.5% |
|
| All Others* | 8.8% |
|
As of January 31, 2010 | |||
| Health Care Providers & Services | 23.8% |
|
| Pharmaceuticals | 23.7% |
|
| Health Care Equipment & Supplies | 20.1% |
|
| Biotechnology | 14.4% |
|
| Life Sciences Tools & Services | 10.2% |
|
| All Others* | 7.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Health Care Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 98.2% | |||
Shares | Value | ||
BIOTECHNOLOGY - 21.4% | |||
Biotechnology - 21.4% | |||
Acorda Therapeutics, Inc. (a) | 82,800 | $ 2,677,752 | |
Alexion Pharmaceuticals, Inc. (a) | 130,098 | 7,072,127 | |
Allos Therapeutics, Inc. (a)(d) | 170,500 | 821,810 | |
Alnylam Pharmaceuticals, Inc. (a) | 52,137 | 800,303 | |
Amgen, Inc. (a) | 137,812 | 7,514,888 | |
Anadys Pharmaceuticals, Inc. (a) | 192,046 | 386,012 | |
ARIAD Pharmaceuticals, Inc. (a)(d) | 636,890 | 2,038,048 | |
Biogen Idec, Inc. (a) | 197,379 | 11,029,539 | |
BioMarin Pharmaceutical, Inc. (a) | 302,567 | 6,611,089 | |
Celgene Corp. (a) | 86,300 | 4,759,445 | |
Cephalon, Inc. (a) | 44,400 | 2,519,700 | |
Dynavax Technologies Corp. (a) | 349,200 | 771,732 | |
Genzyme Corp. (a) | 110,650 | 7,696,814 | |
Gilead Sciences, Inc. (a) | 271,465 | 9,045,214 | |
Human Genome Sciences, Inc. (a) | 67,800 | 1,758,732 | |
Incyte Corp. (a) | 221,382 | 2,882,394 | |
Ironwood Pharmaceuticals, Inc. Class A | 49,500 | 584,100 | |
Keryx Biopharmaceuticals, Inc. (a)(d) | 166,640 | 626,566 | |
Micromet, Inc. (a) | 103,100 | 706,235 | |
Neurocrine Biosciences, Inc. (a) | 150,100 | 852,568 | |
Protalix BioTherapeutics, Inc. (a)(d) | 148,624 | 970,515 | |
Seattle Genetics, Inc. (a) | 137,557 | 1,675,444 | |
Targacept, Inc. (a) | 97,815 | 2,115,738 | |
United Therapeutics Corp. (a) | 96,048 | 4,695,787 | |
ZIOPHARM Oncology, Inc. (a)(d) | 170,847 | 638,968 | |
| 81,251,520 | ||
CAPITAL MARKETS - 0.1% | |||
Asset Management & Custody Banks - 0.1% | |||
Safeguard Scientifics, Inc. (a) | 34,947 | 442,778 | |
DIVERSIFIED CONSUMER SERVICES - 0.6% | |||
Specialized Consumer Services - 0.6% | |||
Carriage Services, Inc. (a) | 252,255 | 1,180,553 | |
Stewart Enterprises, Inc. Class A | 167,743 | 900,780 | |
| 2,081,333 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 1.8% | |||
Electronic Equipment & Instruments - 1.8% | |||
Agilent Technologies, Inc. (a) | 245,653 | 6,861,088 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 16.5% | |||
Health Care Equipment - 14.8% | |||
American Medical Systems Holdings, Inc. (a) | 160,900 | 3,597,724 | |
ArthroCare Corp. (a) | 84,500 | 2,262,910 | |
C. R. Bard, Inc. | 132,622 | 10,414,806 | |
Covidien PLC | 350,345 | 13,074,875 | |
Edwards Lifesciences Corp. (a) | 130,672 | 7,552,842 | |
Genmark Diagnostics, Inc. | 79,000 | 352,340 | |
HeartWare International, Inc. (a) | 23,984 | 1,545,289 | |
HeartWare International, Inc. CDI unit (a) | 273,246 | 501,911 | |
| |||
Shares | Value | ||
Hologic, Inc. (a) | 223,000 | $ 3,153,220 | |
NuVasive, Inc. (a)(d) | 49,000 | 1,605,730 | |
Orthofix International NV (a) | 63,605 | 1,925,959 | |
Orthovita, Inc. (a) | 633,763 | 1,172,462 | |
William Demant Holding AS (a) | 32,969 | 2,416,304 | |
Wright Medical Group, Inc. (a) | 73,471 | 1,146,882 | |
Zimmer Holdings, Inc. (a) | 98,212 | 5,204,254 | |
| 55,927,508 | ||
Health Care Supplies - 1.7% | |||
AGA Medical Holdings, Inc. | 72,100 | 1,044,729 | |
Cooper Companies, Inc. | 98,602 | 3,831,674 | |
RTI Biologics, Inc. (a) | 563,676 | 1,629,024 | |
| 6,505,427 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 62,432,935 | ||
HEALTH CARE PROVIDERS & SERVICES - 20.4% | |||
Health Care Distributors & Services - 3.7% | |||
Henry Schein, Inc. (a) | 72,803 | 3,821,429 | |
McKesson Corp. | 135,491 | 8,511,545 | |
Sinopharm Group Co. Ltd. (H Shares) | 156,800 | 586,423 | |
United Drug PLC (Ireland) | 368,476 | 1,168,456 | |
| 14,087,853 | ||
Health Care Facilities - 1.6% | |||
Emeritus Corp. (a)(d) | 89,971 | 1,548,401 | |
Hanger Orthopedic Group, Inc. (a) | 155,165 | 2,661,080 | |
LCA-Vision, Inc. (a) | 142,580 | 739,990 | |
Sunrise Senior Living, Inc. (a)(d) | 319,849 | 956,349 | |
| 5,905,820 | ||
Health Care Services - 10.8% | |||
Express Scripts, Inc. (a) | 344,886 | 15,581,949 | |
Laboratory Corp. of America Holdings (a) | 23,900 | 1,744,222 | |
LHC Group, Inc. (a) | 111,286 | 2,558,465 | |
Medco Health Solutions, Inc. (a) | 406,919 | 19,532,110 | |
Team Health Holdings, Inc. | 129,300 | 1,695,123 | |
| 41,111,869 | ||
Managed Health Care - 4.3% | |||
Aetna, Inc. | 156,900 | 4,369,665 | |
CIGNA Corp. | 197,700 | 6,081,252 | |
Health Net, Inc. (a) | 48,247 | 1,136,217 | |
UnitedHealth Group, Inc. | 96,367 | 2,934,375 | |
WellPoint, Inc. (a) | 33,623 | 1,705,359 | |
| 16,226,868 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 77,332,410 | ||
HEALTH CARE TECHNOLOGY - 4.0% | |||
Health Care Technology - 4.0% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 315,043 | 5,258,068 | |
Cerner Corp. (a) | 82,627 | 6,399,461 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE TECHNOLOGY - CONTINUED | |||
Health Care Technology - continued | |||
Computer Programs & Systems, Inc. | 29,321 | $ 1,318,565 | |
MedAssets, Inc. (a)(d) | 86,263 | 2,019,417 | |
| 14,995,511 | ||
INTERNET SOFTWARE & SERVICES - 0.5% | |||
Internet Software & Services - 0.5% | |||
WebMD Health Corp. (a) | 42,857 | 1,982,993 | |
LIFE SCIENCES TOOLS & SERVICES - 10.5% | |||
Life Sciences Tools & Services - 10.5% | |||
Covance, Inc. (a) | 130,593 | 5,061,785 | |
Illumina, Inc. (a)(d) | 420,584 | 18,854,781 | |
Life Technologies Corp. (a) | 31,919 | 1,372,198 | |
Lonza Group AG | 24,950 | 1,937,934 | |
MDS, Inc. (a) | 104,500 | 987,105 | |
PAREXEL International Corp. (a) | 160,682 | 3,298,801 | |
PerkinElmer, Inc. | 195,400 | 3,802,484 | |
QIAGEN NV (a)(d) | 245,986 | 4,604,858 | |
| 39,919,946 | ||
PHARMACEUTICALS - 22.4% | |||
Pharmaceuticals - 22.4% | |||
Abbott Laboratories | 62,024 | 3,044,138 | |
Allergan, Inc. | 147,663 | 9,016,303 | |
Ardea Biosciences, Inc. (a) | 135,950 | 2,712,203 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 142,086 | 1,088,379 | |
Cardiome Pharma Corp. (a) | 182,300 | 1,493,230 | |
Hikma Pharmaceuticals PLC | 58,008 | 651,415 | |
Johnson & Johnson | 24,800 | 1,440,632 | |
King Pharmaceuticals, Inc. (a) | 175,156 | 1,534,367 | |
Merck & Co., Inc. | 552,595 | 19,042,424 | |
Optimer Pharmaceuticals, Inc. (a) | 84,654 | 768,658 | |
Perrigo Co. | 49,082 | 2,749,083 | |
| |||
Shares | Value | ||
Pfizer, Inc. | 1,207,988 | $ 18,119,820 | |
Piramal Healthcare Ltd. | 124,221 | 1,291,888 | |
Pronova BioPharma ASA (a)(d) | 87,311 | 214,198 | |
Shire PLC sponsored ADR | 111,000 | 7,644,570 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 68,782 | 3,360,001 | |
Valeant Pharmaceuticals International (a) | 191,300 | 10,774,016 | |
| 84,945,325 | ||
TOTAL COMMON STOCKS (Cost $333,005,537) | 372,245,839 | ||
Money Market Funds - 5.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 7,690,515 | 7,690,515 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 12,889,867 | 12,889,867 | |
TOTAL MONEY MARKET FUNDS (Cost $20,580,382) | 20,580,382 | ||
TOTAL INVESTMENT PORTFOLIO - 103.6% (Cost $353,585,919) | 392,826,221 | ||
NET OTHER ASSETS (LIABILITIES) - (3.6)% | (13,781,726) | ||
NET ASSETS - 100% | $ 379,044,495 | ||
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 | $ 9,131 |
Fidelity Securities Lending Cash Central Fund | 80,131 |
Total | $ 89,262 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.6% |
Ireland | 3.8% |
Bailiwick of Jersey | 2.0% |
Netherlands | 1.2% |
Others (Individually Less Than 1%) | 3.4% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $32,671,830 of which $30,833,729 and $1,838,101 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Fidelity Advisor Health Care Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $12,652,432) - See accompanying schedule: Unaffiliated issuers (cost $333,005,537) | $ 372,245,839 |
|
Fidelity Central Funds (cost $20,580,382) | 20,580,382 |
|
Total Investments (cost $353,585,919) |
| $ 392,826,221 |
Foreign currency held at value (cost $2) | 2 | |
Receivable for investments sold | 10,405,534 | |
Receivable for fund shares sold | 103,532 | |
Dividends receivable | 176,223 | |
Distributions receivable from Fidelity Central Funds | 10,499 | |
Other receivables | 80,510 | |
Total assets | 403,602,521 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,429,190 | |
Payable for fund shares redeemed | 750,429 | |
Accrued management fee | 178,554 | |
Distribution fees payable | 151,232 | |
Other affiliated payables | 110,901 | |
Other payables and accrued expenses | 47,853 | |
Collateral on securities loaned, at value | 12,889,867 | |
Total liabilities | 24,558,026 | |
|
|
|
Net Assets | $ 379,044,495 | |
Net Assets consist of: |
| |
Paid in capital | $ 375,628,261 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (35,819,792) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 39,236,026 | |
Net Assets | $ 379,044,495 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 19.01 | |
|
|
|
Maximum offering price per share (100/94.25 of $19.01) | $ 20.17 | |
Class T: | $ 18.46 | |
|
|
|
Maximum offering price per share (100/96.50 of $18.46) | $ 19.13 | |
Class B: | $ 17.32 | |
|
|
|
Class C: | $ 17.29 | |
|
|
|
Institutional Class: | $ 19.77 | |
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
Fidelity Advisor Health Care Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,345,782 |
Interest |
| 27,278 |
Income from Fidelity Central Funds |
| 89,262 |
Total income |
| 3,462,322 |
|
|
|
Expenses | ||
Management fee | $ 2,290,004 | |
Transfer agent fees | 1,313,504 | |
Distribution fees | 1,974,126 | |
Accounting and security lending fees | 164,874 | |
Custodian fees and expenses | 50,729 | |
Independent trustees' compensation | 2,508 | |
Registration fees | 64,079 | |
Audit | 52,714 | |
Legal | 3,080 | |
Miscellaneous | 7,055 | |
Total expenses before reductions | 5,922,673 | |
Expense reductions | (39,394) | 5,883,279 |
Net investment income (loss) | (2,420,957) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 38,045,399 | |
Foreign currency transactions | 16,493 | |
Total net realized gain (loss) |
| 38,061,892 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 5,980,382 | |
Assets and liabilities in foreign currencies | 1,964 | |
Total change in net unrealized appreciation (depreciation) |
| 5,982,346 |
Net gain (loss) | 44,044,238 | |
Net increase (decrease) in net assets resulting from operations | $ 41,623,281 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,420,957) | $ (546,482) |
Net realized gain (loss) | 38,061,892 | (71,981,218) |
Change in net unrealized appreciation (depreciation) | 5,982,346 | 3,789,678 |
Net increase (decrease) in net assets resulting from operations | 41,623,281 | (68,738,022) |
Distributions to shareholders from net realized gain | - | (9,966,416) |
Share transactions - net increase (decrease) | (51,082,260) | (54,481,101) |
Redemption fees | 6,564 | 10,268 |
Total increase (decrease) in net assets | (9,452,415) | (133,175,271) |
|
|
|
Net Assets | ||
Beginning of period | 388,496,910 | 521,672,181 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $43,822, respectively) | $ 379,044,495 | $ 388,496,910 |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.15 | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.07) | .02 | (.03) | (.03) | (.09) |
Net realized and unrealized gain (loss) | 1.93 | (2.22) | (1.08) | 1.91 | .96 |
Total from investment operations | 1.86 | (2.20) | (1.11) | 1.88 | .87 |
Distributions from net realized gain | - | (.37) | (2.07) | (2.75) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 19.01 | $ 17.15 | $ 19.72 | $ 22.90 | $ 23.77 |
Total Return A, B | 10.85% | (11.37)% | (5.64)% | 8.54% | 3.79% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.22% | 1.23% | 1.20% | 1.22% | 1.25% |
Expenses net of fee waivers, if any | 1.22% | 1.23% | 1.20% | 1.22% | 1.25% |
Expenses net of all reductions | 1.21% | 1.23% | 1.19% | 1.21% | 1.21% |
Net investment income (loss) | (.36)% | .11% | (.13)% | (.14)% | (.38)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 179,586 | $ 177,890 | $ 220,888 | $ 234,656 | $ 199,221 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.69 | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) | (.02) | (.08) | (.09) | (.15) |
Net realized and unrealized gain (loss) | 1.89 | (2.18) | (1.06) | 1.87 | .95 |
Total from investment operations | 1.77 | (2.20) | (1.14) | 1.78 | .80 |
Distributions from net realized gain | - | (.37) | (1.99) | (2.65) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 18.46 | $ 16.69 | $ 19.26 | $ 22.39 | $ 23.26 |
Total Return A, B | 10.61% | (11.65)% | (5.86)% | 8.25% | 3.55% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.47% | 1.49% | 1.46% | 1.48% | 1.50% |
Expenses net of fee waivers, if any | 1.47% | 1.49% | 1.46% | 1.48% | 1.50% |
Expenses net of all reductions | 1.46% | 1.49% | 1.45% | 1.47% | 1.47% |
Net investment income (loss) | (.62)% | (.15)% | (.40)% | (.40)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 100,883 | $ 103,772 | $ 143,237 | $ 186,628 | $ 218,280 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.74 | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.20) | (.09) | (.18) | (.20) | (.25) |
Net realized and unrealized gain (loss) | 1.78 | (2.07) | (.99) | 1.79 | .91 |
Total from investment operations | 1.58 | (2.16) | (1.17) | 1.59 | .66 |
Distributions from net realized gain | - | (.37) | (1.85) | (2.47) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 17.32 | $ 15.74 | $ 18.27 | $ 21.29 | $ 22.17 |
Total Return A, B | 10.04% | (12.07)% | (6.30)% | 7.66% | 3.06% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.97% | 1.98% | 1.95% | 1.99% | 2.01% |
Expenses net of fee waivers, if any | 1.97% | 1.98% | 1.95% | 1.99% | 2.01% |
Expenses net of all reductions | 1.96% | 1.98% | 1.94% | 1.98% | 1.98% |
Net investment income (loss) | (1.11)% | (.64)% | (.89)% | (.91)% | (1.14)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 23,543 | $ 29,381 | $ 55,589 | $ 113,384 | $ 180,364 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.70 | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.19) | (.09) | (.17) | (.19) | (.24) |
Net realized and unrealized gain (loss) | 1.78 | (2.07) | (1.00) | 1.79 | .91 |
Total from investment operations | 1.59 | (2.16) | (1.17) | 1.60 | .67 |
Distributions from net realized gain | - | (.37) | (1.89) | (2.55) | (.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 17.29 | $ 15.70 | $ 18.23 | $ 21.29 | $ 22.24 |
Total Return A, B | 10.13% | (12.09)% | (6.31)% | 7.75% | 3.10% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.94% | 1.98% | 1.94% | 1.94% | 1.94% |
Expenses net of fee waivers, if any | 1.94% | 1.98% | 1.94% | 1.94% | 1.94% |
Expenses net of all reductions | 1.93% | 1.98% | 1.94% | 1.93% | 1.91% |
Net investment income (loss) | (1.08)% | (.64)% | (.88)% | (.86)% | (1.07)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 60,861 | $ 64,002 | $ 83,133 | $ 105,519 | $ 115,644 |
Portfolio turnover rate E | 103% | 172% | 134% | 141% | 99% |
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 reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Institutional Class
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.78 | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.02) | .06 | .03 | .05 | - F |
Net realized and unrealized gain (loss) | 2.01 | (2.30) | (1.12) | 1.96 | .99 |
Total from investment operations | 1.99 | (2.24) | (1.09) | 2.01 | .99 |
Distributions from net realized gain | - | (.37) | (2.14) | (2.82) | (.04) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 19.77 | $ 17.78 | $ 20.39 | $ 23.62 | $ 24.43 |
Total Return A | 11.19% | (11.19)% | (5.36)% | 8.90% | 4.21% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .96% | .98% | .93% | .88% | .86% |
Expenses net of fee waivers, if any | .96% | .98% | .93% | .88% | .86% |
Expenses net of all reductions | .95% | .98% | .92% | .87% | .83% |
Net investment income (loss) | (.10)% | .36% | .14% | .19% | .01% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 14,172 | $ 13,452 | $ 18,825 | $ 22,174 | $ 20,652 |
Portfolio turnover rate D | 103% | 172% | 134% | 141% | 99% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Health Care
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 53,158,372 |
Gross unrealized depreciation | (17,067,771) |
Net unrealized appreciation (depreciation) | $ 36,090,601 |
|
|
Tax Cost | $ 356,735,620 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (32,671,830) |
Net unrealized appreciation (depreciation) | $ 36,088,066 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Long-term Capital Gains | $ - | $ 9,966,416 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $411,602,718 and $466,387,409, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 475,297 | $ 3,208 |
Class T | .25% | .25% | 550,512 | 1,394 |
Class B | .75% | .25% | 285,520 | 214,517 |
Class C | .75% | .25% | 662,797 | 28,814 |
|
|
| $ 1,974,126 | $ 247,933 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 25,798 |
Class T | 13,488 |
Class B* | 36,610 |
Class C* | 1,703 |
| $ 77,599 |
* 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.
Health Care
5. 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 |
Class A | $ 614,611 | .32 |
Class T | 363,875 | .33 |
Class B | 93,095 | .33 |
Class C | 195,949 | .30 |
Institutional Class | 45,974 | .32 |
| $ 1,313,504 |
|
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 $3,638 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $1,636 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $80,131.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $39,394 for the period.
Annual Report
Notes to Financial Statements - continued
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net realized gain |
|
|
Class A | $ - | $ 4,165,896 |
Class T | - | 2,716,500 |
Class B | - | 1,072,948 |
Class C | - | 1,667,891 |
Institutional Class | - | 343,181 |
Total | $ - | $ 9,966,416 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,348,328 | 2,119,806 | $ 26,342,454 | $ 33,600,941 |
Reinvestment of distributions | - | 190,190 | - | 3,682,080 |
Shares redeemed | (2,277,034) | (3,135,479) | (43,802,733) | (48,422,714) |
Net increase (decrease) | (928,706) | (825,483) | $ (17,460,279) | $ (11,139,693) |
Class T |
|
|
|
|
Shares sold | 653,249 | 602,296 | $ 12,596,630 | $ 9,206,132 |
Reinvestment of distributions | - | 135,003 | - | 2,550,205 |
Shares redeemed | (1,405,398) | (1,958,228) | (26,754,410) | (29,483,941) |
Net increase (decrease) | (752,149) | (1,220,929) | $ (14,157,780) | $ (17,727,604) |
Class B |
|
|
|
|
Shares sold | 142,178 | 212,561 | $ 2,538,751 | $ 3,135,162 |
Reinvestment of distributions | - | 53,957 | - | 965,289 |
Shares redeemed | (649,613) | (1,442,718) | (11,572,231) | (20,918,367) |
Net increase (decrease) | (507,435) | (1,176,200) | $ (9,033,480) | $ (16,817,916) |
Class C |
|
|
|
|
Shares sold | 307,711 | 511,934 | $ 5,532,717 | $ 7,440,670 |
Reinvestment of distributions | - | 74,490 | - | 1,329,646 |
Shares redeemed | (862,744) | (1,071,755) | (15,167,135) | (15,223,014) |
Net increase (decrease) | (555,033) | (485,331) | $ (9,634,418) | $ (6,452,698) |
Institutional Class |
|
|
|
|
Shares sold | 188,384 | 260,510 | $ 3,842,212 | $ 4,409,032 |
Reinvestment of distributions | - | 12,578 | - | 251,944 |
Shares redeemed | (227,941) | (439,916) | (4,638,515) | (7,004,166) |
Net increase (decrease) | (39,557) | (166,828) | $ (796,303) | $ (2,343,190) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Health Care
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 28.52% | 5.43% | 8.61% |
A Prior to October 1, 2006, Fidelity Advisor Industrials Fund 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, 2000. 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.
