UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3010
Fidelity Advisor Series VII
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | July 31 |
| |
Date of reporting period: | July 31, 2009 |
Item 1. Reports to Stockholders
Fidelity Advisor
Focus Funds®
Class A, Class T, Class B and Class C
Biotechnology
Communications Equipment
Consumer Discretionary
Electronics
Energy
Financial Services
Health Care
Industrials
Technology
Utilities
Annual Report
July 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/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.
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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Dear Shareholder:
We've seen a welcome uptick in the global equity markets this spring and summer, as signs of stabilization in some economic indicators have brought many investors back into the marketplace. But there remain other key measures - notably high unemployment and slack consumer spending - that suggest the road back to economic health could still be a bumpy ride. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There 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,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Advisor Biotechnology Fund - Class A, T, B, and C
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. 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, 2009 | Past 1
year | Past 5
years | Life of
fund A |
Class A (incl. 5.75% sales charge) | -16.25% | 3.19% | -4.03% |
Class T (incl. 3.50% sales charge) | -14.47% | 3.40% | -4.01% |
Class B (incl. contingent deferred sales charge) B | -16.26% | 3.26% | -3.97% |
Class C (incl. contingent deferred sales charge) C | -12.73% | 3.61% | -4.11% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 5%, 2%, and 0%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Advisor Biotechnology Fund - Class A on December 27, 2000, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Biotechnology
Advisor Biotechnology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -11.14%, -11.37%, -11.85% and -11.85%, respectively (excluding sales charges), trailing the -8.74% mark of the MSCI ® US Investable Market Biotechnology Index but beating the S&P 500®. Versus the MSCI index, weak stock picking in pharmaceuticals - including Ireland-based Elan, Biodel and XenoPort - hurt performance. Elan's stock was hampered early in the period by renewed concerns about product safety. While biotechnology holding Dendreon delivered an extremely strong gain and was one of our best absolute contributors, it detracted in relative terms, as I missed part of the stock's huge advance. Elan, Biodel and XenoPort were out-of-index positions. Underweighting outperforming index heavyweights Amgen - by far the fund's largest holding - and Genentech, which was acquired during the period, detracted as well. Conversely, the single most positive factor versus our industry benchmark was a small cash position, which helped stabilize the portfolio when share prices were declining. Stock picking in the fund's core biotechnology segment also added modestly to performance. The fund's out-of-index holding in Antigenics roughly doubled in price during the period, fueled by positive news on survival rates of kidney cancer patients treated with the company's Oncophage vaccine. Underweightings in Celgene, Genzyme and Gilead Sciences - all major index components that underperformed - further aided results. Our positioning in Biogen Idec was beneficial as well.