Industrials
Fidelity Advisor Industrials Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 28.13%, 27.80%, 27.17% and 27.23%, respectively (excluding sales charges), handily beating the S&P 500® and about in line with the 27.22% result of the MSCI® U.S. IM Industrials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock picking in aerospace and defense, industrial machinery and household appliances boosted our results, as did an overweighting in the construction and farm machinery/heavy trucks segment, which delivered a return in excess of 50%. Among our individual holdings, the top contributor was Cummins, a maker of heavy-truck engines. In the second half of the reporting period, the pace of order growth for heavy- and medium-duty trucks accelerated, lifting the company's share price. An out-of-benchmark position in household tool maker Black & Decker also paid off, as the company was acquired in March at a price substantially above where the stock had been trading at the time of the merger announcement. Another out-of-index position - this one in TriMas, a relatively unknown conglomerate with business lines in packaging, energy and aerospace/defense, among other areas - contributed to performance. Elsewhere, skillful trading enabled our stake in construction/engineering firm Fluor to add value and also enhanced the gain delivered by commercial printer R.R. Donnelly & Sons, the latter of which I sold to lock in profits. Conversely, minimal exposure to the strong-performing airlines group had a negative impact on relative performance. Weak security selection in electrical components/equipment and tires/rubber also worked against us. The largest relative detractor was building products distributor Masco, which was hurt toward period end by slackening housing activity due to the expiration of tax breaks for first-time homebuyers. An out-of-index position in Goodyear Tire & Rubber fared poorly, as demand for tires tailed off. Consequently, I liquidated the position. Significantly underweighted exposure to industrial conglomerate and index heavyweight General Electric early in the year had a negative impact on relative performance, and underweighting - - and ultimately selling - aerospace giant Boeing also worked against us. Lastly, I'll mention Chinese holding SmartHeat, which sells clean technology plate heat exchangers (PHEs) and related systems. The stock was hampered by China's recent efforts to slow economic growth.
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund: During the past year, the fund's Institutional Class shares returned 28.52%, handily beating the S&P 500® and modestly ahead of the 27.22% result of the MSCI® U.S. IM Industrials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, stock picking in aerospace and defense, industrial machinery and household appliances boosted our results, as did an overweighting in the construction and farm machinery/heavy trucks segment, which delivered a return in excess of 50%. Among our individual holdings, the top contributor was Cummins, a maker of heavy-truck engines. In the second half of the reporting period, the pace of order growth for heavy- and medium-duty trucks accelerated, lifting the company's share price. An out-of-benchmark position in household tool maker Black & Decker also paid off, as the company was acquired in March at a price substantially above where the stock had been trading at the time of the merger announcement. Another out-of-index position - this one in TriMas, a relatively unknown conglomerate with business lines in packaging, energy and aerospace/defense, among other areas - contributed to performance. Elsewhere, skillful trading enabled our stake in construction/engineering firm Fluor to add value and also enhanced the gain delivered by commercial printer R.R. Donnelly & Sons, the latter of which I sold to lock in profits. Conversely, minimal exposure to the strong-performing airlines group had a negative impact on relative performance. Weak security selection in electrical components/equipment and tires/rubber also worked against us. The largest relative detractor was building products distributor Masco, which was hurt toward period end by slackening housing activity due to the expiration of tax breaks for first-time homebuyers. An out-of-index position in Goodyear Tire & Rubber fared poorly, as demand for tires tailed off. Consequently, I liquidated the position. Significantly underweighted exposure to industrial conglomerate and index heavyweight General Electric early in the year had a negative impact on relative performance, and underweighting - and ultimately selling - aerospace giant Boeing also worked against us. Lastly, I'll mention Chinese holding SmartHeat, which sells clean technology plate heat exchangers (PHEs) and related systems. The stock was hampered by China's recent efforts to slow economic growth.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.16% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,131.90 | $ 6.13 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,130.40 | $ 7.45 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.80 | $ 7.05 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.70 | $ 10.23 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.90 | $ 10.08 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,133.70 | $ 4.60 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Industrials Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 13.4 | 6.1 |
United Technologies Corp. | 6.5 | 6.7 |
3M Co. | 5.3 | 4.6 |
Union Pacific Corp. | 4.5 | 4.4 |
Caterpillar, Inc. | 4.1 | 1.0 |
Ingersoll-Rand Co. Ltd. | 3.9 | 3.0 |
Honeywell International, Inc. | 3.3 | 3.5 |
Precision Castparts Corp. | 2.9 | 2.2 |
Danaher Corp. | 2.8 | 3.2 |
Textron, Inc. | 2.2 | 1.2 |
| 48.9 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Machinery | 25.1% |
|
| Industrial Conglomerates | 20.9% |
|
| Aerospace & Defense | 18.5% |
|
| Road & Rail | 7.6% |
|
| Electrical Equipment | 5.4% |
|
| All Others* | 22.5% |
|
As of January 31, 2010 | |||
| Machinery | 22.8% |
|
| Aerospace & Defense | 20.8% |
|
| Industrial Conglomerates | 13.7% |
|
| Road & Rail | 12.2% |
|
| Electrical Equipment | 5.7% |
|
| All Others* | 24.8% |
|
* Includes short-term investments and net other assets. |
Industrials
Fidelity Advisor Industrials Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 18.5% | |||
Aerospace & Defense - 18.5% | |||
BE Aerospace, Inc. (a) | 116,392 | $ 3,421,925 | |
DigitalGlobe, Inc. (a) | 103,779 | 2,829,016 | |
Esterline Technologies Corp. (a) | 6,800 | 349,044 | |
Goodrich Corp. | 65,600 | 4,780,272 | |
Honeywell International, Inc. | 259,900 | 11,139,314 | |
Moog, Inc. Class A (a) | 42,872 | 1,535,246 | |
Precision Castparts Corp. | 78,400 | 9,579,696 | |
Raytheon Co. | 82,596 | 3,821,717 | |
TransDigm Group, Inc. | 44,766 | 2,424,974 | |
United Technologies Corp. | 306,320 | 21,779,352 | |
| 61,660,556 | ||
AIR FREIGHT & LOGISTICS - 1.6% | |||
Air Freight & Logistics - 1.6% | |||
C.H. Robinson Worldwide, Inc. | 80,802 | 5,268,290 | |
AUTO COMPONENTS - 0.3% | |||
Auto Parts & Equipment - 0.3% | |||
Stoneridge, Inc. (a) | 85,914 | 920,139 | |
BUILDING PRODUCTS - 3.1% | |||
Building Products - 3.1% | |||
AAON, Inc. | 24,442 | 607,628 | |
Lennox International, Inc. | 25,396 | 1,109,043 | |
Masco Corp. | 435,300 | 4,474,884 | |
Owens Corning (a) | 129,061 | 4,062,840 | |
| 10,254,395 | ||
COMMERCIAL SERVICES & SUPPLIES - 5.0% | |||
Diversified Support Services - 0.9% | |||
Cintas Corp. | 70,418 | 1,863,260 | |
Iron Mountain, Inc. | 46,000 | 1,088,820 | |
| 2,952,080 | ||
Environmental & Facility Services - 1.7% | |||
Republic Services, Inc. | 138,661 | 4,417,739 | |
Stericycle, Inc. (a) | 18,901 | 1,190,763 | |
| 5,608,502 | ||
Office Services & Supplies - 1.2% | |||
Interface, Inc. Class A | 77,600 | 964,568 | |
Pitney Bowes, Inc. | 94,100 | 2,296,981 | |
Steelcase, Inc. Class A | 108,300 | 748,353 | |
| 4,009,902 | ||
Security & Alarm Services - 1.2% | |||
The Brink's Co. | 89,100 | 1,951,290 | |
The Geo Group, Inc. (a) | 94,700 | 2,043,626 | |
| 3,994,916 | ||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 16,565,400 | ||
| |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 5.2% | |||
Construction & Engineering - 5.2% | |||
Fluor Corp. | 144,660 | $ 6,985,631 | |
Foster Wheeler AG (a) | 102,331 | 2,355,660 | |
Granite Construction, Inc. | 98,315 | 2,285,824 | |
Jacobs Engineering Group, Inc. (a) | 117,704 | 4,304,435 | |
KBR, Inc. | 13,344 | 298,639 | |
MYR Group, Inc. (a) | 76,700 | 1,289,327 | |
| 17,519,516 | ||
ELECTRICAL EQUIPMENT - 5.4% | |||
Electrical Components & Equipment - 5.4% | |||
AMETEK, Inc. | 62,900 | 2,784,583 | |
Cooper Industries PLC Class A | 73,723 | 3,328,593 | |
Emerson Electric Co. | 82,550 | 4,089,527 | |
Fushi Copperweld, Inc. (a) | 223,933 | 1,894,473 | |
General Cable Corp. (a)(d) | 73,100 | 1,940,074 | |
Regal-Beloit Corp. | 35,612 | 2,166,278 | |
Zumtobel AG | 93,083 | 1,763,382 | |
| 17,966,910 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.3% | |||
Electronic Equipment & Instruments - 0.3% | |||
Agilent Technologies, Inc. (a) | 40,100 | 1,119,993 | |
HOUSEHOLD DURABLES - 1.0% | |||
Household Appliances - 1.0% | |||
Stanley Black & Decker, Inc. | 59,964 | 3,479,111 | |
INDUSTRIAL CONGLOMERATES - 20.9% | |||
Industrial Conglomerates - 20.9% | |||
3M Co. | 205,200 | 17,552,808 | |
General Electric Co. | 2,776,749 | 44,761,196 | |
Textron, Inc. (d) | 351,400 | 7,295,064 | |
| 69,609,068 | ||
MACHINERY - 25.1% | |||
Construction & Farm Machinery & Heavy Trucks - 12.4% | |||
Bucyrus International, Inc. Class A | 38,312 | 2,383,773 | |
Caterpillar, Inc. | 195,595 | 13,642,751 | |
Cummins, Inc. | 89,171 | 7,098,903 | |
Deere & Co. | 91,890 | 6,127,225 | |
MAN SE | 12,306 | 1,142,460 | |
Navistar International Corp. (a) | 78,285 | 4,048,117 | |
PACCAR, Inc. | 152,300 | 6,978,386 | |
| 41,421,615 | ||
Industrial Machinery - 12.7% | |||
Actuant Corp. Class A | 59,100 | 1,218,642 | |
Danaher Corp. | 239,354 | 9,193,587 | |
Gardner Denver, Inc. | 43,532 | 2,210,120 | |
Harsco Corp. | 42,800 | 991,248 | |
Ingersoll-Rand Co. Ltd. | 344,500 | 12,904,970 | |
NSK Ltd. | 236,000 | 1,679,375 | |
SmartHeat, Inc. (a)(d) | 330,316 | 2,133,841 | |
Common Stocks - continued | |||
Shares | Value | ||
MACHINERY - CONTINUED | |||
Industrial Machinery - continued | |||
SPX Corp. | 67,900 | $ 4,044,124 | |
The Weir Group PLC | 44,600 | 820,521 | |
Timken Co. | 104,362 | 3,508,650 | |
TriMas Corp. (a) | 72,930 | 870,784 | |
Weg SA | 262,400 | 2,705,324 | |
| 42,281,186 | ||
TOTAL MACHINERY | 83,702,801 | ||
PROFESSIONAL SERVICES - 2.4% | |||
Human Resource & Employment Services - 1.4% | |||
Manpower, Inc. | 48,611 | 2,332,356 | |
Towers Watson & Co. | 50,004 | 2,225,678 | |
| 4,558,034 | ||
Research & Consulting Services - 1.0% | |||
Equifax, Inc. | 106,607 | 3,341,063 | |
TOTAL PROFESSIONAL SERVICES | 7,899,097 | ||
ROAD & RAIL - 7.6% | |||
Railroads - 7.2% | |||
CSX Corp. | 77,800 | 4,101,616 | |
Norfolk Southern Corp. | 90,510 | 5,092,998 | |
Union Pacific Corp. | 200,492 | 14,970,738 | |
| 24,165,352 | ||
Trucking - 0.4% | |||
Saia, Inc. (a) | 85,016 | 1,283,742 | |
TOTAL ROAD & RAIL | 25,449,094 | ||
| |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 3.2% | |||
Trading Companies & Distributors - 3.2% | |||
Finning International, Inc. | 2,100 | $ 40,409 | |
Interline Brands, Inc. (a) | 125,073 | 2,262,571 | |
Mills Estruturas e Servicos de Engenharia SA (a) | 258,000 | 2,215,411 | |
Rush Enterprises, Inc. Class A (a) | 417,765 | 6,241,409 | |
| 10,759,800 | ||
TOTAL COMMON STOCKS (Cost $312,283,860) | 332,174,170 | ||
Money Market Funds - 3.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 3,533,738 | 3,533,738 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 7,647,550 | 7,647,550 | |
TOTAL MONEY MARKET FUNDS (Cost $11,181,288) | 11,181,288 | ||
TOTAL INVESTMENT PORTFOLIO - 102.9% (Cost $323,465,148) | 343,355,458 |
NET OTHER ASSETS (LIABILITIES) - (2.9)% | (9,737,746) | ||
NET ASSETS - 100% | $ 333,617,712 | ||
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 | $ 9,869 |
Fidelity Securities Lending Cash Central Fund | 100,909 |
Total | $ 110,778 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $49,540,826 of which $29,658,388 and $19,882,438 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Industrials
Fidelity Advisor Industrials Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,455,616) - See accompanying schedule: Unaffiliated issuers (cost $312,283,860) | $ 332,174,170 |
|
Fidelity Central Funds (cost $11,181,288) | 11,181,288 |
|
Total Investments (cost $323,465,148) |
| $ 343,355,458 |
Receivable for investments sold | 1,208,444 | |
Receivable for fund shares sold | 613,390 | |
Dividends receivable | 249,529 | |
Distributions receivable from Fidelity Central Funds | 1,962 | |
Other receivables | 5,147 | |
Total assets | 345,433,930 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,030,923 | |
Payable for fund shares redeemed | 743,121 | |
Accrued management fee | 148,505 | |
Distribution fees payable | 120,193 | |
Other affiliated payables | 83,878 | |
Other payables and accrued expenses | 42,048 | |
Collateral on securities loaned, at value | 7,647,550 | |
Total liabilities | 11,816,218 | |
|
|
|
Net Assets | $ 333,617,712 | |
Net Assets consist of: |
| |
Paid in capital | $ 367,575,473 | |
Distributions in excess of net investment income | (71,000) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (53,777,460) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 19,890,699 | |
Net Assets | $ 333,617,712 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 21.54 | |
|
|
|
Maximum offering price per share (100/94.25 of $21.54) | $ 22.85 | |
Class T: | $ 21.24 | |
|
|
|
Maximum offering price per share (100/96.50 of $21.24) | $ 22.01 | |
Class B: | $ 20.22 | |
|
|
|
Class C: | $ 20.28 | |
|
|
|
Institutional Class: | $ 22.30 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Industrials
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,448,041 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 110,778 |
Total income |
| 4,558,821 |
|
|
|
Expenses | ||
Management fee | $ 1,712,420 | |
Transfer agent fees | 866,895 | |
Distribution fees | 1,429,164 | |
Accounting and security lending fees | 120,555 | |
Custodian fees and expenses | 28,657 | |
Independent trustees' compensation | 1,735 | |
Registration fees | 68,361 | |
Audit | 49,265 | |
Legal | 1,261 | |
Miscellaneous | 4,449 | |
Total expenses before reductions | 4,282,762 | |
Expense reductions | (16,641) | 4,266,121 |
Net investment income (loss) | 292,700 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 53,700,097 | |
Foreign currency transactions | (106,377) | |
Total net realized gain (loss) |
| 53,593,720 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 14,759,665 | |
Assets and liabilities in foreign currencies | 2,334 | |
Total change in net unrealized appreciation (depreciation) |
| 14,761,999 |
Net gain (loss) | 68,355,719 | |
Net increase (decrease) in net assets resulting from operations | $ 68,648,419 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 292,700 | $ 1,715,553 |
Net realized gain (loss) | 53,593,720 | (102,654,173) |
Change in net unrealized appreciation (depreciation) | 14,761,999 | (6,469,546) |
Net increase (decrease) in net assets resulting from operations | 68,648,419 | (107,408,166) |
Distributions to shareholders from net investment income | (658,116) | (1,756,118) |
Distributions to shareholders from net realized gain | - | (285,855) |
Total distributions | (658,116) | (2,041,973) |
Share transactions - net increase (decrease) | 10,867,809 | (41,067,612) |
Redemption fees | 9,545 | 10,099 |
Total increase (decrease) in net assets | 78,867,657 | (150,507,652) |
|
|
|
Net Assets | ||
Beginning of period | 254,750,055 | 405,257,707 |
End of period (including distributions in excess of net investment income of $71,000 and undistributed net investment income of $309,528, respectively) | $ 333,617,712 | $ 254,750,055 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.87 | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .13 | .11 | .09 | .08 |
Net realized and unrealized gain (loss) | 4.68 | (5.08) | (1.17) | 5.11 | 1.63 |
Total from investment operations | 4.74 | (4.95) | (1.06) | 5.20 | 1.71 |
Distributions from net investment income | (.07) | (.13) | - | (.06) | - |
Distributions from net realized gain | - | (.02) | (2.46) | (1.81) | (1.08) |
Total distributions | (.07) | (.15) | (2.46) | (1.87) | (1.08) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 21.54 | $ 16.87 | $ 21.97 | $ 25.49 | $ 22.16 |
Total Return A, B | 28.13% | (22.49)% | (4.71)% | 25.13% | 8.40% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.18% | 1.23% | 1.17% | 1.21% | 1.26% |
Expenses net of fee waivers, if any | 1.18% | 1.23% | 1.17% | 1.21% | 1.26% |
Expenses net of all reductions | 1.17% | 1.23% | 1.16% | 1.21% | 1.24% |
Net investment income (loss) | .31% | .89% | .46% | .38% | .34% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 165,029 | $ 130,860 | $ 188,859 | $ 157,451 | $ 99,255 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.64 | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .01 | .10 | .05 | .03 | .02 |
Net realized and unrealized gain (loss) | 4.61 | (5.03) | (1.15) | 5.05 | 1.61 |
Total from investment operations | 4.62 | (4.93) | (1.10) | 5.08 | 1.63 |
Distributions from net investment income | (.02) | (.08) | - | (.03) | - |
Distributions from net realized gain | - | (.02) | (2.40) | (1.74) | (1.04) |
Total distributions | (.02) | (.10) | (2.40) | (1.77) | (1.04) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 21.24 | $ 16.64 | $ 21.67 | $ 25.17 | $ 21.86 |
Total Return A, B | 27.80% | (22.68)% | (4.96)% | 24.82% | 8.13% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.48% | 1.41% | 1.46% | 1.49% |
Expenses net of fee waivers, if any | 1.44% | 1.48% | 1.41% | 1.46% | 1.49% |
Expenses net of all reductions | 1.43% | 1.48% | 1.41% | 1.46% | 1.47% |
Net investment income (loss) | .06% | .63% | .21% | .13% | .11% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 58,202 | $ 48,054 | $ 85,025 | $ 75,530 | $ 55,936 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.90 | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.09) | .02 | (.07) | (.09) | (.09) |
Net realized and unrealized gain (loss) | 4.41 | (4.82) | (1.10) | 4.87 | 1.55 |
Total from investment operations | 4.32 | (4.80) | (1.17) | 4.78 | 1.46 |
Distributions from net investment income | - | (.04) | - | - | - |
Distributions from net realized gain | - | - | (2.28) | (1.61) | (.99) |
Total distributions | - | (.04) | (2.28) | (1.61) | (.99) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 20.22 | $ 15.90 | $ 20.74 | $ 24.19 | $ 21.02 |
Total Return A, B | 27.17% | (23.10)% | (5.46)% | 24.18% | 7.54% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.97% | 1.98% | 1.95% | 2.00% | 2.04% |
Expenses net of fee waivers, if any | 1.97% | 1.98% | 1.95% | 2.00% | 2.04% |
Expenses net of all reductions | 1.97% | 1.98% | 1.95% | 2.00% | 2.02% |
Net investment income (loss) | (.48)% | .13% | (.33)% | (.41)% | (.44)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,048 | $ 25,212 | $ 39,989 | $ 44,330 | $ 37,082 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.94 | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.08) | .02 | (.06) | (.08) | (.08) |
Net realized and unrealized gain (loss) | 4.42 | (4.83) | (1.11) | 4.88 | 1.56 |
Total from investment operations | 4.34 | (4.81) | (1.17) | 4.80 | 1.48 |
Distributions from net investment income | - | (.04) | - | - | - |
Distributions from net realized gain | - | - | (2.30) | (1.70) | (1.00) |
Total distributions | - | (.04) | (2.30) | (1.70) | (1.00) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 20.28 | $ 15.94 | $ 20.79 | $ 24.26 | $ 21.16 |
Total Return A, B | 27.23% | (23.09)% | (5.44)% | 24.25% | 7.59% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.93% | 1.98% | 1.91% | 1.94% | 1.99% |
Expenses net of fee waivers, if any | 1.93% | 1.98% | 1.91% | 1.94% | 1.99% |
Expenses net of all reductions | 1.92% | 1.98% | 1.90% | 1.94% | 1.97% |
Net investment income (loss) | (.43)% | .14% | (.28)% | (.35)% | (.38)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 51,760 | $ 37,862 | $ 57,742 | $ 57,862 | $ 42,363 |
Portfolio turnover rate E | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.45 | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .13 | .19 | .18 | .16 | .16 |
Net realized and unrealized gain (loss) | 4.83 | (5.27) | (1.19) | 5.27 | 1.66 |
Total from investment operations | 4.96 | (5.08) | (1.01) | 5.43 | 1.82 |
Distributions from net investment income | (.11) | (.17) | - | (.13) | - |
Distributions from net realized gain | - | (.02) | (2.53) | (1.81) | (1.11) |
Total distributions | (.11) | (.19) | (2.53) | (1.94) | (1.11) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 22.30 | $ 17.45 | $ 22.72 | $ 26.26 | $ 22.77 |
Total Return A | 28.52% | (22.31)% | (4.40)% | 25.53% | 8.73% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .89% | .96% | .88% | .92% | .91% |
Expenses net of fee waivers, if any | .89% | .96% | .88% | .92% | .91% |
Expenses net of all reductions | .88% | .95% | .87% | .91% | .89% |
Net investment income (loss) | .61% | 1.16% | .75% | .67% | .69% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,578 | $ 12,762 | $ 33,642 | $ 19,498 | $ 13,043 |
Portfolio turnover rate D | 110% | 135% | 91% | 130% | 94% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 34,570,784 |
Gross unrealized depreciation | (18,917,108) |
Net unrealized appreciation (depreciation) | $ 15,653,676 |
|
|
Tax Cost | $ 327,701,782 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (49,540,826) |
Net unrealized appreciation (depreciation) | $ 15,654,065 |
Industrials
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 658,116 | $ 2,041,973 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $338,591,426 and $326,721,810, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 382,429 | $ 2,089 |
Class T | .25% | .25% | 289,388 | 214 |
Class B | .75% | .25% | 283,065 | 212,528 |
Class C | .75% | .25% | 474,282 | 72,794 |
|
|
| $ 1,429,164 | $ 287,625 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 62,332 |
Class T | 9,012 |
Class B* | 70,669 |
Class C* | 4,154 |
| $ 146,167 |
* 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
5. 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 |
Class A | $ 428,648 | .28 |
Class T | 167,533 | .29 |
Class B | 91,225 | .32 |
Class C | 132,658 | .28 |
Institutional Class | 46,831 | .24 |
| $ 866,895 |
|
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 $7,732 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $1,189 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. 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 $100,909.
8. 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 $16,638 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $3.
Industrials
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 508,657 | $ 1,066,448 |
Class T | 67,522 | 306,371 |
Class B | - | 68,325 |
Class C | - | 103,234 |
Institutional Class | 81,937 | 211,740 |
Total | $ 658,116 | $ 1,756,118 |
From net realized gain |
|
|
Class A | $ - | $ 176,460 |
Class T | - | 79,143 |
Institutional Class | - | 30,252 |
Total | $ - | $ 285,855 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 2,293,002 | 2,551,802 | $ 46,751,968 | $ 40,597,092 |
Reinvestment of distributions | 24,478 | 72,593 | 465,084 | 1,139,555 |
Shares redeemed | (2,413,077) | (3,461,949) | (48,350,817) | (50,255,155) |
Net increase (decrease) | (95,597) | (837,554) | $ (1,133,765) | $ (8,518,508) |
Class T |
|
|
|
|
Shares sold | 640,220 | 1,041,987 | $ 12,504,319 | $ 15,774,329 |
Reinvestment of distributions | 3,441 | 24,634 | 64,976 | 365,354 |
Shares redeemed | (791,417) | (2,101,374) | (15,762,597) | (29,010,054) |
Net increase (decrease) | (147,756) | (1,034,753) | $ (3,193,302) | $ (12,870,371) |
Class B |
|
|
|
|
Shares sold | 230,669 | 339,206 | $ 4,429,240 | $ 5,035,039 |
Reinvestment of distributions | - | 4,471 | - | 56,194 |
Shares redeemed | (379,173) | (686,403) | (7,171,787) | (9,410,134) |
Net increase (decrease) | (148,504) | (342,726) | $ (2,742,547) | $ (4,318,901) |
Class C |
|
|
|
|
Shares sold | 965,412 | 638,949 | $ 18,697,081 | $ 9,440,300 |
Reinvestment of distributions | - | 6,551 | - | 82,541 |
Shares redeemed | (787,460) | (1,047,655) | (14,785,582) | (14,427,567) |
Net increase (decrease) | 177,952 | (402,155) | $ 3,911,499 | $ (4,904,726) |
Institutional Class |
|
|
|
|
Shares sold | 1,199,584 | 291,640 | $ 26,360,020 | $ 4,730,735 |
Reinvestment of distributions | 3,299 | 10,868 | 64,789 | 192,321 |
Shares redeemed | (607,717) | (1,052,089) | (12,398,885) | (15,378,162) |
Net increase (decrease) | 595,166 | (749,581) | $ 14,025,924 | $ (10,455,106) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity 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' distributions from 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, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class | 24.06% | 4.49% | -5.03% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Technology Fund - Institutional Class on July 31, 2000. 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
Fidelity Advisor Technology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 23.71%, 23.41%, 22.77% and 22.73%, respectively (excluding sales charges), handily beating the S&P 500® and the 15.12% return of the MSCI® U.S. IM Information Technology 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, favorable stock picking in computer hardware, application software, communications equipment, computer storage/peripherals and Internet software/services lifted performance. At the individual stock level, the top relative contributor was Salesforce.com, which supplies corporate customers with Web-based customer relationship management (CRM) software and was aided by some exciting new products and marketing initiatives. Other contributors included SanDisk, a supplier of flash memory, and consumer electronics maker Apple, which lifted relative performance and was far and away the fund's top contributor in absolute terms. In addition to rolling out its iPad tablet computer, which sold briskly in its first several months, Apple launched an upgraded version of its popular iPhone during the period. HTC, a Taiwan-based manufacturer of smart phones, was a strong contributor in the second half of the period. Underweighting poorly performing index component QUALCOMM also helped. Conversely, untimely ownership of Microsoft's shares was the main factor responsible for the stock detracting from performance. An out-of-index stake in solar products company SunPower fared poorly, as did positions in semiconductor equipment holding Tessera Technologies and graphics chip maker NVIDIA.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the past year, the fund's Institutional Class shares returned 24.06%, handily beating the S&P 500® and the 15.12% return of the MSCI® U.S. IM Information Technology 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, favorable stock picking in computer hardware, application software, communications equipment, computer storage/peripherals and Internet software/services lifted performance. At the individual stock level, the top relative contributor was Salesforce.com, which supplies corporate customers with Web-based customer relationship management (CRM) software and was aided by some exciting new products and marketing initiatives. Other contributors included SanDisk, a supplier of flash memory, and consumer electronics maker Apple, which lifted relative performance and was far and away the fund's top contributor in absolute terms. In addition to rolling out its iPad tablet computer, which sold briskly in its first several months, Apple launched an upgraded version of its popular iPhone during the period. HTC, a Taiwan-based manufacturer of smart phones, was a strong contributor in the second half of the period. Underweighting poorly performing index component QUALCOMM also helped. Conversely, untimely ownership of Microsoft's shares was the main factor responsible for the stock detracting from performance. An out-of-index stake in solar products company SunPower fared poorly, as did positions in semiconductor equipment holding Tessera Technologies and graphics chip maker NVIDIA.
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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.18% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,099.80 | $ 6.14 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.94 | $ 5.91 |
Class T | 1.43% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,098.80 | $ 7.44 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.70 | $ 7.15 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,095.50 | $ 10.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,095.70 | $ 10.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,101.80 | $ 4.74 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Fidelity Advisor Technology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 13.3 | 8.2 |
Google, Inc. Class A | 4.9 | 5.1 |
Oracle Corp. | 4.0 | 3.7 |
Cisco Systems, Inc. | 3.5 | 3.1 |
QUALCOMM, Inc. | 3.5 | 2.6 |
Hewlett-Packard Co. | 2.8 | 3.9 |
Salesforce.com, Inc. | 2.1 | 1.4 |
Akamai Technologies, Inc. | 1.9 | 0.0 |
Motorola, Inc. | 1.7 | 0.3 |
BMC Software, Inc. | 1.5 | 2.1 |
| 39.2 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Software | 23.0% |
|
| Computers & Peripherals | 21.1% |
|
| Communications Equipment | 14.4% |
|
| Semiconductors & Semiconductor Equipment | 14.2% |
|
| Internet Software & Services | 10.4% |
|
| All Others* | 16.9% |
|
As of January 31, 2010 | |||
| Software | 28.8% |
|
| Semiconductors & Semiconductor Equipment | 17.5% |
|
| Computers & Peripherals | 16.7% |
|
| Communications Equipment | 10.6% |
|
| Internet Software & Services | 10.2% |
|
| All Others* | 16.2% |
|
* Includes short-term investments and net other assets. |
Technology
Fidelity Advisor Technology Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value | ||
AUTOMOBILES - 0.2% | |||
Automobile Manufacturers - 0.2% | |||
BYD Co. Ltd. (H Shares) | 96,000 | $ 660,599 | |
Tesla Motors, Inc. (a) | 31,200 | 622,128 | |
| 1,282,727 | ||
CHEMICALS - 0.4% | |||
Commodity Chemicals - 0.2% | |||
STR Holdings, Inc. | 68,323 | 1,530,435 | |
Diversified Chemicals - 0.1% | |||
DC Chemical Co. Ltd. | 2,621 | 613,838 | |
Specialty Chemicals - 0.1% | |||
Shin-Etsu Chemical Co., Ltd. | 6,600 | 328,759 | |
Wacker Chemie AG | 500 | 80,254 | |
| 409,013 | ||
TOTAL CHEMICALS | 2,553,286 | ||
COMMUNICATIONS EQUIPMENT - 14.2% | |||
Communications Equipment - 14.2% | |||
Acme Packet, Inc. (a) | 145,100 | 4,100,526 | |
Adtran, Inc. | 56,500 | 1,784,270 | |
Aruba Networks, Inc. (a) | 9,800 | 166,404 | |
Brocade Communications Systems, Inc. (a) | 200 | 990 | |
Cisco Systems, Inc. (a) | 955,973 | 22,054,297 | |
Emulex Corp. (a) | 5,400 | 46,980 | |
F5 Networks, Inc. (a) | 56,758 | 4,985,055 | |
Finisar Corp. (a)(d) | 18,174 | 291,329 | |
Infinera Corp. (a) | 70,900 | 641,645 | |
Juniper Networks, Inc. (a) | 100,573 | 2,793,918 | |
Motorola, Inc. (a) | 1,425,467 | 10,676,748 | |
Netronix, Inc. (a) | 115,000 | 275,748 | |
OZ Optics Ltd. unit (a)(f) | 68,000 | 301,240 | |
Polycom, Inc. (a) | 82,700 | 2,454,536 | |
QUALCOMM, Inc. | 565,715 | 21,542,427 | |
Research In Motion Ltd. (a) | 58,000 | 3,336,740 | |
Riverbed Technology, Inc. (a) | 121,300 | 4,499,017 | |
Sandvine Corp. (a) | 887,400 | 1,363,969 | |
Sandvine Corp. (U.K.) (a) | 751,600 | 1,184,703 | |
ShoreTel, Inc. (a) | 58,300 | 291,500 | |
Sierra Wireless, Inc. (a) | 41,200 | 386,770 | |
Sonus Networks, Inc. (a) | 29,060 | 83,693 | |
Telefonaktiebolaget LM Ericsson | 402,530 | 4,427,830 | |
Tellabs, Inc. | 82,800 | 577,944 | |
ZTE Corp. (H Shares) | 93,600 | 299,448 | |
| 88,567,727 | ||
COMPUTERS & PERIPHERALS - 21.1% | |||
Computer Hardware - 17.3% | |||
3PAR, Inc. (a) | 71,337 | 720,504 | |
Apple, Inc. (a) | 322,030 | 82,842,218 | |
Hewlett-Packard Co. | 380,683 | 17,526,645 | |
| |||
Shares | Value | ||
HTC Corp. | 289,300 | $ 5,317,965 | |
Stratasys, Inc. (a) | 48,675 | 1,105,409 | |
Toshiba Corp. (a) | 58,000 | 303,338 | |
| 107,816,079 | ||
Computer Storage & Peripherals - 3.8% | |||
Chicony Electronics Co. Ltd. | 198,748 | 435,552 | |
EMC Corp. (a) | 285,237 | 5,644,840 | |
Imagination Technologies Group PLC (a) | 194,800 | 1,004,258 | |
Isilon Systems, Inc. (a) | 80,382 | 1,409,900 | |
NetApp, Inc. (a) | 168,700 | 7,136,010 | |
Netezza Corp. (a) | 6,100 | 94,550 | |
SanDisk Corp. (a) | 116,962 | 5,111,239 | |
Seagate Technology (a) | 17,700 | 222,135 | |
Smart Technologies, Inc. Class A (a) | 72,000 | 1,103,867 | |
Synaptics, Inc. (a)(d) | 48,875 | 1,529,788 | |
Western Digital Corp. (a) | 8,350 | 220,357 | |
| 23,912,496 | ||
TOTAL COMPUTERS & PERIPHERALS | 131,728,575 | ||
DIVERSIFIED CONSUMER SERVICES - 0.2% | |||
Education Services - 0.1% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 809 | 79,120 | |
Promethean World PLC (a) | 194,200 | 405,096 | |
| 484,216 | ||
Specialized Consumer Services - 0.1% | |||
Coinstar, Inc. (a) | 14,100 | 641,550 | |
TOTAL DIVERSIFIED CONSUMER SERVICES | 1,125,766 | ||
ELECTRICAL EQUIPMENT - 0.3% | |||
Electrical Components & Equipment - 0.3% | |||
A123 Systems, Inc. (d) | 2,200 | 23,716 | |
Acuity Brands, Inc. | 14,566 | 613,666 | |
American Superconductor Corp. (a)(d) | 19,869 | 599,050 | |
SMA Solar Technology AG | 5,400 | 667,563 | |
| 1,903,995 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 4.7% | |||
Electronic Components - 1.0% | |||
Amphenol Corp. Class A | 1,400 | 62,720 | |
Cando Corp. (a) | 1,071,392 | 617,966 | |
Corning, Inc. | 144,092 | 2,610,947 | |
Power-One, Inc. (a) | 157,312 | 1,955,388 | |
Prime View International Co. Ltd. (a) | 308,000 | 446,775 | |
Prime View International Co. Ltd. sponsored GDR (a)(e) | 4,700 | 68,252 | |
Vishay Intertechnology, Inc. (a) | 70,557 | 599,029 | |
| 6,361,077 | ||
Electronic Equipment & Instruments - 1.3% | |||
China Security & Surveillance Technology, Inc. warrants 8/25/10 (a)(f) | 42,000 | 91 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED | |||
Electronic Equipment & Instruments - continued | |||
Chroma ATE, Inc. | 1,145,003 | $ 2,301,640 | |
Coretronic Corp. | 219,300 | 305,426 | |
Itron, Inc. (a) | 17,308 | 1,126,232 | |
National Instruments Corp. | 102,890 | 3,282,191 | |
Test Research, Inc. | 136,500 | 188,614 | |
Vishay Precision Group, Inc. (a) | 5,039 | 63,743 | |
Wasion Group Holdings Ltd. (d) | 928,000 | 746,701 | |
| 8,014,638 | ||
Electronic Manufacturing Services - 1.5% | |||
Benchmark Electronics, Inc. (a) | 1,200 | 20,040 | |
IPG Photonics Corp. (a) | 27,300 | 439,803 | |
Ju Teng International Holdings Ltd. | 450,000 | 324,429 | |
Multi-Fineline Electronix, Inc. (a) | 2,289 | 58,003 | |
Trimble Navigation Ltd. (a) | 315,215 | 8,942,650 | |
| 9,784,925 | ||
Technology Distributors - 0.9% | |||
Digital China Holdings Ltd. (H Shares) | 1,278,000 | 2,073,099 | |
Inspur International Ltd. | 1,899,000 | 188,250 | |
Supreme Electronics Co. Ltd. | 798,000 | 604,971 | |
Synnex Technology International Corp. | 273,500 | 624,166 | |
WPG Holding Co. Ltd. | 948,000 | 1,958,978 | |
| 5,449,464 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 29,610,104 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% | |||
Health Care Equipment - 0.1% | |||
China Medical Technologies, Inc. sponsored ADR (d) | 1,900 | 19,475 | |
Golden Meditech Holdings Ltd. (a) | 2,168,000 | 415,876 | |
Mingyuan Medicare Development Co. Ltd. | 270,000 | 30,937 | |
| 466,288 | ||
Health Care Supplies - 0.3% | |||
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 410,000 | 1,847,441 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 2,313,729 | ||
HEALTH CARE TECHNOLOGY - 0.0% | |||
Health Care Technology - 0.0% | |||
athenahealth, Inc. (a) | 600 | 16,662 | |
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||
Hotels, Resorts & Cruise Lines - 0.2% | |||
Ctrip.com International Ltd. sponsored ADR (a) | 26,500 | 1,066,890 | |
| |||
Shares | Value | ||
HOUSEHOLD DURABLES - 0.0% | |||
Consumer Electronics - 0.0% | |||
Sony Corp. sponsored ADR | 1,979 | $ 61,784 | |
TomTom Group BV (a) | 160 | 964 | |
| 62,748 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.1% | |||
Independent Power Producers & Energy Traders - 0.1% | |||
GCL-Poly Energy Holdings Ltd. | 2,724,000 | 631,246 | |
INTERNET & CATALOG RETAIL - 1.7% | |||
Internet Retail - 1.7% | |||
Amazon.com, Inc. (a) | 56,357 | 6,643,927 | |
Overstock.com, Inc. (a)(d) | 42,681 | 843,803 | |
Priceline.com, Inc. (a) | 13,612 | 3,054,533 | |
| 10,542,263 | ||
INTERNET SOFTWARE & SERVICES - 10.4% | |||
Internet Software & Services - 10.4% | |||
Akamai Technologies, Inc. (a) | 310,539 | 11,912,276 | |
Alibaba.com Ltd. (d) | 1,028,500 | 2,126,516 | |
Art Technology Group, Inc. (a) | 73,824 | 265,766 | |
Baidu.com, Inc. sponsored ADR (a) | 48,102 | 3,915,984 | |
China Finance Online Co. Ltd. ADR (a) | 68,770 | 543,971 | |
DealerTrack Holdings, Inc. (a) | 12,300 | 192,003 | |
eBay, Inc. (a) | 259,308 | 5,422,130 | |
Google, Inc. Class A (a) | 62,829 | 30,462,641 | |
GREE, Inc. | 8,500 | 697,310 | |
LogMeIn, Inc. | 21,900 | 624,150 | |
Mercadolibre, Inc. (a)(d) | 54,434 | 3,293,257 | |
NHN Corp. (a) | 31 | 4,823 | |
Open Text Corp. (a) | 30,500 | 1,207,301 | |
OpenTable, Inc. (a) | 400 | 17,880 | |
Rackspace Hosting, Inc. (a) | 38,900 | 727,430 | |
Tencent Holdings Ltd. | 30,300 | 583,960 | |
VistaPrint Ltd. (a) | 78,435 | 2,592,277 | |
Vocus, Inc. (a) | 10,300 | 167,787 | |
| 64,757,462 | ||
IT SERVICES - 2.6% | |||
Data Processing & Outsourced Services - 1.0% | |||
Amadeus IT Holding SA Class A (a) | 90,700 | 1,595,887 | |
hiSoft Technology International Ltd. ADR (a) | 29,800 | 357,600 | |
Visa, Inc. Class A | 57,900 | 4,246,965 | |
| 6,200,452 | ||
IT Consulting & Other Services - 1.6% | |||
Accenture PLC Class A | 78,437 | 3,109,243 | |
Atos Origin SA (a) | 22,032 | 946,173 | |
China Information Security Technology, Inc. (a) | 17 | 99 | |
Cognizant Technology Solutions Corp. Class A (a) | 58,000 | 3,164,480 | |
Hi Sun Technology (China) Ltd. (a) | 408,000 | 159,155 | |
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - CONTINUED | |||
IT Consulting & Other Services - continued | |||
International Business Machines Corp. | 7,163 | $ 919,729 | |
RightNow Technologies, Inc. (a) | 121,090 | 1,915,644 | |
| 10,214,523 | ||
TOTAL IT SERVICES | 16,414,975 | ||
MACHINERY - 0.2% | |||
Industrial Machinery - 0.2% | |||
Meyer Burger Technology AG (a)(d) | 24,700 | 666,382 | |
Mirle Automation Corp. | 174,000 | 169,716 | |
Shin Zu Shing Co. Ltd. | 156,732 | 509,578 | |
| 1,345,676 | ||
MEDIA - 0.3% | |||
Advertising - 0.1% | |||
AirMedia Group, Inc. ADR (a) | 128,600 | 471,962 | |
Focus Media Holding Ltd. ADR (a) | 19,100 | 346,283 | |
| 818,245 | ||
Cable & Satellite - 0.2% | |||
Virgin Media, Inc. | 40,700 | 876,271 | |
TOTAL MEDIA | 1,694,516 | ||
METALS & MINING - 0.0% | |||
Diversified Metals & Mining - 0.0% | |||
Timminco Ltd. (a)(d) | 5,600 | 3,051 | |
OFFICE ELECTRONICS - 0.5% | |||
Office Electronics - 0.5% | |||
Xerox Corp. | 304,550 | 2,966,317 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.4% | |||
Real Estate Services - 0.4% | |||
China Real Estate Information Corp. ADR (d) | 250,917 | 2,323,491 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 14.2% | |||
Semiconductor Equipment - 3.3% | |||
Amkor Technology, Inc. (a) | 54,063 | 311,944 | |
ASM International NV unit (a) | 12,900 | 328,176 | |
ASML Holding NV | 180,200 | 5,800,638 | |
centrotherm photovoltaics AG (a) | 35,159 | 1,427,433 | |
Cymer, Inc. (a) | 44,300 | 1,474,304 | |
GT Solar International, Inc. (a) | 348,800 | 2,260,224 | |
Lam Research Corp. (a) | 52,700 | 2,223,413 | |
LTX-Credence Corp. (a) | 100,260 | 280,728 | |
MEMC Electronic Materials, Inc. (a) | 123,435 | 1,180,039 | |
Photronics, Inc. (a) | 19,800 | 89,496 | |
Roth & Rau AG (a) | 48,016 | 1,589,574 | |
Sumco Corp. (a) | 18,000 | 341,568 | |
| |||
Shares | Value | ||