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund: During the past year, the fund's Institutional Class shares returned -11.00%, trailing the -8.74% mark of the MSCI® US Investable Market Biotechnology Index but beating the S&P 500®. Versus the MSCI index, weak stock picking in pharmaceuticals - including Ireland-based Elan, Biodel and XenoPort - hurt performance. Elan's stock was hampered early in the period by renewed concerns about product safety. While biotechnology holding Dendreon delivered an extremely strong gain and was one of our best absolute contributors, it detracted in relative terms, as I missed part of the stock's huge advance. Elan, Biodel and XenoPort were out-of-index positions. Underweighting outperforming index heavyweights Amgen - by far the fund's largest holding - and Genentech, which was acquired during the period, detracted as well. Conversely, the single most positive factor versus our industry benchmark was a small cash position, which helped stabilize the portfolio when share prices were declining. Stock picking in the fund's core biotechnology segment also added modestly to performance. The fund's out-of-index holding in Antigenics roughly doubled in price during the period, fueled by positive news on survival rates of kidney cancer patients treated with the company's Oncophage vaccine. Underweightings in Celgene, Genzyme and Gilead Sciences - all major index components that underperformed - further aided results. Our positioning in Biogen Idec was beneficial as well.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Biotechnology
Advisor Biotechnology Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,123.00 | $ 7.37 |
HypotheticalA | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,120.70 | $ 8.68 |
HypotheticalA | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.14% | | | |
Actual | | $ 1,000.00 | $ 1,117.40 | $ 11.23 |
HypotheticalA | | $ 1,000.00 | $ 1,014.18 | $ 10.69 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,117.40 | $ 11.29 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.07% | | | |
Actual | | $ 1,000.00 | $ 1,123.00 | $ 5.63 |
Hypothetical A | | $ 1,000.00 | $ 1,019.49 | $ 5.36 |
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
Advisor Biotechnology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Amgen, Inc. | 21.5 | 18.3 |
Biogen Idec, Inc. | 8.5 | 5.3 |
Alexion Pharmaceuticals, Inc. | 6.8 | 4.6 |
Gilead Sciences, Inc. | 5.5 | 9.3 |
United Therapeutics Corp. | 5.0 | 2.1 |
Vertex Pharmaceuticals, Inc. | 4.7 | 3.6 |
Celgene Corp. | 4.5 | 5.0 |
Genzyme Corp. | 3.7 | 4.9 |
Cephalon, Inc. | 3.5 | 4.5 |
Acorda Therapeutics, Inc. | 3.3 | 3.4 |
| 67.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
 | Biotechnology | 92.5% | |
 | Pharmaceuticals | 6.7% | |
 | Life Sciences
Tools & Services | 0.5% | |
 | Health Care
Equipment & Supplies | 0.3% | |
 | All Others* | 0.0% | |
As of January 31, 2009 |
| Biotechnology | 88.6% | |
| Pharmaceuticals | 7.4% | |
| Health Care
Equipment & Supplies | 0.8% | |
| Life Sciences
Tools & Services | 0.6% | |
| All Others* | 2.6% | |
* Includes short-term investments and net other assets. |
Biotechnology
Advisor Biotechnology Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.8% |
| Shares | | Value |
BIOTECHNOLOGY - 92.3% |
Biotechnology - 92.3% |
Acadia Pharmaceuticals, Inc. (a) | 28,874 | | $ 117,517 |
Acorda Therapeutics, Inc. (a) | 71,716 | | 1,811,546 |
Affymax, Inc. (a) | 7,300 | | 139,503 |
Alexion Pharmaceuticals, Inc. (a) | 85,088 | | 3,748,126 |
Alkermes, Inc. (a) | 24,461 | | 252,438 |
Allos Therapeutics, Inc. (a) | 21,930 | | 176,975 |
Alnylam Pharmaceuticals, Inc. (a) | 7,000 | | 162,890 |
Amgen, Inc. (a) | 189,873 | | 11,830,988 |
Amylin Pharmaceuticals, Inc. (a)(d) | 32,000 | | 470,720 |
Anadys Pharmaceuticals, Inc. (a) | 23,355 | | 60,723 |
Antigenics, Inc. (a)(d) | 68,000 | | 148,920 |
Antigenics, Inc.: | | | |
warrants 1/9/10 (a)(e) | 452,000 | | 619,877 |
warrants 1/9/18 (a)(e) | 452,000 | | 984,826 |
Arena Pharmaceuticals, Inc. (a) | 22,400 | | 114,240 |
Biogen Idec, Inc. (a) | 98,026 | | 4,661,136 |
BioMarin Pharmaceutical, Inc. (a) | 85,326 | | 1,400,200 |
Celera Corp. (a) | 17,200 | | 103,200 |
Celgene Corp. (a) | 43,315 | | 2,467,222 |
Cephalon, Inc. (a) | 32,394 | | 1,899,908 |
Cepheid, Inc. (a) | 6,800 | | 71,876 |
Cubist Pharmaceuticals, Inc. (a) | 4,892 | | 97,204 |
Dendreon Corp. (a) | 67,700 | | 1,639,017 |
Enzon Pharmaceuticals, Inc. (a)(d) | 5,400 | | 43,902 |