Tessera Technologies, Inc. (a) | 14,100 | $ 239,418 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 107,800 | 3,046,428 | |
| 20,593,383 | ||
Semiconductors - 10.9% | |||
Advanced Micro Devices, Inc. (a)(d) | 333,198 | 2,495,653 | |
Altera Corp. | 100,038 | 2,773,053 | |
Applied Micro Circuits Corp. (a) | 66,050 | 789,958 | |
ARM Holdings PLC sponsored ADR | 161,200 | 2,490,540 | |
Atmel Corp. (a) | 178,285 | 932,431 | |
Avago Technologies Ltd. | 153,768 | 3,345,992 | |
Broadcom Corp. Class A | 128,099 | 4,615,407 | |
Canadian Solar, Inc. (a)(d) | 100 | 1,210 | |
Cavium Networks, Inc. (a)(d) | 168,718 | 4,526,704 | |
Cree, Inc. (a) | 46,910 | 3,323,104 | |
CSR PLC (a) | 8,708 | 46,654 | |
Cypress Semiconductor Corp. (a) | 230,800 | 2,446,480 | |
Duksan Hi-Metal Co. Ltd. (a) | 52,336 | 800,914 | |
Energy Conversion Devices, Inc. (a)(d) | 8,000 | 38,720 | |
Fairchild Semiconductor International, Inc. (a) | 32,200 | 292,376 | |
First Solar, Inc. (a) | 4,714 | 591,371 | |
Global Unichip Corp. | 142,291 | 547,145 | |
Hittite Microwave Corp. (a) | 22,479 | 1,033,135 | |
Hynix Semiconductor, Inc. (a) | 3,230 | 61,446 | |
Infineon Technologies AG (a) | 47,596 | 321,275 | |
Intel Corp. | 2,881 | 59,349 | |
International Rectifier Corp. (a) | 101,100 | 1,974,483 | |
Intersil Corp. Class A | 24,100 | 273,776 | |
JA Solar Holdings Co. Ltd. ADR (a) | 104,800 | 623,560 | |
Jinkosolar Holdings Co. Ltd. ADR | 74,675 | 1,092,495 | |
Marvell Technology Group Ltd. (a) | 259,709 | 3,874,858 | |
MediaTek, Inc. | 4,046 | 54,832 | |
Micron Technology, Inc. (a) | 573,346 | 4,173,959 | |
Microsemi Corp. (a) | 4,100 | 65,436 | |
Monolithic Power Systems, Inc. (a) | 68,500 | 1,206,970 | |
Netlogic Microsystems, Inc. (a)(d) | 38,200 | 1,129,192 | |
NVIDIA Corp. (a) | 483,300 | 4,441,527 | |
PMC-Sierra, Inc. (a) | 18,400 | 149,040 | |
Power Integrations, Inc. | 67,186 | 2,375,025 | |
Radiant Opto-Electronics Corp. | 253,122 | 344,222 | |
Rambus, Inc. (a) | 35,400 | 695,610 | |
Realtek Semiconductor Corp. | 275,000 | 628,449 | |
Silicon Laboratories, Inc. (a) | 8,300 | 332,415 | |
Skyworks Solutions, Inc. (a) | 175,300 | 3,073,009 | |
SolarWorld AG (d) | 8,681 | 117,839 | |
Spreadtrum Communications, Inc. ADR (a)(d) | 110,400 | 1,024,512 | |
Standard Microsystems Corp. (a) | 83,000 | 1,827,660 | |
SunPower Corp.: | |||
Class A (a)(d) | 8,600 | 106,898 | |
Class B (a) | 4,216 | 48,653 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 3,200 | 31,808 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Trina Solar Ltd. ADR (a)(d) | 105,300 | $ 2,289,222 | |
TriQuint Semiconductor, Inc. (a) | 260,150 | 1,802,840 | |
Volterra Semiconductor Corp. (a) | 15,500 | 349,060 | |
Xilinx, Inc. | 79,236 | 2,212,269 | |
Yingli Green Energy Holding Co. Ltd. ADR (a) | 200 | 2,184 | |
YoungTek Electronics Corp. | 83,000 | 204,208 | |
| 68,058,928 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 88,652,311 | ||
SOFTWARE - 23.0% | |||
Application Software - 11.9% | |||
Adobe Systems, Inc. (a) | 2,534 | 72,776 | |
ANSYS, Inc. (a) | 35,408 | 1,591,590 | |
AsiaInfo Holdings, Inc. (a) | 61,100 | 1,246,440 | |
Autodesk, Inc. (a) | 225,083 | 6,648,952 | |
AutoNavi Holdings Ltd. ADR | 46,747 | 683,909 | |
Autonomy Corp. PLC (a) | 115,875 | 2,989,596 | |
Citrix Systems, Inc. (a) | 133,790 | 7,361,126 | |
Concur Technologies, Inc. (a) | 111,565 | 5,163,228 | |
Cyberlink Corp. | 141,000 | 588,464 | |
Epicor Software Corp. (a) | 97,861 | 757,444 | |
Informatica Corp. (a) | 192,600 | 5,803,038 | |
Intuit, Inc. (a) | 18,300 | 727,425 | |
JDA Software Group, Inc. (a) | 23,090 | 542,615 | |
Kenexa Corp. (a) | 23,969 | 288,347 | |
Kingdee International Software Group Co. Ltd. | 12,698,000 | 5,345,666 | |
Longtop Financial Technologies Ltd. ADR (a) | 59,500 | 1,983,135 | |
Manhattan Associates, Inc. (a) | 4,157 | 111,657 | |
MicroStrategy, Inc. Class A (a) | 3,859 | 320,258 | |
Nuance Communications, Inc. (a) | 263,369 | 4,348,222 | |
ORC Software AB | 17,800 | 323,670 | |
Parametric Technology Corp. (a) | 178,590 | 3,203,905 | |
Pegasystems, Inc. | 17,903 | 550,696 | |
QLIK Technologies, Inc. | 2,200 | 31,614 | |
Salesforce.com, Inc. (a) | 133,100 | 13,170,245 | |
Smith Micro Software, Inc. (a) | 74,100 | 728,403 | |
SolarWinds, Inc. (a) | 2,700 | 37,314 | |
Sonic Solutions, Inc. (a) | 15,051 | 118,451 | |
SuccessFactors, Inc. (a) | 212,200 | 4,309,782 | |
Synopsys, Inc. (a) | 100 | 2,184 | |
Taleo Corp. Class A (a) | 116,488 | 2,865,605 | |
TeleNav, Inc. | 55,473 | 301,773 | |
| |||
Shares | Value | ||
TIBCO Software, Inc. (a) | 74,594 | $ 1,011,495 | |
TiVo, Inc. (a) | 35,100 | 301,158 | |
Ulticom, Inc. (a) | 79,731 | 755,850 | |
| 74,286,033 | ||
Home Entertainment Software - 1.2% | |||
Activision Blizzard, Inc. | 27,100 | 321,948 | |
Changyou.com Ltd. (A Shares) ADR (a)(d) | 24,000 | 686,640 | |
Giant Interactive Group, Inc. ADR (d) | 42,767 | 287,822 | |
NCsoft Corp. | 22,557 | 3,585,470 | |
Neowiz Games Corp. | 10,197 | 328,477 | |
Nintendo Co. Ltd. ADR | 16,500 | 581,039 | |
Perfect World Co. Ltd. sponsored ADR Class B (a) | 33,300 | 777,888 | |
RealD, Inc. | 3,600 | 61,200 | |
Shanda Games Ltd. sponsored ADR | 73,300 | 485,979 | |
| 7,116,463 | ||
Systems Software - 9.9% | |||
Ariba, Inc. (a) | 58,417 | 932,919 | |
BMC Software, Inc. (a) | 259,700 | 9,240,126 | |
Check Point Software Technologies Ltd. (a) | 1,700 | 57,834 | |
CommVault Systems, Inc. (a) | 37,364 | 691,981 | |
Fortinet, Inc. | 36,400 | 655,564 | |
Insyde Software Corp. | 102,498 | 299,603 | |
Microsoft Corp. | 240,846 | 6,216,235 | |
Novell, Inc. (a) | 316,210 | 1,909,908 | |
Oracle Corp. | 1,061,830 | 25,101,661 | |
Red Hat, Inc. (a) | 222,600 | 7,156,590 | |
Rovi Corp. (a) | 44,471 | 1,978,960 | |
Symantec Corp. (a) | 106,500 | 1,381,305 | |
VMware, Inc. Class A (a) | 77,479 | 6,006,947 | |
| 61,629,633 | ||
TOTAL SOFTWARE | 143,032,129 | ||
WIRELESS TELECOMMUNICATION SERVICES - 1.4% | |||
Wireless Telecommunication Services - 1.4% | |||
American Tower Corp. Class A (a) | 7,800 | 360,672 | |
Crown Castle International Corp. (a) | 8,800 | 347,688 | |
SBA Communications Corp. Class A (a) | 9,547 | 345,410 | |
Sprint Nextel Corp. (a) | 1,340,998 | 6,128,361 | |
Syniverse Holdings, Inc. (a) | 69,504 | 1,552,024 | |
| 8,734,155 | ||
TOTAL COMMON STOCKS (Cost $536,183,956) | 601,329,801 | ||
Convertible Bonds - 0.2% | ||||
| Principal Amount | Value | ||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 1,270,000 | $ 1,088,517 | ||
Money Market Funds - 5.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.24% (b) | 20,595,734 | 20,595,734 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 15,908,146 | 15,908,146 | |
TOTAL MONEY MARKET FUNDS (Cost $36,503,880) | 36,503,880 | ||
TOTAL INVESTMENT PORTFOLIO - 102.5% (Cost $573,957,836) | 638,922,198 | ||
NET OTHER ASSETS (LIABILITIES) - (2.5)% | (15,744,166) | ||
NET ASSETS - 100% | $ 623,178,032 | ||
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 $68,252 or 0.0% 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 $301,331 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
China Security & Surveillance Technology, Inc. warrants 8/25/10 | 8/25/09 | $ 4 |
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 | $ 7,783 |
Fidelity Securities Lending Cash Central Fund | 143,831 |
Total | $ 151,614 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 601,329,801 | $ 601,028,470 | $ 91 | $ 301,240 |
Convertible Bonds | 1,088,517 | - | 1,088,517 | - |
Money Market Funds | 36,503,880 | 36,503,880 | - | - |
Total Investments in Securities: | $ 638,922,198 | $ 637,532,350 | $ 1,088,608 | $ 301,240 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 320,960 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (19,720) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 301,240 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at July 31, 2010 | $ (19,720) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.6% |
Cayman Islands | 3.8% |
Taiwan | 2.7% |
China | 1.8% |
Canada | 1.5% |
United Kingdom | 1.2% |
Bermuda | 1.0% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 4.4% |
| 100.0% |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $632,644,379 of which $499,806,783 and $132,837,596 will expire on July 31, 2011 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Advisor Technology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $15,225,824) - See accompanying schedule: Unaffiliated issuers (cost $537,453,956) | $ 602,418,318 |
|
Fidelity Central Funds (cost $36,503,880) | 36,503,880 |
|
Total Investments (cost $573,957,836) |
| $ 638,922,198 |
Foreign currency held at value (cost $18) | 18 | |
Receivable for investments sold | 14,799,525 | |
Receivable for fund shares sold | 452,089 | |
Dividends receivable | 341,826 | |
Interest receivable | 785 | |
Distributions receivable from Fidelity Central Funds | 11,946 | |
Other receivables | 24,336 | |
Total assets | 654,552,723 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 13,507,784 | |
Payable for fund shares redeemed | 1,226,639 | |
Accrued management fee | 289,116 | |
Distribution fees payable | 217,087 | |
Other affiliated payables | 173,835 | |
Other payables and accrued expenses | 52,084 | |
Collateral on securities loaned, at value | 15,908,146 | |
Total liabilities | 31,374,691 | |
|
|
|
Net Assets | $ 623,178,032 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,194,815,135 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (636,597,230) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 64,960,127 | |
Net Assets | $ 623,178,032 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 19.83 | |
|
|
|
Maximum offering price per share (100/94.25 of $19.83) | $ 21.04 | |
Class T: | $ 19.24 | |
|
|
|
Maximum offering price per share (100/96.50 of $19.24) | $ 19.94 | |
Class B: | $ 18.01 | |
|
|
|
Class C: | $ 18.09 | |
|
|
|
Institutional Class: | $ 20.68 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,811,505 |
Interest |
| 172,259 |
Income from Fidelity Central Funds (including $143,831 from security lending) |
| 151,614 |
Total income |
| 2,135,378 |
|
|
|
Expenses | ||
Management fee | $ 3,415,846 | |
Transfer agent fees | 1,967,192 | |
Distribution fees | 2,609,226 | |
Accounting and security lending fees | 232,303 | |
Custodian fees and expenses | 84,909 | |
Independent trustees' compensation | 3,656 | |
Registration fees | 80,936 | |
Audit | 51,189 | |
Legal | 3,778 | |
Interest | 383 | |
Miscellaneous | 8,796 | |
Total expenses before reductions | 8,458,214 | |
Expense reductions | (146,219) | 8,311,995 |
Net investment income (loss) | (6,176,617) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 117,179,736 | |
Foreign currency transactions | 43,566 | |
Capital gain distributions from Fidelity Central Funds | 1,063 | |
Total net realized gain (loss) |
| 117,224,365 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 9,237,133 | |
Assets and liabilities in foreign currencies | (5,287) | |
Total change in net unrealized appreciation (depreciation) |
| 9,231,846 |
Net gain (loss) | 126,456,211 | |
Net increase (decrease) in net assets resulting from operations | $ 120,279,594 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (6,176,617) | $ (112,131) |
Net realized gain (loss) | 117,224,365 | (206,821,306) |
Change in net unrealized appreciation (depreciation) | 9,231,846 | 162,039,261 |
Net increase (decrease) in net assets resulting from operations | 120,279,594 | (44,894,176) |
Share transactions - net increase (decrease) | (19,248,670) | (14,948,367) |
Redemption fees | 34,453 | 15,958 |
Total increase (decrease) in net assets | 101,065,377 | (59,826,585) |
|
|
|
Net Assets | ||
Beginning of period | 522,112,655 | 581,939,240 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $425,528, respectively) | $ 623,178,032 | $ 522,112,655 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.03 | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | .02 F | (.10) | (.17) | (.15) |
Net realized and unrealized gain (loss) | 3.96 | (1.03) | (3.41) | 5.13 | (.42) |
Total from investment operations | 3.80 | (1.01) | (3.51) | 4.96 | (.57) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 19.83 | $ 16.03 | $ 17.04 | $ 20.55 | $ 15.59 |
Total Return A,B | 23.71% | (5.93)% | (17.08)% | 31.82% | (3.53)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.21% | 1.23% | 1.21% | 1.25% | 1.30% |
Expenses net of fee waivers, if any | 1.21% | 1.23% | 1.21% | 1.25% | 1.30% |
Expenses net of all reductions | 1.18% | 1.22% | 1.19% | 1.24% | 1.20% |
Net investment income (loss) | (.83)% | .17% F | (.49)% | (.91)% | (.88)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 312,659 | $ 258,433 | $ 275,117 | $ 309,105 | $ 189,054 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.18)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.59 | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.20) | (.01) F | (.14) | (.21) | (.19) |
Net realized and unrealized gain (loss) | 3.85 | (1.02) | (3.33) | 5.02 | (.41) |
Total from investment operations | 3.65 | (1.03) | (3.47) | 4.81 | (.60) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 19.24 | $ 15.59 | $ 16.62 | $ 20.09 | $ 15.28 |
Total Return A,B | 23.41% | (6.20)% | (17.27)% | 31.48% | (3.78)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.46% | 1.49% | 1.46% | 1.51% | 1.55% |
Expenses net of fee waivers, if any | 1.46% | 1.49% | 1.46% | 1.51% | 1.55% |
Expenses net of all reductions | 1.44% | 1.48% | 1.45% | 1.49% | 1.44% |
Net investment income (loss) | (1.09)% | (.09)% F | (.74)% | (1.16)% | (1.13)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 169,049 | $ 151,170 | $ 173,917 | $ 260,339 | $ 260,966 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.44)%.
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 14.67 | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.27) | (.07) F | (.23) | (.28) | (.27) |
Net realized and unrealized gain (loss) | 3.61 | (.98) | (3.15) | 4.79 | (.38) |
Total from investment operations | 3.34 | (1.05) | (3.38) | 4.51 | (.65) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 18.01 | $ 14.67 | $ 15.72 | $ 19.10 | $ 14.59 |
Total Return A,B | 22.77% | (6.68)% | (17.70)% | 30.91% | (4.27)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of fee waivers, if any | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of all reductions | 1.94% | 1.97% | 1.94% | 2.00% | 1.94% |
Net investment income (loss) | (1.59)% | (.58)% F | (1.24)% | (1.67)% | (1.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,176 | $ 30,580 | $ 47,294 | $ 102,655 | $ 192,790 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 14.74 | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.28) | (.07) F | (.23) | (.29) | (.27) |
Net realized and unrealized gain (loss) | 3.63 | (.98) | (3.16) | 4.81 | (.38) |
Total from investment operations | 3.35 | (1.05) | (3.39) | 4.52 | (.65) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 18.09 | $ 14.74 | $ 15.79 | $ 19.18 | $ 14.66 |
Total Return A,B | 22.73% | (6.65)% | (17.67)% | 30.83% | (4.25)% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of fee waivers, if any | 1.96% | 1.98% | 1.96% | 2.01% | 2.05% |
Expenses net of all reductions | 1.93% | 1.97% | 1.94% | 1.99% | 1.94% |
Net investment income (loss) | (1.58)% | (.58)% F | (1.24)% | (1.66)% | (1.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 70,017 | $ 55,645 | $ 63,590 | $ 86,974 | $ 82,835 |
Portfolio turnover rate E | 115% | 225% | 214% | 208% | 258% |
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 $.04 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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.67 | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.11) | .06 E | (.04) | (.11) | (.09) |
Net realized and unrealized gain (loss) | 4.12 | (1.07) | (3.54) | 5.30 | (.44) |
Total from investment operations | 4.01 | (1.01) | (3.58) | 5.19 | (.53) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 20.68 | $ 16.67 | $ 17.68 | $ 21.26 | $ 16.07 |
Total Return A | 24.06% | (5.71)% | (16.84)% | 32.30% | (3.19)% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .92% | .98% | .94% | .93% | .90% |
Expenses net of fee waivers, if any | .92% | .98% | .94% | .93% | .90% |
Expenses net of all reductions | .90% | .97% | .92% | .92% | .80% |
Net investment income (loss) | (.55)% | .42% E | (.22)% | (.59)% | (.49)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 42,277 | $ 26,285 | $ 22,021 | $ 21,111 | $ 11,681 |
Portfolio turnover rate D | 115% | 225% | 214% | 208% | 258% |
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 $.04 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 reductions from 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, 2010
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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. 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, 2009, dividend income has been reduced $1,075,061 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, market discount, net operating losses, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Technology
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 98,770,260 |
Gross unrealized depreciation | (37,758,749) |
Net unrealized appreciation (depreciation) | $ 61,011,511 |
|
|
Tax Cost | $ 577,910,687 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (632,644,379) |
Net unrealized appreciation (depreciation) | $ 61,007,276 |
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.