Facet Biotech Corp. (a) | 4,500 | | 39,690 |
Genomic Health, Inc. (a) | 2,100 | | 35,406 |
Genzyme Corp. (a) | 38,832 | | 2,014,992 |
Gilead Sciences, Inc. (a) | 62,062 | | 3,036,694 |
GTx, Inc. (a) | 2,670 | | 28,088 |
Halozyme Therapeutics, Inc. (a) | 12,910 | | 91,145 |
Human Genome Sciences, Inc. (a)(d) | 72,308 | | 1,034,004 |
ImmunoGen, Inc. (a) | 900 | | 7,821 |
Incyte Corp. (a) | 13,195 | | 68,614 |
InterMune, Inc. | 24,417 | | 373,092 |
Isis Pharmaceuticals, Inc. (a) | 37,900 | | 692,812 |
Ligand Pharmaceuticals, Inc. Class B (a) | 26,500 | | 74,995 |
Martek Biosciences | 2,900 | | 67,454 |
Medivation, Inc. (a) | 7,880 | | 195,030 |
Micromet, Inc. (a) | 4,700 | | 30,221 |
Momenta Pharmaceuticals, Inc. (a)(d) | 19,760 | | 214,396 |
Myriad Genetics, Inc. (a) | 15,224 | | 417,442 |
Myriad Pharmaceuticals, Inc. (a) | 302 | | 1,471 |
OncoGenex Pharmaceuticals, Inc. (a)(d) | 12,692 | | 370,353 |
ONYX Pharmaceuticals, Inc. (a) | 14,948 | | 536,932 |
OREXIGEN Therapeutics, Inc. (a)(d) | 13,588 | | 111,150 |
OSI Pharmaceuticals, Inc. (a) | 26,003 | | 878,641 |
PDL BioPharma, Inc. | 41,900 | | 344,837 |
Poniard Pharmaceuticals, Inc. (a)(d) | 7,700 | | 55,517 |
Progenics Pharmaceuticals, Inc. (a) | 4,500 | | 25,560 |
|
| Shares | | Value |
Regeneron Pharmaceuticals, Inc. (a) | 13,649 | | $ 292,635 |
Rigel Pharmaceuticals, Inc. (a) | 7,635 | | 63,600 |
Sangamo Biosciences, Inc. (a)(d) | 7,098 | | 40,459 |
Savient Pharmaceuticals, Inc. (a)(d) | 15,855 | | 247,179 |
Targacept, Inc. (a) | 500 | | 5,365 |
Theratechnologies, Inc. (a) | 1,900 | | 3,968 |
Theravance, Inc. (a)(d) | 21,385 | | 322,914 |
United Therapeutics Corp. (a) | 29,660 | | 2,747,109 |
Vanda Pharmaceuticals, Inc. (a) | 33,500 | | 509,200 |
Vertex Pharmaceuticals, Inc. (a) | 72,204 | | 2,600,066 |
Zymogenetics, Inc. (a)(d) | 10,295 | | 57,652 |
| | 50,659,458 |
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3% |
Health Care Equipment - 0.0% |
Alsius Corp. (a) | 14,200 | | 852 |
Aradigm Corp. (a) | 21,800 | | 4,447 |
| | 5,299 |
Health Care Supplies - 0.3% |
Quidel Corp. (a) | 11,770 | | 175,726 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 181,025 |
LIFE SCIENCES TOOLS & SERVICES - 0.5% |
Life Sciences Tools & Services - 0.5% |
Clinical Data, Inc. (a)(d) | 7,925 | | 117,369 |
Exelixis, Inc. (a) | 32,900 | | 176,015 |
| | 293,384 |
PHARMACEUTICALS - 6.7% |
Pharmaceuticals - 6.7% |
Adolor Corp. (a) | 45,299 | | 80,632 |
Akorn, Inc. (a) | 112,579 | | 151,982 |
Alexza Pharmaceuticals, Inc. (a)(d) | 6,581 | | 17,374 |
Auxilium Pharmaceuticals, Inc. (a)(d) | 47,658 | | 1,474,062 |
Biodel, Inc. (a) | 100,769 | | 496,791 |
Cadence Pharmaceuticals, Inc. (a)(d) | 13,600 | | 164,560 |
Elan Corp. PLC sponsored ADR (a) | 72,250 | | 569,330 |
Inspire Pharmaceuticals, Inc. (a) | 1,370 | | 6,658 |
Jazz Pharmaceuticals, Inc. (a)(d) | 8,735 | | 51,362 |
Optimer Pharmaceuticals, Inc. (a) | 12,437 | | 175,237 |
ViroPharma, Inc. (a) | 4,100 | | 30,217 |
Vivus, Inc. (a) | 12,468 | | 92,388 |
Wyeth | 5,800 | | 269,990 |
XenoPort, Inc. (a) | 4,833 | | 98,158 |
| | 3,678,741 |
TOTAL COMMON STOCKS (Cost $51,054,720) | 54,812,608 |
Convertible Bonds - 0.2% |
| Principal Amount | | Value |
BIOTECHNOLOGY - 0.2% |
Biotechnology - 0.2% |
OSI Pharmaceuticals, Inc. 3.25% 9/8/23
(Cost $106,858) | | $ 130,000 | | $ 120,169 |
Money Market Funds - 4.0% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b) | 121,707 | | 121,707 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 2,073,900 | | 2,073,900 |
TOTAL MONEY MARKET FUNDS (Cost $2,195,607) | 2,195,607 |
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $53,357,185) | | 57,128,384 |
NET OTHER ASSETS - (4.0)% | | (2,210,643) |
NET ASSETS - 100% | $ 54,917,741 |
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 $1,604,703 or 2.9% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Antigenics, Inc. warrants 1/9/10 | 1/9/08 | $ 3 |
Antigenics, Inc. warrants 1/9/18 | 1/9/08 | $ 563,722 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 23,996 |
Fidelity Securities Lending Cash Central Fund | 16,666 |
Total | $ 40,662 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Health Care | $ 54,812,608 | $ 53,207,905 | $ 1,604,703 | $ - |
Corporate Bonds | 120,169 | - | 120,169 | - |
Money Market Funds | 2,195,607 | 2,195,607 | - | - |
Total Investments in Securities | $ 57,128,384 | $ 55,403,512 | $ 1,724,872 | $ - |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $4,539,063 all of which will expire on July 31, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Biotechnology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $1,996,287) - See accompanying schedule: Unaffiliated issuers (cost $51,161,578) | $ 54,932,777 | |
Fidelity Central Funds (cost $2,195,607) | 2,195,607 | |
Total Investments (cost $53,357,185) | | $ 57,128,384 |
Receivable for investments sold | | 824,559 |
Receivable for fund shares sold | | 112,289 |
Interest receivable | | 1,667 |
Distributions receivable from Fidelity Central Funds | | 3,280 |
Prepaid expenses | | 224 |
Total assets | | 58,070,403 |
| | |
Liabilities | | |
Payable for investments purchased | $ 774,912 | |
Payable for fund shares redeemed | 200,915 | |
Accrued management fee | 24,972 | |
Distribution fees payable | 24,630 | |
Other affiliated payables | 16,122 | |
Other payables and accrued expenses | 37,211 | |
Collateral on securities loaned, at value | 2,073,900 | |
Total liabilities | | 3,152,662 |
| | |
Net Assets | | $ 54,917,741 |
Net Assets consist of: | | |
Paid in capital | | $ 56,459,376 |
Undistributed net investment income | | 95 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (5,312,929) |
Net unrealized appreciation (depreciation) on investments | | 3,771,199 |
Net Assets | | $ 54,917,741 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($19,857,624 ÷ 2,862,510 shares) | | $ 6.94 |
| | |
Maximum offering price per share (100/94.25 of $6.94) | | $ 7.36 |
Class T:
Net Asset Value and redemption price per share ($13,356,033 ÷ 1,971,055 shares) | | $ 6.78 |
| | |
Maximum offering price per share (100/96.50 of $6.78) | | $ 7.03 |
Class B:
Net Asset Value and offering price per share ($7,376,850 ÷ 1,139,962 shares) A | | $ 6.47 |
| | |
Class C:
Net Asset Value and offering price per share ($12,425,872 ÷ 1,919,725 shares) A | | $ 6.47 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($1,901,362 ÷ 266,947 shares) | | $ 7.12 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Biotechnology Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 26,491 |
Interest | | 466 |
Income from Fidelity Central Funds (including $16,666 from security lending) | | 40,662 |
Total income | | 67,619 |
| | |
Expenses | | |
Management fee | $ 294,316 | |
Transfer agent fees | 176,074 | |
Distribution fees | 306,361 | |
Accounting and security lending fees | 21,988 | |
Custodian fees and expenses | 9,828 | |
Independent trustees' compensation | 351 | |
Registration fees | 53,205 | |
Audit | 46,604 | |
Legal | 275 | |
Miscellaneous | 3,757 | |
Total expenses before reductions | 912,759 | |
Expense reductions | (7,893) | 904,866 |
Net investment income (loss) | | (837,247) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (282,142) | |
Foreign currency transactions | (38) | |
Total net realized gain (loss) | | (282,180) |
Change in net unrealized appreciation (depreciation) on investment securities | | (7,383,033) |
Net gain (loss) | | (7,665,213) |
Net increase (decrease) in net assets resulting from operations | | $ (8,502,460) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (837,247) | $ (852,978) |
Net realized gain (loss) | (282,180) | (1,921,856) |
Change in net unrealized appreciation (depreciation) | (7,383,033) | 10,243,107 |
Net increase (decrease) in net assets resulting from operations | (8,502,460) | 7,468,273 |
Distributions to shareholders from net realized gain | - | (3,898,928) |
Share transactions - net increase (decrease) | 4,533,971 | 3,736,181 |
Redemption fees | 29,559 | 1,940 |