4. Operating Policies.
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 $684,296,338 and $729,729,891, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares, except for the Institutional Class. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 768,219 | $ 11,929 |
Class T | .25% | .25% | 844,822 | 4,030 |
Class B | .75% | .25% | 321,710 | 241,714 |
Class C | .75% | .25% | 674,475 | 86,799 |
|
|
| $ 2,609,226 | $ 344,472 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 88,242 |
Class T | 19,307 |
Class B* | 43,677 |
Class C* | 6,996 |
| $ 158,222 |
* 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 |
Class A | $ 991,638 | .32 |
Class T | 552,433 | .33 |
Class B | 104,934 | .33 |
Class C | 217,727 | .32 |
Institutional Class | 100,460 | .29 |
| $ 1,967,192 |
|
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 $17,301 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 4,608,286 | .43% | $ 383 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $2,385 and is reflected in Miscellaneous expenses 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
Technology
8. Security Lending - continued
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 $146,219 for the period.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 4,395,059 | 3,881,770 | $ 83,404,216 | $ 49,340,225 |
Shares redeemed | (4,747,519) | (3,900,491) | (89,682,006) | (47,190,702) |
Net increase (decrease) | (352,460) | (18,721) | $ (6,277,790) | $ 2,149,523 |
Class T |
|
|
|
|
Shares sold | 1,549,777 | 2,072,898 | $ 28,544,536 | $ 24,512,394 |
Shares redeemed | (2,457,153) | (2,840,598) | (44,605,674) | (33,936,510) |
Net increase (decrease) | (907,376) | (767,700) | $ (16,061,138) | $ (9,424,116) |
Class B |
|
|
|
|
Shares sold | 364,834 | 327,585 | $ 6,301,624 | $ 3,794,593 |
Shares redeemed | (829,145) | (1,251,978) | (14,327,782) | (14,128,827) |
Net increase (decrease) | (464,311) | (924,393) | $ (8,026,158) | $ (10,334,234) |
Class C |
|
|
|
|
Shares sold | 985,847 | 654,688 | $ 17,180,918 | $ 7,947,929 |
Shares redeemed | (891,510) | (906,545) | (15,514,588) | (10,144,084) |
Net increase (decrease) | 94,337 | (251,857) | $ 1,666,330 | $ (2,196,155) |
Institutional Class |
|
|
|
|
Shares sold | 1,270,106 | 753,599 | $ 25,258,423 | $ 10,483,415 |
Shares redeemed | (802,290) | (422,236) | (15,808,337) | (5,626,800) |
Net increase (decrease) | 467,816 | 331,363 | $ 9,450,086 | $ 4,856,615 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity 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' distributions from 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, 2010 |
| Past 1 | Past 5 | Past 10 |
Institutional Class A |
| 11.66% | 3.92% | -0.42% |
A Prior to October 1, 2006, Fidelity Advisor Utilities Fund 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, 2000. 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
Fidelity Advisor Utilities Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares returned 11.42%, 11.13%, 10.56% and 10.54%, respectively (excluding sales charges), underperforming the S&P 500® but outperforming the 10.00% return of the MSCI® U.S. IM Utilities 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. At the industry level, the fund benefited versus the MSCI index from strong security selection in our three main areas of focus, independent power/energy trade, electric utilities and multi-utilities. On an individual security basis, the fund got a boost from underweighting Chicago-based Exelon, the nation's largest deregulated electric utility by market capitalization, which declined due to sluggish earnings growth. Independent power producer Constellation Energy Group rose on the strength of a recovery in power demand in Maryland. TECO Energy, a Florida-based multi-utility that produces coal, fared well, as higher coal prices propelled the company's earnings growth. An underweighting and timely ownership of Pennsylvania electric utility PPL also helped. I avoided the stock when it declined, in part because the company announced a costly acquisition of a German power producer. Ohio's American Electric Power, the largest electric utility in the Midwest, experienced improved industrial power demand that coincided with a recovery in manufacturing activity. Conversely, overweighting independent power/energy trade and underweighting gas utilities hurt. Not owning Virginia multi-utility Dominion Resources, a major index constituent, dampened performance. Dominion's share price rose, but I chose to focus on other, more-attractive regulated utilities. Untimely ownership of Utah-based gas utility Questar also detracted, as the fund wasn't able to fully capitalize on the company's spin-off of its exploration and production operations. Ohio-based FirstEnergy declined after its purchase of another deregulated electricity provider was frowned upon by the market. The share price of global power producer AES declined in part because of the company's announcement in May that it was reducing its earnings guidance for fiscal 2010. Exelon and Constellation Energy Group were not held at period end.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2010, the fund's Institutional Class shares returned 11.66%, underperforming the S&P 500® but outperforming the 10.00% return of the MSCI® U.S. IM Utilities 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. At the industry level, the fund benefited versus the MSCI index from strong security selection in our three main areas of focus, independent power/energy trade, electric utilities and multi-utilities. On an individual security basis, the fund got a boost from underweighting Chicago-based Exelon, the nation's largest deregulated electric utility by market capitalization, which declined due to sluggish earnings growth. Independent power producer Constellation Energy Group rose on the strength of a recovery in power demand in Maryland. TECO Energy, a Florida-based multi-utility that produces coal, fared well, as higher coal prices propelled the company's earnings growth. An underweighting and timely ownership of Pennsylvania electric utility PPL also helped. I avoided the stock when it declined, in part because the company announced a costly acquisition of a German power producer. Ohio's American Electric Power, the largest electric utility in the Midwest, experienced improved industrial power demand that coincided with a recovery in manufacturing activity. Conversely, overweighting independent power/energy trade and underweighting gas utilities hurt. Not owning Virginia multi-utility Dominion Resources, a major index constituent, dampened performance. Dominion's share price rose, but I chose to focus on other, more-attractive regulated utilities. Untimely ownership of Utah-based gas utility Questar also detracted, as the fund wasn't able to fully capitalize on the company's spin-off of its exploration and production operations. Ohio-based FirstEnergy declined after its purchase of another deregulated electricity provider was frowned upon by the market. The share price of global power producer AES declined in part because of the company's announcement in May that it was reducing its earnings guidance for fiscal 2010. Exelon and Constellation Energy Group 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
Fidelity 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, 2010 to July 31, 2010).
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.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.22% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,064.80 | $ 6.25 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.74 | $ 6.11 |
Class T | 1.49% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.50 | $ 7.62 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.41 | $ 7.45 |
Class B | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,060.90 | $ 10.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Class C | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,061.20 | $ 10.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Institutional Class | .99% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,065.80 | $ 5.07 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.89 | $ 4.96 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Utilities
Fidelity Advisor Utilities Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
NextEra Energy, Inc. | 10.5 | 6.8 |
American Electric Power Co., Inc. | 9.1 | 9.5 |
Sempra Energy | 8.7 | 0.0 |
Public Service Enterprise Group, Inc. | 8.2 | 0.0 |
PPL Corp. | 6.9 | 0.0 |
PG&E Corp. | 5.0 | 8.8 |
NV Energy, Inc. | 5.0 | 3.6 |
National Grid PLC | 5.0 | 0.0 |
Entergy Corp. | 4.9 | 8.2 |
FirstEnergy Corp. | 4.9 | 9.1 |
| 68.2 | |
Top Industries (% of fund's net assets) | |||
As of July 31, 2010 | |||
| Electric Utilities | 52.4% |
|
| Multi-Utilities | 37.2% |
|
| Independent Power Producers & Energy Traders | 3.4% |
|
| Oil, Gas & Consumable Fuels | 3.1% |
|
| Gas Utilities | 2.9% |
|
| All Others* | 1.0% |
|
As of January 31, 2010 | |||
| Electric Utilities | 45.7% |
|
| Multi-Utilities | 35.3% |
|
 | Independent Power Producers & Energy Traders | 12.5% |
|
| Gas Utilities | 5.5% |
|
| All Others* | 1.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Fidelity Advisor Utilities Fund
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 52.4% | |||
Electric Utilities - 52.4% | |||
American Electric Power Co., Inc. | 343,573 | $ 12,361,757 | |
Companhia Paranaense de Energia-Copel (PN-B) sponsored ADR | 17,300 | 379,216 | |
Entergy Corp. | 85,200 | 6,603,852 | |
FirstEnergy Corp. | 174,400 | 6,574,880 | |
ITC Holdings Corp. | 111,047 | 6,300,807 | |
NextEra Energy, Inc. | 271,286 | 14,188,254 | |
NV Energy, Inc. | 527,965 | 6,705,156 | |
Pepco Holdings, Inc. | 65,547 | 1,108,400 | |
Pinnacle West Capital Corp. | 136,072 | 5,182,982 | |
PPL Corp. | 343,161 | 9,364,864 | |
Southern Co. | 58,400 | 2,063,272 | |
| 70,833,440 | ||
GAS UTILITIES - 2.9% | |||
Gas Utilities - 2.9% | |||
National Fuel Gas Co. New Jersey | 59,858 | 2,876,177 | |
Questar Corp. | 66,100 | 1,087,345 | |
| 3,963,522 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 3.4% | |||
Independent Power Producers & Energy Traders - 3.4% | |||
AES Corp. (a) | 442,100 | 4,558,051 | |
MULTI-UTILITIES - 37.2% | |||
Multi-Utilities - 37.2% | |||
Alliant Energy Corp. | 31,876 | 1,101,635 | |
CMS Energy Corp. | 405,900 | 6,461,928 | |
National Grid PLC | 834,900 | 6,684,647 | |
PG&E Corp. | 151,304 | 6,717,898 | |
Public Service Enterprise Group, Inc. | 338,703 | 11,143,329 | |
Sempra Energy | 237,200 | 11,800,700 | |
TECO Energy, Inc. | 392,249 | 6,409,349 | |
| 50,319,486 | ||
| |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 3.1% | |||
Coal & Consumable Fuels - 1.0% | |||
Massey Energy Co. | 45,900 | $ 1,403,622 | |
Oil & Gas Exploration & Production - 1.8% | |||
Canacol Energy Ltd. (a) | 943,200 | 1,055,188 | |
Pacific Rubiales Energy Corp. (a) | 57,900 | 1,388,992 | |
| 2,444,180 | ||
Oil & Gas Storage & Transport - 0.3% | |||
Chesapeake Midstream Partners | 16,500 | 377,850 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 4,225,652 | ||
TOTAL COMMON STOCKS (Cost $129,105,969) | 133,900,151 | ||
Money Market Funds - 0.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.24% (b) | 899,773 | 899,773 | |
TOTAL INVESTMENT PORTFOLIO - 99.7% (Cost $130,005,742) | 134,799,924 | ||
NET OTHER ASSETS (LIABILITIES) - 0.3% | 460,344 | ||
NET ASSETS - 100% | $ 135,260,268 | ||
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,547 |
Fidelity Securities Lending Cash Central Fund | 5,660 |
Total | $ 8,207 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 133,900,151 | $ 127,215,504 | $ 6,684,647 | $ - |
Money Market Funds | 899,773 | 899,773 | - | - |
Total Investments in Securities: | $ 134,799,924 | $ 128,115,277 | $ 6,684,647 | $ - |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $196,362,484 of which $154,412,532, $13,867,918 and $28,082,034 will expire on July 31, 2011, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
The Fund intends to elect to defer to its fiscal year ending July 31, 2011 approximately $4,837,964 of losses recognized during the period November 1, 2009 to July 31, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fidelity Advisor Utilities Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $129,105,969) | $ 133,900,151 |
|
Fidelity Central Funds (cost $899,773) | 899,773 |
|
Total Investments (cost $130,005,742) |
| $ 134,799,924 |
Receivable for investments sold | 4,973,051 | |
Receivable for fund shares sold | 122,708 | |
Dividends receivable | 110,600 | |
Distributions receivable from Fidelity Central Funds | 276 | |
Other receivables | 12,776 | |
Total assets | 140,019,335 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,322,432 | |
Payable for fund shares redeemed | 248,156 | |
Accrued management fee | 62,252 | |
Distribution fees payable | 51,871 | |
Other affiliated payables | 36,645 | |
Other payables and accrued expenses | 37,711 | |
Total liabilities | 4,759,067 | |
|
|
|
Net Assets | $ 135,260,268 | |
Net Assets consist of: |
| |
Paid in capital | $ 333,187,270 | |
Undistributed net investment income | 1,286,115 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (204,003,841) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 4,790,724 | |
Net Assets | $ 135,260,268 | |
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 16.59 | |
|
|
|
Maximum offering price per share (100/94.25 of $16.59) | $ 17.60 | |
Class T: | $ 16.59 | |
|
|
|
Maximum offering price per share (100/96.50 of $16.59) | $ 17.19 | |
Class B: | $ 16.38 | |
|
|
|
Class C: | $ 16.30 | |
|
|
|
Institutional Class: | $ 16.85 | |
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
Fidelity Advisor Utilities Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,037,705 |
Interest |
| 2 |
Income from Fidelity Central Funds |
| 8,207 |
Total income |
| 5,045,914 |
|
|
|
Expenses | ||
Management fee | $ 758,623 | |
Transfer agent fees | 444,613 | |
Distribution fees | 647,138 | |
Accounting and security lending fees | 53,623 | |
Custodian fees and expenses | 9,780 | |
Independent trustees' compensation | 826 | |
Registration fees | 54,515 | |
Audit | 47,367 | |
Legal | 2,702 | |
Miscellaneous | 2,302 | |
Total expenses before reductions | 2,021,489 | |
Expense reductions | (47,050) | 1,974,439 |
Net investment income (loss) | 3,071,475 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,320,574 | |
Foreign currency transactions | (12,353) | |
Total net realized gain (loss) |
| 6,308,221 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 4,899,320 | |
Assets and liabilities in foreign currencies | (3,642) | |
Total change in net unrealized appreciation (depreciation) |
| 4,895,678 |
Net gain (loss) | 11,203,899 | |
Net increase (decrease) in net assets resulting from operations | $ 14,275,374 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,071,475 | $ 3,120,844 |
Net realized gain (loss) | 6,308,221 | (55,782,452) |
Change in net unrealized appreciation (depreciation) | 4,895,678 | (1,796,906) |
Net increase (decrease) in net assets resulting from operations | 14,275,374 | (54,458,514) |
Distributions to shareholders from net investment income | (3,192,017) | (2,162,549) |
Share transactions - net increase (decrease) | (13,238,224) | (29,372,654) |
Redemption fees | 1,956 | 4,076 |
Total increase (decrease) in net assets | (2,152,911) | (85,989,641) |
|
|
|
Net Assets | ||
Beginning of period | 137,413,179 | 223,402,820 |
End of period (including undistributed net investment income of $1,286,115 and undistributed net investment income of $1,435,445, respectively) | $ 135,260,268 | $ 137,413,179 |
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.27 | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .40 | .35 | .24 | .21 | .24 |
Net realized and unrealized gain (loss) | 1.32 | (5.10) | (.38) | 3.56 | 2.06 |
Total from investment operations | 1.72 | (4.75) | (.14) | 3.77 | 2.30 |
Distributions from net investment income | (.40) | (.26) | (.32) | (.23) | (.27) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.59 | $ 15.27 | $ 20.28 | $ 20.74 | $ 17.20 |
Total Return A,B | 11.42% | (23.44)% | (.82)% | 22.14% | 15.38% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.26% | 1.26% | 1.21% | 1.27% | 1.34% |
Expenses net of fee waivers, if any | 1.26% | 1.26% | 1.21% | 1.27% | 1.34% |
Expenses net of all reductions | 1.22% | 1.26% | 1.21% | 1.26% | 1.32% |
Net investment income (loss) | 2.49% | 2.37% | 1.11% | 1.04% | 1.51% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 64,890 | $ 66,064 | $ 105,219 | $ 94,842 | $ 40,599 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.27 | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .35 | .31 | .18 | .15 | .19 |
Net realized and unrealized gain (loss) | 1.33 | (5.10) | (.39) | 3.56 | 2.08 |
Total from investment operations | 1.68 | (4.79) | (.21) | 3.71 | 2.27 |
Distributions from net investment income | (.36) | (.20) | (.24) | (.18) | (.19) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.59 | $ 15.27 | $ 20.26 | $ 20.71 | $ 17.18 |
Total Return A,B | 11.13% | (23.61)% | (1.11)% | 21.74% | 15.20% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.52% | 1.52% | 1.47% | 1.54% | 1.60% |
Expenses net of fee waivers, if any | 1.52% | 1.52% | 1.47% | 1.54% | 1.60% |
Expenses net of all reductions | 1.49% | 1.52% | 1.47% | 1.54% | 1.58% |
Net investment income (loss) | 2.23% | 2.11% | .84% | .76% | 1.25% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 33,651 | $ 33,989 | $ 54,346 | $ 62,592 | $ 52,128 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.08 | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .27 | .24 | .08 | .05 | .12 |
Net realized and unrealized gain (loss) | 1.31 | (5.04) | (.39) | 3.52 | 2.03 |
Total from investment operations | 1.58 | (4.80) | (.31) | 3.57 | 2.15 |
Distributions from net investment income | (.28) | (.13) | (.08) | (.07) | (.08) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.38 | $ 15.08 | $ 20.01 | $ 20.40 | $ 16.90 |
Total Return A,B | 10.56% | (23.97)% | (1.59)% | 21.18% | 14.57% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 2.01% | 2.01% | 1.96% | 2.04% | 2.09% |
Expenses net of fee waivers, if any | 2.01% | 2.01% | 1.96% | 2.04% | 2.09% |
Expenses net of all reductions | 1.98% | 2.01% | 1.95% | 2.03% | 2.06% |
Net investment income (loss) | 1.74% | 1.62% | .36% | .27% | .76% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 8,794 | $ 10,634 | $ 20,747 | $ 43,845 | $ 65,959 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.02 | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .27 | .24 | .08 | .06 | .13 |
Net realized and unrealized gain (loss) | 1.30 | (5.02) | (.39) | 3.51 | 2.04 |
Total from investment operations | 1.57 | (4.78) | (.31) | 3.57 | 2.17 |
Distributions from net investment income | (.29) | (.13) | (.14) | (.10) | (.10) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 16.30 | $ 15.02 | $ 19.93 | $ 20.38 | $ 16.91 |
Total Return A,B | 10.54% | (23.96)% | (1.58)% | 21.23% | 14.72% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 2.01% | 2.01% | 1.95% | 1.99% | 2.02% |
Expenses net of fee waivers, if any | 2.01% | 2.01% | 1.95% | 1.99% | 2.02% |
Expenses net of all reductions | 1.97% | 2.01% | 1.95% | 1.99% | 2.00% |
Net investment income (loss) | 1.74% | 1.62% | .36% | .32% | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,415 | $ 22,352 | $ 37,387 | $ 43,292 | $ 32,823 |
Portfolio turnover rate E | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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
Financial Highlights - Institutional Class
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 15.51 | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 |
Income from Investment Operations | �� |
|
|
|
|
Net investment income (loss) B | .44 | .39 | .31 | .29 | .30 |
Net realized and unrealized gain (loss) | 1.35 | (5.17) | (.38) | 3.58 | 2.10 |
Total from investment operations | 1.79 | (4.78) | (.07) | 3.87 | 2.40 |
Distributions from net investment income | (.45) | (.23) | (.36) | (.30) | (.33) |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 16.85 | $ 15.51 | $ 20.52 | $ 20.95 | $ 17.38 |
Total Return A | 11.66% | (23.24)% | (.49)% | 22.54% | 15.95% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | 1.00% | 1.00% | .91% | .92% | .94% |
Expenses net of fee waivers, if any | 1.00% | 1.00% | .91% | .92% | .94% |
Expenses net of all reductions | .97% | 1.00% | .90% | .92% | .92% |
Net investment income (loss) | 2.75% | 2.63% | 1.41% | 1.39% | 1.91% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 6,511 | $ 4,373 | $ 5,704 | $ 12,822 | $ 6,479 |
Portfolio turnover rate D | 216% | 247% | 77% | 118% | 64% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), 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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Utilities
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 7,140,331 |
Gross unrealized depreciation | (5,149,542) |
Net unrealized appreciation (depreciation) | $ 1,990,789 |
|
|
Tax Cost | $ 132,809,135 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,286,115 |
Capital loss carryforward | $ (196,362,484) |
Net unrealized appreciation (depreciation) | $ 1,987,331 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 3,192,017 | $ 2,162,549 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $286,648,743 and $300,228,488, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 163,817 | $ 3,767 |
Class T | .25% | .25% | 169,126 | 888 |
Class B | .75% | .25% | 96,659 | 72,568 |
Class C | .75% | .25% | 217,536 | 15,785 |
|
|
| $ 647,138 | $ 93,008 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 23,566 |
Class T | 6,328 |
Class B* | 24,054 |
Class C* | 955 |
| $ 54,903 |
* 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.
Utilities
5. 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 |
Class A | $ 212,559 | .32 |
Class T | 114,128 | .34 |
Class B | 31,788 | .33 |
Class C | 70,487 | .32 |
Institutional Class | 15,651 | .32 |
| $ 444,613 |
|
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 $2,040 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $545 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $5,660.
8. 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 $47,050 for the period.
Annual Report
Notes to Financial Statements - continued
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 1,700,301 | $ 1,279,763 |
Class T | 782,544 | 508,856 |
Class B | 184,067 | 107,816 |
Class C | 413,366 | 209,682 |
Institutional Class | 111,739 | 56,432 |
Total | $ 3,192,017 | $ 2,162,549 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 582,593 | 856,135 | $ 9,269,210 | $ 12,539,810 |
Reinvestment of distributions | 96,455 | 73,926 | 1,532,370 | 1,138,401 |
Shares redeemed | (1,092,389) | (1,794,060) | (17,388,823) | (25,956,960) |
Net increase (decrease) | (413,341) | (863,999) | $ (6,587,243) | $ (12,278,749) |
Class T |
|
|
|
|
Shares sold | 214,231 | 257,339 | $ 3,421,542 | $ 3,753,639 |
Reinvestment of distributions | 46,549 | 31,967 | 741,068 | 480,828 |
Shares redeemed | (457,353) | (746,038) | (7,262,506) | (10,889,452) |
Net increase (decrease) | (196,573) | (456,732) | $ (3,099,896) | $ (6,654,985) |
Class B |
|
|
|
|
Shares sold | 89,148 | 154,111 | $ 1,411,608 | $ 2,249,187 |
Reinvestment of distributions | 10,582 | 6,919 | 167,069 | 98,250 |
Shares redeemed | (267,950) | (492,642) | (4,203,072) | (7,223,742) |
Net increase (decrease) | (168,220) | (331,612) | $ (2,624,395) | $ (4,876,305) |
Class C |
|
|
|
|
Shares sold | 188,570 | 216,794 | $ 2,992,972 | $ 3,077,077 |
Reinvestment of distributions | 20,486 | 11,490 | 322,145 | 162,462 |
Shares redeemed | (383,514) | (615,787) | (5,996,156) | (8,815,385) |
Net increase (decrease) | (174,458) | (387,503) | $ (2,681,039) | $ (5,575,846) |
Institutional Class |
|
|
|
|
Shares sold | 287,925 | 137,801 | $ 4,699,845 | $ 1,988,698 |
Reinvestment of distributions | 5,221 | 2,995 | 84,041 | 45,330 |
Shares redeemed | (188,687) | (136,905) | (3,029,537) | (2,020,797) |
Net increase (decrease) | 104,459 | 3,891 | $ 1,754,349 | $ 13,231 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
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 Consumer Discretionary Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Energy 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 Consumer Discretionary Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund (collectively, the "Funds"), including the schedules of investments, as of July 31, 2010, 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, 2010, 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 Consumer Discretionary Fund, Fidelity Advisor Industrials Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Electronics Fund, Fidelity Advisor Financial Services Fund, Fidelity Advisor Health Care Fund, Fidelity Advisor Energy Fund, Fidelity Advisor Technology Fund, and Fidelity Advisor Utilities Fund as of July 31, 2010, 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 the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 20, 2010
Annual Report
Trustees and Officers
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, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 411 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.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the funds' Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through FMR, its affiliates and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. 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 (75) | |
| 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (62) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). 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. Mr. Lautenbach is also 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 (65) | |
| 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (66) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small 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. In addition, Ms. Small 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 (71) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000- |
David M. Thomas (61) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley 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, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010- |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). 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). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (63) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and is an employee of Fidelity Investments (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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| September 2009 | December 2009 |
Fidelity Advisor Consumer Discretionary Fund |
|
|
Institutional Class | 100% | -% |
Fidelity Advisor Electronics Fund |
|
|
Institutional Class | 100% | -% |
Fidelity Advisor Financial Services Fund |
|
|
Institutional Class | 45% | -% |
Fidelity Advisor Industrials Fund |
|
|
Institutional Class | 100% | 100% |
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 2009 | December 2009 |
Fidelity Advisor Consumer Discretionary Fund |
|
|
Institutional Class | 100% | -% |
Fidelity Advisor Electronics Fund |
|
|
Institutional Class | 100% | -% |
Fidelity Advisor Financial Services Fund |
|
|
Institutional Class | 47% | -% |
Fidelity Advisor Industrials Fund |
|
|
Institutional Class | 100% | 100% |
Fidelity Advisor Utilities Fund |
|
|
Institutional Class | 100% | 100% |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Focus Funds
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2010 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.