Total increase (decrease) in net assets | (3,938,930) | 7,307,466 |
| | |
Net Assets | | |
Beginning of period | 58,856,671 | 51,549,205 |
End of period (including undistributed net investment income of $95 and $0, respectively) | $ 54,917,741 | $ 58,856,671 |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.08) | (.09) F | (.09) | (.09) | (.08) G |
Net realized and unrealized gain (loss) | (.79) | 1.20 | .51 | .10 | .88 |
Total from investment operations | (.87) | 1.11 | .42 | .01 | .80 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.94 | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 |
Total Return A,B | (11.14)% | 15.95% | 6.17% | .15% | 13.33% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.40% | 1.37% | 1.42% | 1.48% | 1.56% |
Expenses net of fee waivers, if any | 1.40% | 1.37% | 1.40% | 1.40% | 1.45% |
Expenses net of all reductions | 1.40% | 1.37% | 1.40% | 1.37% | 1.43% |
Net investment income (loss) | (1.27)% | (1.24)% F | (1.25)% | (1.29)% | (1.36)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 19,858 | $ 18,249 | $ 13,081 | $ 12,539 | $ 11,022 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.33)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.37)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) | (.11) F | (.11) | (.11) | (.10) G |
Net realized and unrealized gain (loss) | (.78) | 1.18 | .51 | .10 | .87 |
Total from investment operations | (.87) | 1.07 | .40 | (.01) | .77 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.78 | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 |
Total Return A,B | (11.37)% | 15.64% | 5.96% | (.15)% | 12.94% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.71% | 1.69% | 1.75% | 1.79% | 1.93% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.70% |
Expenses net of all reductions | 1.65% | 1.65% | 1.65% | 1.62% | 1.68% |
Net investment income (loss) | (1.52)% | (1.53)% F | (1.49)% | (1.54)% | (1.61)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,356 | $ 15,123 | $ 13,008 | $ 13,808 | $ 14,177 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.12) | (.14) F | (.14) | (.14) | (.13) G |
Net realized and unrealized gain (loss) | (.75) | 1.13 | .50 | .10 | .85 |
Total from investment operations | (.87) | .99 | .36 | (.04) | .72 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 |
Total Return A,B | (11.85)% | 14.96% | 5.52% | (.61)% | 12.33% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.15% | 2.12% | 2.17% | 2.23% | 2.33% |
Expenses net of fee waivers, if any | 2.15% | 2.12% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.12% | 2.15% | 2.12% | 2.18% |
Net investment income (loss) | (2.02)% | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 7,377 | $ 11,044 | $ 12,656 | $ 14,938 | $ 16,921 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.12) | (.13) F | (.14) | (.14) | (.13) G |
Net realized and unrealized gain (loss) | (.75) | 1.12 | .50 | .09 | .86 |
Total from investment operations | (.87) | .99 | .36 | (.05) | .73 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 |
Total Return A,B | (11.85)% | 14.96% | 5.52% | (.76)% | 12.50% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.15% | 2.12% | 2.16% | 2.17% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.12% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.12% | 2.15% | 2.12% | 2.18% |
Net investment income (loss) | (2.02)% | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 12,426 | $ 13,323 | $ 11,813 | $ 13,787 | $ 12,538 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.06) | (.07) E | (.07) | (.07) | (.06) F |
Net realized and unrealized gain (loss) | (.82) | 1.23 | .53 | .09 | .89 |
Total from investment operations | (.88) | 1.16 | .46 | .02 | .83 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 7.12 | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 |
Total Return A | (11.00)% | 16.35% | 6.66% | .29% | 13.70% |
Ratios to Average Net Assets C,G | | | | | |
Expenses before reductions | 1.11% | 1.06% | 1.06% | 1.05% | 1.10% |
Expenses net of fee waivers, if any | 1.11% | 1.06% | 1.06% | 1.05% | 1.10% |
Expenses net of all reductions | 1.11% | 1.06% | 1.06% | 1.03% | 1.09% |
Net investment income (loss) | (.98)% | (.94)% E | (.91)% | (.94)% | (1.02)% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,901 | $ 1,117 | $ 991 | $ 1,268 | $ 1,243 |
Portfolio turnover rate D | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Biotechnology Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Biotechnology
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded 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, 2008, dividend income has been reduced $20,082 with a corresponding increase to net unrealized appreciation (depreciation). The change in estimate has no impact on total net assets or total return of the Fund. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, net operating losses, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 9,091,862 | |
Unrealized depreciation | (6,094,438) | |
Net unrealized appreciation (depreciation) | $ 2,997,424 | |
Capital loss carryforward | $ (4,539,063) | |
Cost for federal income tax purposes | $ 54,130,960 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Long-term Capital Gains | $ - | $ 3,898,928 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 $42,678,225 and $37,357,661, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 44,439 | $ 727 |
Class T | .25% | .25% | 64,334 | 330 |
Class B | .75% | .25% | 79,206 | 59,780 |
Class C | .75% | .25% | 118,382 | 24,881 |
| | | $ 306,361 | $ 85,718 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 19,529 |
Class T | 7,568 |
Class B* | 19,140 |
Class C* | 5,479 |
| $ 51,716 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Biotechnology
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 58,066 | .33 |
Class T | 48,815 | .38 |
Class B | 25,711 | .32 |
Class C | 38,525 | .33 |
Institutional Class | 4,957 | .28 |
| $ 176,074 | |
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 $737 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $241 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 366 |
Class T | 1.65% | 6,995 |
Class B | 2.15% | 350 |
Class C | 2.15% | 182 |
| | $ 7,893 |
Annual Report
Notes to Financial Statements - continued
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ - | $ 958,767 |
Class T | - | 975,566 |
Class B | - | 968,071 |
Class C | - | 911,566 |
Institutional Class | - | 84,958 |
Total | $ - | $ 3,898,928 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,341,295 | 968,364 | $ 15,410,062 | $ 6,960,029 |
Reinvestment of distributions | - | 116,475 | - | 854,207 |
Shares redeemed | (1,815,151) | (556,578) | (11,129,933) | (3,954,261) |
Net increase (decrease) | 526,144 | 528,261 | $ 4,280,129 | $ 3,859,975 |
Class T | | | | |
Shares sold | 826,391 | 558,497 | $ 5,258,554 | $ 3,914,836 |
Reinvestment of distributions | - | 133,154 | - | 959,165 |
Shares redeemed | (832,503) | (543,030) | (5,110,823) | (3,782,531) |
Net increase (decrease) | (6,112) | 148,621 | $ 147,731 | $ 1,091,470 |
Class B | | | | |
Shares sold | 365,766 | 270,835 | $ 2,311,576 | $ 1,836,564 |
Reinvestment of distributions | - | 123,818 | - | 860,151 |
Shares redeemed | (730,232) | (730,418) | (4,256,288) | (4,825,895) |
Net increase (decrease) | (364,466) | (335,765) | $ (1,944,712) | $ (2,129,180) |
Class C | | | | |
Shares sold | 793,743 | 452,084 | $ 5,016,886 | $ 3,145,989 |
Reinvestment of distributions | - | 110,151 | - | 765,068 |
Shares redeemed | (688,414) | (465,047) | (3,988,392) | (3,112,018) |
Net increase (decrease) | 105,329 | 97,188 | $ 1,028,494 | $ 799,039 |
Institutional Class | | | | |
Shares sold | 390,521 | 190,433 | $ 2,696,069 | $ 1,427,209 |
Reinvestment of distributions | - | 6,538 | - | 48,898 |
Shares redeemed | (263,268) | (191,649) | (1,673,740) | (1,361,230) |
Net increase (decrease) | 127,253 | 5,322 | $ 1,022,329 | $ 114,877 |
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.