In considering whether to renew the Advisory Contracts for each fund, the Board 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 is in the best interests of fund shareholders and that the compensation to be received by Fidelity under the management contracts is fair and reasonable. 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 Fidelity's competitors, 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 the 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 to act in the best interest of each fund.
Resources Dedicated to Investment Management and Support Services. The Board and the equity research subcommittee of the Board's Fund Oversight Committee 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 and market and securities data 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. The Board noted FMR's continued focus on strengthening the organization and discipline of equity portfolio management and research.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and restructuring and broadening the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) launching Class F of certain funds as a lower-fee class available to Freedom K and Freedom Index Funds; (iv) lowering the initial investment minimums and ongoing balance requirements for Real Estate High Income Fund; (v) eliminating subsequent purchase minimums for all funds and adding a waiver of the investment minimum requirement for new accounts opened with the proceeds of a systematic withdrawal plan; (vi) eliminating the withdrawal minimum and maximum limits for systematic withdrawals from Advisor funds; (vii) expanding sales load waivers on Class A shares for Destiny Planholders and expanding Institutional Class eligibility for Class O Destiny Planholders; and (viii) changing certain Class A and Class T sales charge structures to further align them with industry practices.
Annual Report
Investment Performance. The Board considered whether each fund has operated in accordance with 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 over multiple periods against a third-party-sponsored index that reflects the market sector in which the fund invests. 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 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, 2009, 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 five-year performance).
For each of Advisor Biotechnology, Advisor Communications Equipment, Advisor Consumer Discretionary, and Advisor Technology, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2009, 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 five-year performance).
Advisor Biotechnology
The Board noted 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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Communications Equipment
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Consumer Discretionary
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Advisor Electronics
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Energy
The Board noted that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Financial Services
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Health Care
The Board noted that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Advisor Industrials
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Advisor Technology
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Utilities
The Board noted that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the one- and five-year periods, although the fund's three-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. The Board also reviewed the fund's performance since inception as well as performance in the current year.
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 and factoring in the unprecedented market events in recent years, the Board concluded that the nature, extent, and quality of investment management and support services and of shareholder and administrative 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.
Management Fee. 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 8% means that 92% 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 2009.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expenses. 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.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
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 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, and Class C of Advisor Communications Equipment ranked below its competitive median for 2009, the total expenses of Institutional Class ranked equal to its competitive median for 2009, and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
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 2009, the total expenses of Institutional Class ranked equal to its competitive median for 2009, and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, and Class C of Advisor Electronics ranked below its competitive median for 2009, the total expenses of Institutional Class ranked equal to its competitive median for 2009, and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each class of Advisor Energy ranked below its competitive median for 2009.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Financial Services ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Health Care ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Industrials ranked below its competitive median for 2009 and the total expenses of Class T ranked equal to its competitive median for 2009.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Technology ranked below its competitive median for 2009 and the total expenses of Class T ranked equal to its competitive median for 2009.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class of Advisor Utilities ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expenses and fees charged to other Fidelity clients, 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, including the findings of the Committee.
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 Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board has also reviewed Fidelity's non-fund businesses and 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 were satisfied that the profitability was not excessive in the circumstances.
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.
In February 2009, the Board and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, considering the findings of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, the rationale for the compensation structure, and how the compensation structure provides appropriate performance incentives; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) management and other fees paid by FMR to affiliated sub-advisers on behalf of the Fidelity funds; (vi) Fidelity's fee structures and rationale for recommending different fees among different categories of funds; (vii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; (viii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (ix) explanations regarding the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses for certain funds and classes.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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 Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
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-0910
1.789242.106
(Fidelity Investment logo)(registered trademark)
Fidelity® Advisor
Real Estate
Fund - Class A, Class T, Class B
and Class C
Annual Report
July 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults 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
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets reversed course in late April 2010 when investor sentiment turned bearish due in great measure to concern that Europe's debt crisis would expand and slow or derail economic recovery. However, a bounceback in July helped to recover some of the ground that was lost. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the 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 can be tax advantages and cost benefits to consider as well. 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 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 "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 by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Fidelity Advisor Real Estate Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Class A (incl. 5.75% sales charge) | 51.16% | 0.05% | 9.36% |
Class T (incl. 3.50% sales charge) | 54.42% | 0.28% | 9.40% |
Class B (incl. contingent deferred sales charge) B | 54.14% | 0.16% | 9.44% |
Class C (incl. contingent deferred sales charge) C | 58.28% | 0.49% | 9.36% |
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 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.
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 S&P 500® Index performed over the same period. See the previous page for additional information regarding the performance of Class A.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares rose 60.38%, 60.02%, 59.14% and 59.28%, respectively (excluding sales charges). In comparison, the Dow Jones U.S. Select Real Estate Securities IndexSM increased 55.21%. Relative to the Dow Jones index, stock selection was very favorable. The strongest relative performer was SL Green Realty, a real estate investment trust (REIT) whose office properties are concentrated in and around New York City. Concern about debt hurt mall owner Macerich, but as investors became more tolerant about risk, the company began doing better. Other positives included retail REITs Developers Diversified Realty and CBL & Associates, as well as Sunstone Hotel Investors, Apartment Investment & Management and Health Care REIT, the last of which was not in the portfolio at period end. On the negative side, industrial REIT ProLogis underperformed as investors continued to be concerned about its excess debt and relatively complex business model. Corporate Office Properties, a relatively defensive office REIT, also lagged, as did the fund's underweighted position in AvalonBay Communities, a high-quality apartment REIT.
Comments from Samuel Wald, Portfolio Manager of Fidelity ®Advisor Real Estate Fund: For the year ending July 31, 2010, the fund's Institutional Class shares rose 60.75%. In comparison, the Dow Jones U.S. Select Real Estate Securities IndexSM increased 55.21%. Relative to the Dow Jones index, stock selection was very favorable. The strongest relative performer was SL Green Realty, a real estate investment trust (REIT) whose office properties are concentrated in and around New York City. Concern about debt hurt mall owner Macerich, but as investors became more tolerant about risk, the company began doing better. Other positives included retail REITs Developers Diversified Realty and CBL & Associates, as well as Sunstone Hotel Investors, Apartment Investment & Management and Health Care REIT, the last of which was not in the portfolio at period end. On the negative side, industrial REIT ProLogis underperformed as investors continued to be concerned about its excess debt and relatively complex business model. Corporate Office Properties, a relatively defensive office REIT, also lagged, as did the fund's underweighted position in AvalonBay Communities, a high-quality apartment 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, 2010 to July 31, 2010).
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.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.21% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,232.10 | $ 6.70 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.79 | $ 6.06 |
Class T | 1.48% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,231.20 | $ 8.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.46 | $ 7.40 |
Class B | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,228.10 | $ 10.88 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Class C | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,228.80 | $ 10.89 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Institutional Class | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,234.90 | $ 5.32 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.03 | $ 4.81 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Simon Property Group, Inc. | 10.6 | 10.7 |
Public Storage | 7.6 | 4.2 |
Vornado Realty Trust | 5.5 | 4.6 |
Ventas, Inc. | 5.5 | 6.4 |
HCP, Inc. | 4.1 | 3.2 |
ProLogis Trust | 3.9 | 5.5 |
SL Green Realty Corp. | 3.9 | 4.4 |
Digital Realty Trust, Inc. | 3.6 | 3.8 |
Boston Properties, Inc. | 3.4 | 2.8 |
Alexandria Real Estate Equities, Inc. | 3.3 | 2.2 |
| 51.4 | |
Top Five REIT Sectors as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
REITs - Malls | 15.9 | 14.6 |
REITs - Apartments | 15.1 | 13.9 |
REITs - Office Buildings | 14.9 | 15.6 |
REITs - Industrial Buildings | 12.3 | 14.3 |
REITs - Health Care Facilities | 12.1 | 11.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2010* | As of January 31, 2010** | ||||||
 | Stocks 97.4% |
| | Stocks 98.3% |
| ||
 | Convertible |
| | Convertible |
| ||
 | Short-Term |
| | Short-Term |
| ||
* Foreign investments | 1.4% |
| ** Foreign investments | 1.4% |
| ||
Annual Report
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - 2.0% | |||
Health Care Facilities - 2.0% | |||
Brookdale Senior Living, Inc. (a) | 80,600 | $ 1,142,908 | |
Emeritus Corp. (a)(d) | 321,488 | 5,532,808 | |
Sunrise Senior Living, Inc. (a)(d) | 318,092 | 951,095 | |
TOTAL HEALTH CARE FACILITIES | 7,626,811 | ||
REAL ESTATE INVESTMENT TRUSTS - 91.0% | |||
REITs - Apartments - 15.1% | |||
Apartment Investment & Management Co. Class A | 301,853 | 6,480,784 | |
AvalonBay Communities, Inc. | 52,323 | 5,498,624 | |
Colonial Properties Trust (SBI) | 42,500 | 685,100 | |
Education Realty Trust, Inc. | 1,032,611 | 7,176,646 | |
Equity Residential (SBI) | 250,902 | 11,503,857 | |
Essex Property Trust, Inc. | 106,300 | 11,173,193 | |
Mid-America Apartment Communities, Inc. | 221,802 | 12,527,377 | |
Post Properties, Inc. | 140,400 | 3,577,392 | |
TOTAL REITS - APARTMENTS | 58,622,973 | ||
REITs - Health Care Facilities - 12.1% | |||
HCP, Inc. | 444,933 | 15,781,774 | |
Healthcare Realty Trust, Inc. | 178,669 | 4,193,361 | |
National Health Investors, Inc. | 55,796 | 2,100,719 | |
Omega Healthcare Investors, Inc. | 161,424 | 3,548,100 | |
Ventas, Inc. | 420,000 | 21,302,400 | |
TOTAL REITS - HEALTH CARE FACILITIES | 46,926,354 | ||
REITs - Hotels - 6.7% | |||
DiamondRock Hospitality Co. | 1,173,363 | 10,888,809 | |
Host Hotels & Resorts, Inc. | 443,825 | 6,364,451 | |
Sunstone Hotel Investors, Inc. (a) | 864,366 | 8,920,257 | |
TOTAL REITS - HOTELS | 26,173,517 | ||
REITs - Industrial Buildings - 12.3% | |||
AMB Property Corp. (SBI) | 39,800 | 993,408 | |
DCT Industrial Trust, Inc. | 371,300 | 1,741,397 | |
ProLogis Trust | 1,409,451 | 15,306,638 | |
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - CONTINUED | |||
REITs - Industrial Buildings - continued | |||
Public Storage | 300,698 | $ 29,504,488 | |
U-Store-It Trust | 14,300 | 115,401 | |
TOTAL REITS - INDUSTRIAL BUILDINGS | 47,661,332 | ||
REITs - Malls - 15.9% | |||
CBL & Associates Properties, Inc. | 686,226 | 9,655,200 | |
Simon Property Group, Inc. | 462,912 | 41,301,009 | |
The Macerich Co. | 257,093 | 10,656,505 | |
TOTAL REITS - MALLS | 61,612,714 | ||
REITs - Management/Investment - 3.6% | |||
Digital Realty Trust, Inc. (d) | 224,000 | 14,161,280 | |
REITs - Office Buildings - 14.9% | |||
Alexandria Real Estate Equities, Inc. | 183,356 | 12,935,766 | |
Boston Properties, Inc. | 158,000 | 12,940,200 | |
Brandywine Realty Trust (SBI) | 280,900 | 3,191,024 | |
Corporate Office Properties Trust (SBI) | 126,400 | 4,740,000 | |
Highwoods Properties, Inc. (SBI) | 288,656 | 9,037,819 | |
SL Green Realty Corp. | 252,100 | 15,186,504 | |
TOTAL REITS - OFFICE BUILDINGS | 58,031,313 | ||
REITs - Shopping Centers - 10.4% | |||
Acadia Realty Trust (SBI) | 366,700 | 6,798,618 | |
Cedar Shopping Centers, Inc. | 193,000 | 1,196,600 | |
Developers Diversified Realty Corp. | 334,210 | 3,793,284 | |
Equity One, Inc. | 45,500 | 775,320 | |
Glimcher Realty Trust | 75,700 | 503,405 | |
Kimco Realty Corp. | 258,616 | 3,897,343 | |
Kite Realty Group Trust | 404,046 | 1,874,773 | |
Vornado Realty Trust | 258,707 | 21,415,765 | |
TOTAL REITS - SHOPPING CENTERS | 40,255,108 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 353,444,591 | ||
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 4.4% | |||
Real Estate Operating Companies - 2.1% | |||
Brookfield Properties Corp. (d) | 358,630 | $ 5,407,622 | |
Forest City Enterprises, Inc. Class A (a)(d) | 218,700 | 2,777,490 | |
TOTAL REAL ESTATE OPERATING COMPANIES | 8,185,112 | ||
Real Estate Services - 2.3% | |||
CB Richard Ellis Group, Inc. Class A (a) | 534,162 | 9,080,754 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 17,265,866 | ||
TOTAL COMMON STOCKS (Cost $343,850,625) | 378,337,268 | ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Services - 0.1% | |||
Grubb & Ellis Co., 12.00% (e) (Cost $810,000) | 8,100 | 660,150 | |
Convertible Bonds - 0.1% | |||
|
|
|
|
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Services - 0.1% | |||
Grubb & Ellis Co. 7.95% 5/1/15 (e) | 340,000 | 286,025 | |
Money Market Funds - 7.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.24% (b) | 8,000,074 | $ 8,000,074 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 19,904,810 | 19,904,810 | |
TOTAL MONEY MARKET FUNDS (Cost $27,904,884) | 27,904,884 | ||
TOTAL INVESTMENT PORTFOLIO - 104.8% (Cost $372,905,509) | 407,188,327 | ||
NET OTHER ASSETS (LIABILITIES) - (4.8)% | (18,749,452) | ||
NET ASSETS - 100% | $ 388,438,875 | ||
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 $946,175 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 | $ 15,526 |
Fidelity Securities Lending Cash Central Fund | 61,917 |
Total | $ 77,443 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 378,337,268 | $ 378,337,268 | $ - | $ - |
Convertible Preferred Stocks | 660,150 | - | 660,150 | - |
Convertible Bonds | 286,025 | - | 286,025 | - |
Money Market Funds | 27,904,884 | 27,904,884 | - | - |
Total Investments in Securities: | $ 407,188,327 | $ 406,242,152 | $ 946,175 | $ - |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $36,010,469 of which $15,429,654 and $20,580,815 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $19,590,468) - See accompanying schedule: Unaffiliated issuers (cost $345,000,625) | $ 379,283,443 |
|
Fidelity Central Funds (cost $27,904,884) | 27,904,884 |
|
Total Investments (cost $372,905,509) |
| $ 407,188,327 |
Receivable for investments sold | 4,539,676 | |
Receivable for fund shares sold | 578,908 | |
Dividends receivable | 172,691 | |
Interest receivable | 6,239 | |
Distributions receivable from Fidelity Central Funds | 6,041 | |
Other receivables | 4,440 | |
Total assets | 412,496,322 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,393,791 | |
Payable for fund shares redeemed | 366,344 | |
Accrued management fee | 168,958 | |
Distribution fees payable | 80,510 | |
Other affiliated payables | 98,041 | |
Other payables and accrued expenses | 44,993 | |
Collateral on securities loaned, at value | 19,904,810 | |
Total liabilities | 24,057,447 | |
|
|
|
Net Assets | $ 388,438,875 | |
Net Assets consist of: |
| |
Paid in capital | $ 404,856,241 | |
Undistributed net investment income | 744,500 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (51,444,684) | |
Net unrealized appreciation (depreciation) on investments | 34,282,818 | |
Net Assets | $ 388,438,875 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 14.88 | |
|
|
|
Maximum offering price per share (100/94.25 of $14.88) | $ 15.79 | |
Class T: | $ 14.90 | |
|
|
|
Maximum offering price per share (100/96.50 of $14.90) | $ 15.44 | |
Class B: | $ 14.77 | |
|
|
|
Class C: | $ 14.76 | |
|
|
|
Institutional Class: | $ 14.96 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,344,341 |
Interest |
| 6,246 |
Income from Fidelity Central Funds |
| 77,443 |
Total income |
| 7,428,030 |
|
|
|
Expenses | ||
Management fee | $ 1,549,756 | |
Transfer agent fees | 883,643 | |
Distribution fees | 828,869 | |
Accounting and security lending fees | 113,325 | |
Custodian fees and expenses | 36,549 | |
Independent trustees' compensation | 1,491 | |
Registration fees | 81,596 | |
Audit | 46,505 | |
Legal | 937 | |
Miscellaneous | 3,526 | |
Total expenses before reductions | 3,546,197 | |
Expense reductions | (21,081) | 3,525,116 |
Net investment income (loss) | 3,902,914 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,253,186 | |
Foreign currency transactions | (30,623) | |
Capital gain distributions from Fidelity Central Funds | 1,624 | |
Total net realized gain (loss) |
| 36,224,187 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 74,424,576 | |
Assets and liabilities in foreign currencies | 1,766 | |
Total change in net unrealized appreciation (depreciation) |
| 74,426,342 |
Net gain (loss) | 110,650,529 | |
Net increase (decrease) in net assets resulting from operations | $ 114,553,443 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,902,914 | $ 4,597,200 |
Net realized gain (loss) | 36,224,187 | (79,840,498) |
Change in net unrealized appreciation (depreciation) | 74,426,342 | (44,021,577) |
Net increase (decrease) in net assets resulting | 114,553,443 | (119,264,875) |
Distributions to shareholders from net investment income | (3,478,958) | (5,963,213) |
Distributions to shareholders from net realized gain | - | (564,328) |
Total distributions | (3,478,958) | (6,527,541) |
Share transactions - net increase (decrease) | 98,330,995 | (1,196,796) |
Total increase (decrease) in net assets | 209,405,480 | (126,989,212) |
|
|
|
Net Assets | ||
Beginning of period | 179,033,395 | 306,022,607 |
End of period (including undistributed net investment income of $744,500 and undistributed net investment income of $216,338, respectively) | $ 388,438,875 | $ 179,033,395 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.41 | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 |
Income from Investment Operations |
|
|
|
| |
Net investment income (loss) C | .19 | .27 | .30 | .18 | .29 |
Net realized and unrealized gain (loss) | 5.46 | (6.86) | (1.24) | (.17) | 2.85 |
Total from investment operations | 5.65 | (6.59) | (.94) | .01 | 3.14 |
Distributions from net investment income | (.18) | (.36) | (.26) | (.18) | (.23) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.18) | (.39) | (1.34) G | (1.68) | (1.03) |
Net asset value, end of period | $ 14.88 | $ 9.41 | $ 16.39 | $ 18.67 | $ 20.34 |
Total Return A, B | 60.38% | (40.19)% | (5.66)% | (.65)% | 18.32% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.23% | 1.27% | 1.22% | 1.25% | 1.29% |
Expenses net of fee waivers, if any | 1.23% | 1.25% | 1.22% | 1.25% | 1.25% |
Expenses net of all reductions | 1.22% | 1.25% | 1.21% | 1.25% | 1.24% |
Net investment income (loss) | 1.45% | 2.73% | 1.71% | .81% | 1.59% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 117,929 | $ 62,422 | $ 109,442 | $ 117,831 | $ 85,000 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.42 | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 |
Income from Investment |
|
|
|
| |
Net investment income (loss) C | .15 | .25 | .26 | .12 | .24 |
Net realized and unrealized gain (loss) | 5.47 | (6.87) | (1.24) | (.16) | 2.84 |
Total from investment operations | 5.62 | (6.62) | (.98) | (.04) | 3.08 |
Distributions from net investment income | (.14) | (.33) | (.17) | (.13) | (.20) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.14) | (.36) | (1.26) G | (1.63) | (1.00) |
Net asset value, end of period | $ 14.90 | $ 9.42 | $ 16.40 | $ 18.64 | $ 20.31 |
Total Return A, B | 60.02% | (40.33)% | (5.88)% | (.89)% | 17.98% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | 1.49% | 1.54% | 1.47% | 1.50% | 1.55% |
Expenses net of fee waivers, if any | 1.49% | 1.50% | 1.47% | 1.50% | 1.50% |
Expenses net of all reductions | 1.48% | 1.50% | 1.47% | 1.49% | 1.49% |
Net investment income (loss) | 1.19% | 2.48% | 1.45% | .57% | 1.34% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 59,529 | $ 40,276 | $ 81,938 | $ 100,621 | $ 91,224 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.35 | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .09 | .20 | .17 | .01 | .15 |
Net realized and unrealized gain (loss) | 5.42 | (6.81) | (1.23) | (.16) | 2.83 |
Total from investment operations | 5.51 | (6.61) | (1.06) | (.15) | 2.98 |
Distributions from net investment income | (.09) | (.27) | (.10) | (.05) | (.15) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.48) | (.80) |
Total distributions | (.09) | (.30) | (1.19) G | (1.53) | (.95) |
Net asset value, end of period | $ 14.77 | $ 9.35 | $ 16.26 | $ 18.51 | $ 20.19 |
Total Return A, B | 59.14% | (40.60)% | (6.37)% | (1.45)% | 17.42% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | 1.98% | 2.04% | 1.96% | 2.02% | 2.05% |
Expenses net of fee waivers, if any | 1.98% | 2.00% | 1.96% | 2.00% | 2.00% |
Expenses net of all reductions | 1.97% | 2.00% | 1.96% | 2.00% | 1.98% |
Net investment income (loss) | .70% | 1.98% | .96% | .07% | .84% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 12,078 | $ 7,933 | $ 16,879 | $ 25,114 | $ 27,397 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.34 | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .09 | .19 | .17 | .01 | .15 |
Net realized and unrealized gain (loss) | 5.43 | (6.81) | (1.23) | (.16) | 2.84 |
Total from investment operations | 5.52 | (6.62) | (1.06) | (.15) | 2.99 |
Distributions from net investment income | (.10) | (.27) | (.11) | (.05) | (.15) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.10) | (.30) | (1.19) G | (1.55) | (.95) |
Net asset value, end of period | $ 14.76 | $ 9.34 | $ 16.26 | $ 18.51 | $ 20.21 |
Total Return A, B | 59.28% | (40.64)% | (6.35)% | (1.45)% | 17.46% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | 1.98% | 2.01% | 1.96% | 2.01% | 2.05% |
Expenses net of fee waivers, if any | 1.98% | 2.00% | 1.96% | 2.00% | 2.00% |
Expenses net of all reductions | 1.97% | 2.00% | 1.96% | 2.00% | 1.98% |
Net investment income (loss) | .71% | 1.98% | .96% | .06% | .84% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 31,204 | $ 13,226 | $ 24,984 | $ 36,854 | $ 36,669 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.46 | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .23 | .30 | .34 | .24 | .35 |
Net realized and unrealized gain (loss) | 5.47 | (6.90) | (1.23) | (.17) | 2.85 |
Total from investment operations | 5.70 | (6.60) | (.89) | .07 | 3.20 |
Distributions from net investment income | (.20) | (.38) | (.35) | (.24) | (.26) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.20) | (.41) | (1.44) F | (1.74) | (1.06) |
Net asset value, end of period | $ 14.96 | $ 9.46 | $ 16.47 | $ 18.80 | $ 20.47 |
Total Return A | 60.75% | (40.03)% | (5.39)% | (.37)% | 18.61% |
Ratios to Average Net Assets C, E |
|
|
|
| |
Expenses before reductions | .97% | 1.01% | .95% | .98% | .94% |
Expenses net of fee waivers, if any | .97% | 1.00% | .95% | .98% | .94% |
Expenses net of all reductions | .96% | 1.00% | .95% | .97% | .92% |
Net investment income (loss) | 1.71% | 2.98% | 1.97% | 1.09% | 1.90% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 167,699 | $ 55,177 | $ 72,780 | $ 12,259 | $ 7,152 |
Portfolio turnover rate D | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements.