Biotechnology
Advisor Communications Equipment Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Life of
fundA |
Class A (incl. 5.75% sales charge) D | -12.26% | 1.28% | -4.13% |
Class T (incl. 3.50% sales charge) D | -10.41% | 1.50% | -4.10% |
Class B (incl. contingent deferred sales charge)B,D | -12.20% | 1.36% | -4.06% |
Class C (incl. contingent deferred sales charge)C,D | -8.51% | 1.71% | -4.19% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 5%, 2%, and 0%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 1%, 0%, and 0%, respectively.
D Prior to October 1, 2006, Advisor Communications Equipment operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Communications Equipment Fund - Class A on December 27, 2000, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Communications Equipment
Advisor Communications Equipment Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -6.91%, -7.16%, -7.58% and -7.59%, respectively (excluding sales charges), edging the - -7.64% return of the MSCI® US Investable Market Communications Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock picking in the semiconductors group was most productive, with stock selection in application software and Internet software/services, along with a modest cash position, also bolstering performance. Starent Networks, a provider of infrastructure hardware/software products, was the top contributor, with China-based Cogo Group, which sells electronic components to telecommunication equipment companies, and German chip maker Infineon Technologies, an out-of-index holding, also contributing. I sold Cogo to lock in profits. Conversely, unfavorable stock choices in communications equipment detracted, as did picks in advertising and electronic equipment/instruments. Our foreign holdings also hurt, hampered in part by currency fluctuations. Canadian out-of-index holding Research In Motion was our biggest detractor, sidetracked by increasingly stiff competition in the smartphone market, while Powerwave Technologies, which makes equipment for wireless communications networks, and Comverse Technology, an out-of-index maker of software and systems, also hurt. A large underweighting in network equipment maker Cisco Systems - the MSCI index's largest component - was counterproductive as well, although I added substantially to the position by period end.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund: During the past year, the fund's Institutional Class shares returned -6.64%, beating the -7.64% return of the MSCI® US Investable Market Communications Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock picking in the semiconductors group was most productive, with stock selection in application software and Internet software/services, along with a modest cash position, also bolstering performance. Starent Networks, a provider of infrastructure hardware/software products, was the top contributor, with China-based Cogo Group, which sells electronic components to telecommunication equipment companies, and German chip maker Infineon Technologies, an out-of-index holding, also contributing. I sold Cogo to lock in profits. Conversely, unfavorable stock choices in communications equipment detracted, as did picks in advertising and electronic equipment/instruments. Our foreign holdings also hurt, hampered in part by currency fluctuations. Canadian out-of-index holding Research In Motion was our biggest detractor, sidetracked by increasingly stiff competition in the smartphone market, while Powerwave Technologies, which makes equipment for wireless communications networks, and Comverse Technology, an out-of-index maker of software and systems, also hurt. A large underweighting in network equipment maker Cisco Systems - the MSCI index's largest component - was counterproductive as well, although I added substantially to the position 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
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, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,610.60 | $ 9.06 |
Hypothetical A | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,609.50 | $ 10.68 |
Hypothetical A | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,607.10 | $ 13.90 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,604.70 | $ 13.89 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% | | | |
Actual | | $ 1,000.00 | $ 1,612.60 | $ 7.45 |
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).