Annual Report
3. Significant Accounting Policies - continued
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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 gain distributions from the Fidelity Central Funds, foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 54,003,298 |
Gross unrealized depreciation | (32,805,250) |
Net unrealized appreciation (depreciation) | $ 21,198,048 |
|
|
Tax Cost | $ 385,990,279 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 744,500 |
Capital loss carryforward | $ (36,010,469) |
Net unrealized appreciation (depreciation) | $ 21,198,048 |
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 3,478,958 | $ 5,963,213 |
Long-term Capital Gains | - | 564,328 |
Total | $ 3,478,958 | $ 6,527,541 |
4. Operating Policies.
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 $260,036,348 and $161,226,245, 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
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 232,404 | $ 5,899 |
Class T | .25% | .25% | 268,616 | - |
Class B | .75% | .25% | 106,510 | 79,945 |
Class C | .75% | .25% | 221,339 | 37,542 |
|
|
| $ 828,869 | $ 123,386 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares. For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 47,924 |
Class T | 7,205 |
Class B* | 21,047 |
Class C* | 2,495 |
| $ 78,671 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 296,991 | .32 |
Class T | 177,154 | .33 |
Class B | 34,356 | .32 |
Class C | 70,339 | .32 |
Institutional Class | 304,803 | .31 |
| $ 883,643 |
|
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 $7,461 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $1,026 and is reflected in Miscellaneous expenses 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
Annual Report
8. Security Lending - continued
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 $61,917.
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 $21,070 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $11.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 1,234,313 | $ 2,373,225 |
Class T | 586,319 | 1,559,018 |
Class B | 73,937 | 251,874 |
Class C | 151,383 | 401,222 |
Institutional Class | 1,433,006 | 1,377,874 |
Total | $ 3,478,958 | $ 5,963,213 |
From net realized gain |
|
|
Class A | $ - | $ 204,885 |
Class T | - | 150,062 |
Class B | - | 31,214 |
Class C | - | 46,271 |
Institutional Class | - | 131,896 |
Total | $ - | $ 564,328 |
Annual Report
Notes to Financial Statements - continued
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 3,838,345 | 3,043,573 | $ 50,713,463 | $ 29,321,172 |
Reinvestment of distributions | 94,331 | 261,214 | 1,168,282 | 2,477,765 |
Shares redeemed | (2,642,928) | (3,348,691) | (33,936,194) | (29,451,189) |
Net increase (decrease) | 1,289,748 | (43,904) | $ 17,945,551 | $ 2,347,748 |
Class T |
|
|
|
|
Shares sold | 1,600,698 | 1,740,100 | $ 21,094,229 | $ 16,246,028 |
Reinvestment of distributions | 46,490 | 166,425 | 571,730 | 1,591,698 |
Shares redeemed | (1,927,214) | (2,627,118) | (25,063,300) | (23,368,486) |
Net increase (decrease) | (280,026) | (720,593) | $ (3,397,341) | $ (5,530,760) |
Class B |
|
|
|
|
Shares sold | 214,509 | 136,838 | $ 2,825,349 | $ 1,421,735 |
Reinvestment of distributions | 5,594 | 27,253 | 67,395 | 256,567 |
Shares redeemed | (251,258) | (353,148) | (3,248,064) | (3,397,456) |
Net increase (decrease) | (31,155) | (189,057) | $ (355,320) | $ (1,719,154) |
Class C |
|
|
|
|
Shares sold | 1,050,192 | 422,080 | $ 14,008,372 | $ 4,270,150 |
Reinvestment of distributions | 11,301 | 43,425 | 138,548 | 402,486 |
Shares redeemed | (362,839) | (586,087) | (4,691,785) | (5,492,116) |
Net increase (decrease) | 698,654 | (120,582) | $ 9,455,135 | $ (819,480) |
Institutional Class |
|
|
|
|
Shares sold | 7,306,218 | 7,788,306 | $ 99,355,047 | $ 62,314,949 |
Reinvestment of distributions | 57,970 | 54,679 | 738,990 | 559,339 |
Shares redeemed | (1,990,258) | (6,427,386) | (25,411,067) | (58,349,438) |
Net increase (decrease) | 5,373,930 | 1,415,599 | $ 74,682,970 | $ 4,524,850 |
12. 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.
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, 2010, 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, 2010, 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, 2010, 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 the 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 15, 2010
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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 411 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Board Structure and Oversight Function. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. 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 (75) | |
| 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- |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (62) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). 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. Mr. Lautenbach is also 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 (65) | |
| 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (66) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008- |
William S. Stavropoulos (71) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos 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, 2005-present). Mr. Stavropoulos 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 (61) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008- |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009- |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). 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). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (63) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and is an employee of Fidelity Investments (2008- |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008- |
Name, Age; Principal Occupation | |
John R. Hebble (52) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
A total of 0.08% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Real Estate Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2010 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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of fund shareholders and that the compensation to be received by Fidelity under the management contract is fair and reasonable. 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 Fidelity's competitors, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interest of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the equity research subcommittee of the Board's Fund Oversight Committee 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 and market and securities data 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. The Board noted FMR's continued focus on strengthening the organization and discipline of equity portfolio management and research.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and restructuring and broadening the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) launching Class F of certain funds as a lower-fee class available to Freedom K and Freedom Index Funds; (iv) lowering the initial investment minimums and ongoing balance requirements for Real Estate High Income Fund; (v) eliminating subsequent purchase minimums for all funds and adding a waiver of the investment minimum requirement for new accounts opened with the proceeds of a systematic withdrawal plan; (vi) eliminating the withdrawal minimum and maximum limits for systematic withdrawals from Advisor funds; (vii) expanding sales load waivers on Class A shares for Destiny Planholders and expanding Institutional Class eligibility for Class O Destiny Planholders; and (viii) changing certain Class A and Class T sales charge structures to further align them with industry practices.
Investment Performance. The Board considered whether the fund has operated in accordance with 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 over multiple periods against a broad-based securities market index. 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, 2009, 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 five-year performance).
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Advisor Real Estate Fund
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
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 and factoring in the unprecedented market events in recent years, the Board concluded that the nature, extent, and quality of investment management and support services and of shareholder and administrative 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.
Annual Report
Management Fee. 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 8% means that 92% 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 2009.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expenses. 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. The Board noted that the 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 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.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expenses and fees charged to other Fidelity clients, the Board concluded that the total expenses of each class of the fund were reasonable, although in one case 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, including the findings of the Committee.
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.
Annual Report
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 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 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 were satisfied that the profitability was not excessive in the circumstances.
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.
In February 2009, the Board and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees 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 concluded, considering the findings of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, the rationale for the compensation structure, and how the compensation structure provides appropriate performance incentives; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) management and other fees paid by FMR to affiliated sub-advisers on behalf of the Fidelity funds; (vi) Fidelity's fee structures and rationale for recommending different fees among different categories of funds; (vii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; (viii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (ix) explanations regarding the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses for certain funds and classes.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
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
The Bank of New York Mellon
New York, NY
ARE-UANN-0910 1.789707.107
(Fidelity Investment logo)(registered trademark)
Fidelity® Advisor
Real Estate
Fund - Institutional Class
Annual Report
July 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to financial statements. | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults 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
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets reversed course in late April 2010 when investor sentiment turned bearish due in great measure to concern that Europe's debt crisis would expand and slow or derail economic recovery. However, a bounceback in July helped to recover some of the ground that was lost. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the 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 can be tax advantages and cost benefits to consider as well. 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 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 "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 by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
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' distributions from 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, 2010 | Past 1 | Past 5 | Life of |
Institutional Class | 60.75% | 1.51% | 10.51% |
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 S&P 500® Index performed over the same period. See above for additional information regarding the performance of Institutional Class.
Annual Report
Management's Discussion of Fund Performance
Market Recap: U.S. stock markets saw double-digit gains for the year ending July 31, 2010, despite the return of market volatility and risk aversion during the first half of 2010. An impressive bull run continued through 2009, bolstered by improvement in the economy and credit markets. Early in the new year, however, stocks fell sharply amid concerns about the global economic recovery, fueled by European debt woes and China's efforts to restrain inflation. After this brief dip, markets regained their upward momentum, as government stimulus and significant corporate cost cutting led to encouraging earnings reports, improved credit conditions and rising consumer confidence. Positive news continued through mid-April, when the Dow Jones Industrial AverageSM pushed above the 11,000 mark for the first time in 19 months. That milestone was short-lived, however, as heightened concern about the European debt crisis sparked an abrupt sell-off in May, leading to the first official correction since the rally began in March 2009. Although the market's malaise continued through June, stocks saw solid gains in July. For the year, the Dow rose 17.28%, while the S&P 500® Index was up 13.84%. Elsewhere, the technology-laden Nasdaq Composite® Index returned 14.99%. Small- and mid-cap stocks performed best, as measured by the 18.43% increase of the Russell 2000® Index and the 23.21% gain of the Russell Midcap® Index.
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund: For the year ending July 31, 2010, the fund's Class A, Class T, Class B and Class C shares rose 60.38%, 60.02%, 59.14% and 59.28%, respectively (excluding sales charges). In comparison, the Dow Jones U.S. Select Real Estate Securities IndexSM increased 55.21%. Relative to the Dow Jones index, stock selection was very favorable. The strongest relative performer was SL Green Realty, a real estate investment trust (REIT) whose office properties are concentrated in and around New York City. Concern about debt hurt mall owner Macerich, but as investors became more tolerant about risk, the company began doing better. Other positives included retail REITs Developers Diversified Realty and CBL & Associates, as well as Sunstone Hotel Investors, Apartment Investment & Management and Health Care REIT, the last of which was not in the portfolio at period end. On the negative side, industrial REIT ProLogis underperformed as investors continued to be concerned about its excess debt and relatively complex business model. Corporate Office Properties, a relatively defensive office REIT, also lagged, as did the fund's underweighted position in AvalonBay Communities, a high-quality apartment REIT.
Comments from Samuel Wald, Portfolio Manager of Fidelity ®Advisor Real Estate Fund: For the year ending July 31, 2010, the fund's Institutional Class shares rose 60.75%. In comparison, the Dow Jones U.S. Select Real Estate Securities IndexSM increased 55.21%. Relative to the Dow Jones index, stock selection was very favorable. The strongest relative performer was SL Green Realty, a real estate investment trust (REIT) whose office properties are concentrated in and around New York City. Concern about debt hurt mall owner Macerich, but as investors became more tolerant about risk, the company began doing better. Other positives included retail REITs Developers Diversified Realty and CBL & Associates, as well as Sunstone Hotel Investors, Apartment Investment & Management and Health Care REIT, the last of which was not in the portfolio at period end. On the negative side, industrial REIT ProLogis underperformed as investors continued to be concerned about its excess debt and relatively complex business model. Corporate Office Properties, a relatively defensive office REIT, also lagged, as did the fund's underweighted position in AvalonBay Communities, a high-quality apartment 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, 2010 to July 31, 2010).
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.
Annual Report
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.21% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,232.10 | $ 6.70 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.79 | $ 6.06 |
Class T | 1.48% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,231.20 | $ 8.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.46 | $ 7.40 |
Class B | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,228.10 | $ 10.88 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Class C | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,228.80 | $ 10.89 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Institutional Class | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,234.90 | $ 5.32 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.03 | $ 4.81 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
Simon Property Group, Inc. | 10.6 | 10.7 |
Public Storage | 7.6 | 4.2 |
Vornado Realty Trust | 5.5 | 4.6 |
Ventas, Inc. | 5.5 | 6.4 |
HCP, Inc. | 4.1 | 3.2 |
ProLogis Trust | 3.9 | 5.5 |
SL Green Realty Corp. | 3.9 | 4.4 |
Digital Realty Trust, Inc. | 3.6 | 3.8 |
Boston Properties, Inc. | 3.4 | 2.8 |
Alexandria Real Estate Equities, Inc. | 3.3 | 2.2 |
| 51.4 | |
Top Five REIT Sectors as of July 31, 2010 | ||
| % of fund's | % of fund's net assets |
REITs - Malls | 15.9 | 14.6 |
REITs - Apartments | 15.1 | 13.9 |
REITs - Office Buildings | 14.9 | 15.6 |
REITs - Industrial Buildings | 12.3 | 14.3 |
REITs - Health Care Facilities | 12.1 | 11.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of July 31, 2010* | As of January 31, 2010** | ||||||
| Stocks 97.4% |
| | Stocks 98.3% |
| ||
| Convertible |
| | Convertible |
| ||
| Short-Term |
| | Short-Term |
| ||
* Foreign investments | 1.4% |
| ** Foreign investments | 1.4% |
| ||
Annual Report
Investments July 31, 2010
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - 2.0% | |||
Health Care Facilities - 2.0% | |||
Brookdale Senior Living, Inc. (a) | 80,600 | $ 1,142,908 | |
Emeritus Corp. (a)(d) | 321,488 | 5,532,808 | |
Sunrise Senior Living, Inc. (a)(d) | 318,092 | 951,095 | |
TOTAL HEALTH CARE FACILITIES | 7,626,811 | ||
REAL ESTATE INVESTMENT TRUSTS - 91.0% | |||
REITs - Apartments - 15.1% | |||
Apartment Investment & Management Co. Class A | 301,853 | 6,480,784 | |
AvalonBay Communities, Inc. | 52,323 | 5,498,624 | |
Colonial Properties Trust (SBI) | 42,500 | 685,100 | |
Education Realty Trust, Inc. | 1,032,611 | 7,176,646 | |
Equity Residential (SBI) | 250,902 | 11,503,857 | |
Essex Property Trust, Inc. | 106,300 | 11,173,193 | |
Mid-America Apartment Communities, Inc. | 221,802 | 12,527,377 | |
Post Properties, Inc. | 140,400 | 3,577,392 | |
TOTAL REITS - APARTMENTS | 58,622,973 | ||
REITs - Health Care Facilities - 12.1% | |||
HCP, Inc. | 444,933 | 15,781,774 | |
Healthcare Realty Trust, Inc. | 178,669 | 4,193,361 | |
National Health Investors, Inc. | 55,796 | 2,100,719 | |
Omega Healthcare Investors, Inc. | 161,424 | 3,548,100 | |
Ventas, Inc. | 420,000 | 21,302,400 | |
TOTAL REITS - HEALTH CARE FACILITIES | 46,926,354 | ||
REITs - Hotels - 6.7% | |||
DiamondRock Hospitality Co. | 1,173,363 | 10,888,809 | |
Host Hotels & Resorts, Inc. | 443,825 | 6,364,451 | |
Sunstone Hotel Investors, Inc. (a) | 864,366 | 8,920,257 | |
TOTAL REITS - HOTELS | 26,173,517 | ||
REITs - Industrial Buildings - 12.3% | |||
AMB Property Corp. (SBI) | 39,800 | 993,408 | |
DCT Industrial Trust, Inc. | 371,300 | 1,741,397 | |
ProLogis Trust | 1,409,451 | 15,306,638 | |
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - CONTINUED | |||
REITs - Industrial Buildings - continued | |||
Public Storage | 300,698 | $ 29,504,488 | |
U-Store-It Trust | 14,300 | 115,401 | |
TOTAL REITS - INDUSTRIAL BUILDINGS | 47,661,332 | ||
REITs - Malls - 15.9% | |||
CBL & Associates Properties, Inc. | 686,226 | 9,655,200 | |
Simon Property Group, Inc. | 462,912 | 41,301,009 | |
The Macerich Co. | 257,093 | 10,656,505 | |
TOTAL REITS - MALLS | 61,612,714 | ||
REITs - Management/Investment - 3.6% | |||
Digital Realty Trust, Inc. (d) | 224,000 | 14,161,280 | |
REITs - Office Buildings - 14.9% | |||
Alexandria Real Estate Equities, Inc. | 183,356 | 12,935,766 | |
Boston Properties, Inc. | 158,000 | 12,940,200 | |
Brandywine Realty Trust (SBI) | 280,900 | 3,191,024 | |
Corporate Office Properties Trust (SBI) | 126,400 | 4,740,000 | |
Highwoods Properties, Inc. (SBI) | 288,656 | 9,037,819 | |
SL Green Realty Corp. | 252,100 | 15,186,504 | |
TOTAL REITS - OFFICE BUILDINGS | 58,031,313 | ||
REITs - Shopping Centers - 10.4% | |||
Acadia Realty Trust (SBI) | 366,700 | 6,798,618 | |
Cedar Shopping Centers, Inc. | 193,000 | 1,196,600 | |
Developers Diversified Realty Corp. | 334,210 | 3,793,284 | |
Equity One, Inc. | 45,500 | 775,320 | |
Glimcher Realty Trust | 75,700 | 503,405 | |
Kimco Realty Corp. | 258,616 | 3,897,343 | |
Kite Realty Group Trust | 404,046 | 1,874,773 | |
Vornado Realty Trust | 258,707 | 21,415,765 | |
TOTAL REITS - SHOPPING CENTERS | 40,255,108 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 353,444,591 | ||
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 4.4% | |||
Real Estate Operating Companies - 2.1% | |||
Brookfield Properties Corp. (d) | 358,630 | $ 5,407,622 | |
Forest City Enterprises, Inc. Class A (a)(d) | 218,700 | 2,777,490 | |
TOTAL REAL ESTATE OPERATING COMPANIES | 8,185,112 | ||
Real Estate Services - 2.3% | |||
CB Richard Ellis Group, Inc. Class A (a) | 534,162 | 9,080,754 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 17,265,866 | ||
TOTAL COMMON STOCKS (Cost $343,850,625) | 378,337,268 | ||
Convertible Preferred Stocks - 0.1% | |||
|
|
|
|
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Services - 0.1% | |||
Grubb & Ellis Co., 12.00% (e) (Cost $810,000) | 8,100 | 660,150 | |
Convertible Bonds - 0.1% | |||
|
|
|
|
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Services - 0.1% | |||
Grubb & Ellis Co. 7.95% 5/1/15 (e) | 340,000 | 286,025 | |
Money Market Funds - 7.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.24% (b) | 8,000,074 | $ 8,000,074 | |
Fidelity Securities Lending Cash Central Fund, 0.27% (b)(c) | 19,904,810 | 19,904,810 | |
TOTAL MONEY MARKET FUNDS (Cost $27,904,884) | 27,904,884 | ||
TOTAL INVESTMENT PORTFOLIO - 104.8% (Cost $372,905,509) | 407,188,327 | ||
NET OTHER ASSETS (LIABILITIES) - (4.8)% | (18,749,452) | ||
NET ASSETS - 100% | $ 388,438,875 | ||
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 $946,175 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 | $ 15,526 |
Fidelity Securities Lending Cash Central Fund | 61,917 |
Total | $ 77,443 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2010, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 378,337,268 | $ 378,337,268 | $ - | $ - |
Convertible Preferred Stocks | 660,150 | - | 660,150 | - |
Convertible Bonds | 286,025 | - | 286,025 | - |
Money Market Funds | 27,904,884 | 27,904,884 | - | - |
Total Investments in Securities: | $ 407,188,327 | $ 406,242,152 | $ 946,175 | $ - |
Income Tax Information |
At July 31, 2010, the Fund had a capital loss carryforward of approximately $36,010,469 of which $15,429,654 and $20,580,815 will expire on July 31, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| July 31, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $19,590,468) - See accompanying schedule: Unaffiliated issuers (cost $345,000,625) | $ 379,283,443 |
|
Fidelity Central Funds (cost $27,904,884) | 27,904,884 |
|
Total Investments (cost $372,905,509) |
| $ 407,188,327 |
Receivable for investments sold | 4,539,676 | |
Receivable for fund shares sold | 578,908 | |
Dividends receivable | 172,691 | |
Interest receivable | 6,239 | |
Distributions receivable from Fidelity Central Funds | 6,041 | |
Other receivables | 4,440 | |
Total assets | 412,496,322 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,393,791 | |
Payable for fund shares redeemed | 366,344 | |
Accrued management fee | 168,958 | |
Distribution fees payable | 80,510 | |
Other affiliated payables | 98,041 | |
Other payables and accrued expenses | 44,993 | |
Collateral on securities loaned, at value | 19,904,810 | |
Total liabilities | 24,057,447 | |
|
|
|
Net Assets | $ 388,438,875 | |
Net Assets consist of: |
| |
Paid in capital | $ 404,856,241 | |
Undistributed net investment income | 744,500 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (51,444,684) | |
Net unrealized appreciation (depreciation) on investments | 34,282,818 | |
Net Assets | $ 388,438,875 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
| July 31, 2010 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 14.88 | |
|
|
|
Maximum offering price per share (100/94.25 of $14.88) | $ 15.79 | |
Class T: | $ 14.90 | |
|
|
|
Maximum offering price per share (100/96.50 of $14.90) | $ 15.44 | |
Class B: | $ 14.77 | |
|
|
|
Class C: | $ 14.76 | |
|
|
|
Institutional Class: | $ 14.96 | |
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, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,344,341 |
Interest |
| 6,246 |
Income from Fidelity Central Funds |
| 77,443 |
Total income |
| 7,428,030 |
|
|
|
Expenses | ||
Management fee | $ 1,549,756 | |
Transfer agent fees | 883,643 | |
Distribution fees | 828,869 | |
Accounting and security lending fees | 113,325 | |
Custodian fees and expenses | 36,549 | |
Independent trustees' compensation | 1,491 | |
Registration fees | 81,596 | |
Audit | 46,505 | |
Legal | 937 | |
Miscellaneous | 3,526 | |
Total expenses before reductions | 3,546,197 | |
Expense reductions | (21,081) | 3,525,116 |
Net investment income (loss) | 3,902,914 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,253,186 | |
Foreign currency transactions | (30,623) | |
Capital gain distributions from Fidelity Central Funds | 1,624 | |
Total net realized gain (loss) |
| 36,224,187 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 74,424,576 | |
Assets and liabilities in foreign currencies | 1,766 | |
Total change in net unrealized appreciation (depreciation) |
| 74,426,342 |
Net gain (loss) | 110,650,529 | |
Net increase (decrease) in net assets resulting from operations | $ 114,553,443 | |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,902,914 | $ 4,597,200 |
Net realized gain (loss) | 36,224,187 | (79,840,498) |
Change in net unrealized appreciation (depreciation) | 74,426,342 | (44,021,577) |
Net increase (decrease) in net assets resulting | 114,553,443 | (119,264,875) |
Distributions to shareholders from net investment income | (3,478,958) | (5,963,213) |
Distributions to shareholders from net realized gain | - | (564,328) |
Total distributions | (3,478,958) | (6,527,541) |
Share transactions - net increase (decrease) | 98,330,995 | (1,196,796) |
Total increase (decrease) in net assets | 209,405,480 | (126,989,212) |
|
|
|
Net Assets | ||
Beginning of period | 179,033,395 | 306,022,607 |
End of period (including undistributed net investment income of $744,500 and undistributed net investment income of $216,338, respectively) | $ 388,438,875 | $ 179,033,395 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.41 | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 |
Income from Investment Operations |
|
|
|
| |
Net investment income (loss) C | .19 | .27 | .30 | .18 | .29 |
Net realized and unrealized gain (loss) | 5.46 | (6.86) | (1.24) | (.17) | 2.85 |
Total from investment operations | 5.65 | (6.59) | (.94) | .01 | 3.14 |
Distributions from net investment income | (.18) | (.36) | (.26) | (.18) | (.23) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.18) | (.39) | (1.34) G | (1.68) | (1.03) |
Net asset value, end of period | $ 14.88 | $ 9.41 | $ 16.39 | $ 18.67 | $ 20.34 |
Total Return A, B | 60.38% | (40.19)% | (5.66)% | (.65)% | 18.32% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.23% | 1.27% | 1.22% | 1.25% | 1.29% |
Expenses net of fee waivers, if any | 1.23% | 1.25% | 1.22% | 1.25% | 1.25% |
Expenses net of all reductions | 1.22% | 1.25% | 1.21% | 1.25% | 1.24% |
Net investment income (loss) | 1.45% | 2.73% | 1.71% | .81% | 1.59% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 117,929 | $ 62,422 | $ 109,442 | $ 117,831 | $ 85,000 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.42 | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 |
Income from Investment |
|
|
|
| |
Net investment income (loss) C | .15 | .25 | .26 | .12 | .24 |
Net realized and unrealized gain (loss) | 5.47 | (6.87) | (1.24) | (.16) | 2.84 |
Total from investment operations | 5.62 | (6.62) | (.98) | (.04) | 3.08 |
Distributions from net investment income | (.14) | (.33) | (.17) | (.13) | (.20) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.14) | (.36) | (1.26) G | (1.63) | (1.00) |
Net asset value, end of period | $ 14.90 | $ 9.42 | $ 16.40 | $ 18.64 | $ 20.31 |
Total Return A, B | 60.02% | (40.33)% | (5.88)% | (.89)% | 17.98% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | 1.49% | 1.54% | 1.47% | 1.50% | 1.55% |
Expenses net of fee waivers, if any | 1.49% | 1.50% | 1.47% | 1.50% | 1.50% |
Expenses net of all reductions | 1.48% | 1.50% | 1.47% | 1.49% | 1.49% |
Net investment income (loss) | 1.19% | 2.48% | 1.45% | .57% | 1.34% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 59,529 | $ 40,276 | $ 81,938 | $ 100,621 | $ 91,224 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.35 | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .09 | .20 | .17 | .01 | .15 |
Net realized and unrealized gain (loss) | 5.42 | (6.81) | (1.23) | (.16) | 2.83 |
Total from investment operations | 5.51 | (6.61) | (1.06) | (.15) | 2.98 |
Distributions from net investment income | (.09) | (.27) | (.10) | (.05) | (.15) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.48) | (.80) |
Total distributions | (.09) | (.30) | (1.19) G | (1.53) | (.95) |
Net asset value, end of period | $ 14.77 | $ 9.35 | $ 16.26 | $ 18.51 | $ 20.19 |
Total Return A, B | 59.14% | (40.60)% | (6.37)% | (1.45)% | 17.42% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | 1.98% | 2.04% | 1.96% | 2.02% | 2.05% |
Expenses net of fee waivers, if any | 1.98% | 2.00% | 1.96% | 2.00% | 2.00% |
Expenses net of all reductions | 1.97% | 2.00% | 1.96% | 2.00% | 1.98% |
Net investment income (loss) | .70% | 1.98% | .96% | .07% | .84% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 12,078 | $ 7,933 | $ 16,879 | $ 25,114 | $ 27,397 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.34 | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .09 | .19 | .17 | .01 | .15 |
Net realized and unrealized gain (loss) | 5.43 | (6.81) | (1.23) | (.16) | 2.84 |
Total from investment operations | 5.52 | (6.62) | (1.06) | (.15) | 2.99 |
Distributions from net investment income | (.10) | (.27) | (.11) | (.05) | (.15) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.10) | (.30) | (1.19) G | (1.55) | (.95) |
Net asset value, end of period | $ 14.76 | $ 9.34 | $ 16.26 | $ 18.51 | $ 20.21 |
Total Return A, B | 59.28% | (40.64)% | (6.35)% | (1.45)% | 17.46% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | 1.98% | 2.01% | 1.96% | 2.01% | 2.05% |
Expenses net of fee waivers, if any | 1.98% | 2.00% | 1.96% | 2.00% | 2.00% |
Expenses net of all reductions | 1.97% | 2.00% | 1.96% | 2.00% | 1.98% |
Net investment income (loss) | .71% | 1.98% | .96% | .06% | .84% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 31,204 | $ 13,226 | $ 24,984 | $ 36,854 | $ 36,669 |
Portfolio turnover rate E | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, | 2010 | 2009 | 2008 | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.46 | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .23 | .30 | .34 | .24 | .35 |
Net realized and unrealized gain (loss) | 5.47 | (6.90) | (1.23) | (.17) | 2.85 |
Total from investment operations | 5.70 | (6.60) | (.89) | .07 | 3.20 |
Distributions from net investment income | (.20) | (.38) | (.35) | (.24) | (.26) |
Distributions from net realized gain | - | (.03) | (1.09) | (1.50) | (.80) |
Total distributions | (.20) | (.41) | (1.44) F | (1.74) | (1.06) |
Net asset value, end of period | $ 14.96 | $ 9.46 | $ 16.47 | $ 18.80 | $ 20.47 |
Total Return A | 60.75% | (40.03)% | (5.39)% | (.37)% | 18.61% |
Ratios to Average Net Assets C, E |
|
|
|
| |
Expenses before reductions | .97% | 1.01% | .95% | .98% | .94% |
Expenses net of fee waivers, if any | .97% | 1.00% | .95% | .98% | .94% |
Expenses net of all reductions | .96% | 1.00% | .95% | .97% | .92% |
Net investment income (loss) | 1.71% | 2.98% | 1.97% | 1.09% | 1.90% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 167,699 | $ 55,177 | $ 72,780 | $ 12,259 | $ 7,152 |
Portfolio turnover rate D | 60% | 98% | 86% | 84% | 65% |
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 reductions from 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, 2010
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. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) 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 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements.
Annual Report
3. Significant Accounting Policies - continued
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. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. 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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of July 31, 2010, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
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 and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. 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 fair value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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 amongst 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, including 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. As of July 31, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 GAAP.
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 gain distributions from the Fidelity Central Funds, foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 54,003,298 |
Gross unrealized depreciation | (32,805,250) |
Net unrealized appreciation (depreciation) | $ 21,198,048 |
|
|
Tax Cost | $ 385,990,279 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 744,500 |
Capital loss carryforward | $ (36,010,469) |
Net unrealized appreciation (depreciation) | $ 21,198,048 |
The tax character of distributions paid was as follows:
| July 31, 2010 | July 31, 2009 |
Ordinary Income | $ 3,478,958 | $ 5,963,213 |
Long-term Capital Gains | - | 564,328 |
Total | $ 3,478,958 | $ 6,527,541 |
4. Operating Policies.
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 $260,036,348 and $161,226,245, 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
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | 0% | .25% | $ 232,404 | $ 5,899 |
Class T | .25% | .25% | 268,616 | - |
Class B | .75% | .25% | 106,510 | 79,945 |
Class C | .75% | .25% | 221,339 | 37,542 |
|
|
| $ 828,869 | $ 123,386 |
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% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares. For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 47,924 |
Class T | 7,205 |
Class B* | 21,047 |
Class C* | 2,495 |
| $ 78,671 |
* 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 applicable class were as follows:
| Amount | % of |
Class A | $ 296,991 | .32 |
Class T | 177,154 | .33 |
Class B | 34,356 | .32 |
Class C | 70,339 | .32 |
Institutional Class | 304,803 | .31 |
| $ 883,643 |
|
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 $7,461 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 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 $1,026 and is reflected in Miscellaneous expenses 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
Annual Report
8. Security Lending - continued
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 $61,917.
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 $21,070 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $11.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 1,234,313 | $ 2,373,225 |
Class T | 586,319 | 1,559,018 |
Class B | 73,937 | 251,874 |
Class C | 151,383 | 401,222 |
Institutional Class | 1,433,006 | 1,377,874 |
Total | $ 3,478,958 | $ 5,963,213 |
From net realized gain |
|
|
Class A | $ - | $ 204,885 |
Class T | - | 150,062 |
Class B | - | 31,214 |
Class C | - | 46,271 |
Institutional Class | - | 131,896 |
Total | $ - | $ 564,328 |
Annual Report
Notes to Financial Statements - continued
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended July 31, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 3,838,345 | 3,043,573 | $ 50,713,463 | $ 29,321,172 |
Reinvestment of distributions | 94,331 | 261,214 | 1,168,282 | 2,477,765 |
Shares redeemed | (2,642,928) | (3,348,691) | (33,936,194) | (29,451,189) |
Net increase (decrease) | 1,289,748 | (43,904) | $ 17,945,551 | $ 2,347,748 |
Class T |
|
|
|
|
Shares sold | 1,600,698 | 1,740,100 | $ 21,094,229 | $ 16,246,028 |
Reinvestment of distributions | 46,490 | 166,425 | 571,730 | 1,591,698 |
Shares redeemed | (1,927,214) | (2,627,118) | (25,063,300) | (23,368,486) |
Net increase (decrease) | (280,026) | (720,593) | $ (3,397,341) | $ (5,530,760) |
Class B |
|
|
|
|
Shares sold | 214,509 | 136,838 | $ 2,825,349 | $ 1,421,735 |
Reinvestment of distributions | 5,594 | 27,253 | 67,395 | 256,567 |
Shares redeemed | (251,258) | (353,148) | (3,248,064) | (3,397,456) |
Net increase (decrease) | (31,155) | (189,057) | $ (355,320) | $ (1,719,154) |
Class C |
|
|
|
|
Shares sold | 1,050,192 | 422,080 | $ 14,008,372 | $ 4,270,150 |
Reinvestment of distributions | 11,301 | 43,425 | 138,548 | 402,486 |
Shares redeemed | (362,839) | (586,087) | (4,691,785) | (5,492,116) |
Net increase (decrease) | 698,654 | (120,582) | $ 9,455,135 | $ (819,480) |
Institutional Class |
|
|
|
|
Shares sold | 7,306,218 | 7,788,306 | $ 99,355,047 | $ 62,314,949 |
Reinvestment of distributions | 57,970 | 54,679 | 738,990 | 559,339 |
Shares redeemed | (1,990,258) | (6,427,386) | (25,411,067) | (58,349,438) |
Net increase (decrease) | 5,373,930 | 1,415,599 | $ 74,682,970 | $ 4,524,850 |
12. 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.
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, 2010, 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, 2010, 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, 2010, 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 the 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 15, 2010
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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 411 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.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Annual Report
Board Structure and Oversight Function. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation funds. The asset allocation funds may invest in Fidelity funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
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 Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. 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 (75) | |
| 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- |
* 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.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
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 Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (62) | |
| 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). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). 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 Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). 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. Mr. Lautenbach is also 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 (65) | |
| 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, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (66) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008- |
William S. Stavropoulos (71) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). 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, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos 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, 2005-present). Mr. Stavropoulos 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 (61) | |
| 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), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008- |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009- |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). 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). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (63) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), 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), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and is an employee of Fidelity Investments (2008- |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008- |
Name, Age; Principal Occupation | |
John R. Hebble (52) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
A total of 0.08% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor Real Estate Fund
Each year, 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 relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly 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. The Board has established various 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. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its July 2010 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.
In considering whether to renew the Advisory Contracts for the fund, the Board 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 is in the best interests of fund shareholders and that the compensation to be received by Fidelity under the management contract is fair and reasonable. 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 Fidelity's competitors, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered the 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 to act in the best interest of the fund.
Resources Dedicated to Investment Management and Support Services. The Board and the equity research subcommittee of the Board's Fund Oversight Committee 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 and market and securities data 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. The Board noted FMR's continued focus on strengthening the organization and discipline of equity portfolio management and research.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, 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 adviser's 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 noted that the growth of fund assets over time 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
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 a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and restructuring and broadening the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) launching Class F of certain funds as a lower-fee class available to Freedom K and Freedom Index Funds; (iv) lowering the initial investment minimums and ongoing balance requirements for Real Estate High Income Fund; (v) eliminating subsequent purchase minimums for all funds and adding a waiver of the investment minimum requirement for new accounts opened with the proceeds of a systematic withdrawal plan; (vi) eliminating the withdrawal minimum and maximum limits for systematic withdrawals from Advisor funds; (vii) expanding sales load waivers on Class A shares for Destiny Planholders and expanding Institutional Class eligibility for Class O Destiny Planholders; and (viii) changing certain Class A and Class T sales charge structures to further align them with industry practices.
Investment Performance. The Board considered whether the fund has operated in accordance with 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 over multiple periods against a broad-based securities market index. 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, 2009, 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 five-year performance).
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Advisor Real Estate Fund
The Board noted 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 also reviewed the fund's performance since inception as well as performance in the current year.
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 and factoring in the unprecedented market events in recent years, the Board concluded that the nature, extent, and quality of investment management and support services and of shareholder and administrative 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.
Annual Report
Management Fee. 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 8% means that 92% 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 2009.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expenses. 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.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class ranked below its competitive median for 2009 and the total expenses of Class T ranked above its competitive median for 2009. The Board considered that the total expenses for Class T were above the median primarily because its 12b-1 fee is higher than the typical front-end load class. The Board noted that the 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 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.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of FMR and its affiliates, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients. In March 2010, the Board created an ad hoc joint committee with the board of other Fidelity funds (the Committee) to review and compare Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.
Based on its review of total expenses and fees charged to other Fidelity clients, the Board concluded that the total expenses of each class of the fund were reasonable, although in one case 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, including the findings of the Committee.
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.
Annual Report
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 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 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 were satisfied that the profitability was not excessive in the circumstances.
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.
In February 2009, the Board and the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether FMR attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
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 calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity 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 benefit from lower management fees 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 concluded, considering the findings of the Economies of Scale Committee, that any potential economies of scale are being appropriately shared between fund shareholders and Fidelity.
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, actions to be taken by FMR to improve certain funds' overall performance, and Fidelity's long-term strategies for certain funds; (ii) portfolio manager changes that have occurred during the past year and length of portfolio manager tenure for different categories of funds over time; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, the rationale for the compensation structure, and how the compensation structure provides appropriate performance incentives; (iv) the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (v) management and other fees paid by FMR to affiliated sub-advisers on behalf of the Fidelity funds; (vi) Fidelity's fee structures and rationale for recommending different fees among different categories of funds; (vii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; (viii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; and (ix) explanations regarding the relative total expenses borne by certain funds and classes, total expense competitive trends, and actions that might be taken by FMR to reduce total expenses for certain funds and classes.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, 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
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
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
The Bank of New York Mellon
New York, NY
AREI-UANN-0910 1.789708.107
Item 2. Code of Ethics
As of the end of the period, July 31, 2010, 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
Fees and Services
The following table presents fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte Entities") in each of the last two fiscal years for services rendered to 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"):
Services Billed by Deloitte Entities
July 31, 2010 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Advisor Biotechnology Fund | $33,000 | $- | $4,500 | $- |
Fidelity Advisor Communications Equipment Fund | $34,000 | $- | $4,500 | $- |
Fidelity Advisor Consumer Discretionary Fund | $32,000 | $- | $5,600 | $- |
Fidelity Advisor Electronics Fund | $32,000 | $- | $4,500 | $- |
Fidelity Advisor Energy Fund | $34,000 | $- | $6,600 | $- |
Fidelity Advisor Financial Services Fund | $34,000 | $- | $8,100 | $- |
Fidelity Advisor Health Care Fund | $34,000 | $- | $5,700 | $- |
Fidelity Advisor Industrials Fund | $33,000 | $- | $5,600 | $- |
Fidelity Advisor Real Estate Fund | $35,000 | $- | $5,600 | $- |
Fidelity Advisor Technology Fund | $35,000 | $- | $5,600 | $- |
Fidelity Advisor Utilities Fund | $32,000 | $- | $5,600 | $- |
July 31, 2009 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Advisor Biotechnology Fund | $37,000 | $- | $4,500 | $- |
Fidelity Advisor Communications Equipment Fund | $37,000 | $- | $4,500 | $- |
Fidelity Advisor Consumer Discretionary Fund | $35,000 | $- | $5,600 | $- |
Fidelity Advisor Electronics Fund | $35,000 | $- | $4,500 | $- |
Fidelity Advisor Energy Fund | $36,000 | $- | $6,600 | $- |
Fidelity Advisor Financial Services Fund | $37,000 | $- | $8,000 | $- |
Fidelity Advisor Health Care Fund | $37,000 | $- | $5,600 | $- |
Fidelity Advisor Industrials Fund | $36,000 | $- | $5,600 | $- |
Fidelity Advisor Real Estate Fund | $38,000 | $- | $5,600 | $- |
Fidelity Advisor Technology Fund | $38,000 | $- | $5,600 | $- |
Fidelity Advisor Utilities Fund | $35,000 | $- | $5,600 | $- |
A Amounts may reflect rounding.
The following table presents fees billed by Deloitte Entities that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are 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"):
Services Billed by Deloitte Entities
| July 31, 2010A | July 31, 2009A |
Audit-Related Fees | $720,000 | $815,000 |
Tax Fees | $- | $2,000 |
All Other Fees | $450,000 | $405,000 |
A Amounts may reflect rounding.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for assurance services provided to the fund or Fund Service Provider that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by Deloitte Entities for services rendered to 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 any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:
Billed By | July 31, 2010 A | July 31, 2009 A |
Deloitte Entities | $1,265,000 | $1,395,000 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit 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 Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. 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 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.
All Covered Services 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.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds' last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
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 28, 2010 |
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 28, 2010 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
|
|
Date: | September 28, 2010 |