Communications Equipment
Advisor Communications Equipment Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Cisco Systems, Inc. | 16.0 | 16.7 |
QUALCOMM, Inc. | 10.8 | 19.0 |
Juniper Networks, Inc. | 4.7 | 0.0 |
Tellabs, Inc. | 3.9 | 2.0 |
Starent Networks Corp. | 3.8 | 10.7 |
Tekelec | 3.4 | 0.2 |
Motorola, Inc. | 3.4 | 1.5 |
Adtran, Inc. | 3.2 | 2.2 |
Harmonic, Inc. | 2.9 | 0.0 |
TeleCommunication Systems, Inc. Class A | 2.9 | 0.0 |
| 55.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Communications Equipment | 75.1% | |
 | Semiconductors & Semiconductor Equipment | 9.2% | |
 | Software | 6.2% | |
 | Internet Software & Services | 2.8% | |
| Wireless Telecommunication Services | 2.5% | |
| All Others* | 4.2% | |
|
As of January 31, 2009 |
| Communications Equipment | 76.1% | |
| Semiconductors & Semiconductor Equipment | 8.6% | |
| Software | 5.4% | |
| Wireless Telecommunication Services | 4.7% | |
| Media | 2.0% | |
| All Others* | 3.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Communications Equipment Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.4% |
| Shares | | Value |
COMMUNICATIONS EQUIPMENT - 75.0% |
Communications Equipment - 75.0% |
3Com Corp. (a) | 15,046 | | $ 56,723 |
Acme Packet, Inc. (a) | 15,665 | | 157,277 |
ADC Telecommunications, Inc. (a) | 6,700 | | 48,776 |
Adtran, Inc. | 14,283 | | 345,077 |
ADVA AG Optical Networking (a) | 7,013 | | 15,593 |
Alcatel-Lucent SA sponsored ADR (a) | 40,700 | | 112,332 |
Arris Group, Inc. (a) | 7,844 | | 95,540 |
Aruba Networks, Inc. (a) | 4,951 | | 43,965 |
BigBand Networks, Inc. (a) | 10,500 | | 57,645 |
Blue Coat Systems, Inc. (a) | 7,600 | | 142,044 |
Brocade Communications Systems, Inc. (a) | 25,400 | | 199,644 |
Ceragon Networks Ltd. (a) | 2,000 | | 14,900 |
China GrenTech Corp. Ltd. ADR (a) | 1,388 | | 5,059 |
Ciena Corp. (a) | 10,959 | | 122,302 |
Cisco Systems, Inc. (a) | 79,169 | | 1,742,512 |
CommScope, Inc. (a) | 9,100 | | 232,960 |
Comverse Technology, Inc. (a) | 9,206 | | 72,819 |
DragonWave, Inc. (a) | 2,800 | | 16,763 |
EMCORE Corp. (a) | 4,600 | | 5,796 |
Emulex Corp. (a) | 2,500 | | 22,825 |
F5 Networks, Inc. (a) | 6,300 | | 233,856 |
Harmonic, Inc. (a) | 45,700 | | 316,701 |
Harris Stratex Networks, Inc. Class A (a) | 2,867 | | 19,897 |
Infinera Corp. (a) | 1,300 | | 8,801 |
Ixia (a) | 5,900 | | 44,486 |
JDS Uniphase Corp. (a) | 12,113 | | 70,982 |
Juniper Networks, Inc. (a) | 19,600 | | 512,148 |
Motorola, Inc. | 51,200 | | 366,592 |
Oclaro, Inc. (a) | 4,194 | | 2,474 |
Oplink Communications, Inc. (a) | 1,974 | | 25,109 |
Opnext, Inc. (a) | 15,501 | | 31,467 |
Palm, Inc. (a) | 500 | | 7,865 |
Polycom, Inc. (a) | 8,900 | | 211,375 |
Powerwave Technologies, Inc. (a) | 8,139 | | 10,255 |
QUALCOMM, Inc. | 25,570 | | 1,181,590 |
Research In Motion Ltd. (a) | 100 | | 7,600 |
Riverbed Technology, Inc. (a) | 8,300 | | 166,083 |
Sandvine Corp. (a) | 18,400 | | 20,153 |
Sandvine Corp. (U.K.) (a) | 56,400 | | 60,777 |
ShoreTel, Inc. (a) | 2,304 | | 19,860 |
Sierra Wireless, Inc. (a) | 11,600 | | 83,553 |
Sonus Networks, Inc. (a) | 15,367 | | 29,197 |
Starent Networks Corp. (a) | 17,376 | | 416,676 |
Tekelec (a) | 20,400 | | 375,156 |
Telefonaktiebolaget LM Ericsson
(B Shares) sponsored ADR | 2,400 | | 23,328 |
Tellabs, Inc. (a) | 72,900 | | 422,820 |
| | 8,179,353 |
|
| Shares | | Value |
COMPUTERS & PERIPHERALS - 0.1% |
Computer Hardware - 0.0% |
Compal Electronics, Inc. | 28 | | $ 27 |
Computer Storage & Peripherals - 0.1% |
STEC, Inc. (a) | 400 | | 13,636 |
TOTAL COMPUTERS & PERIPHERALS | | 13,663 |
ELECTRONIC EQUIPMENT & COMPONENTS - 1.2% |
Electronic Components - 0.3% |
Universal Display Corp. (a) | 2,800 | | 34,020 |
Electronic Manufacturing Services - 0.8% |
Flextronics International Ltd. (a) | 6,200 | | 32,984 |
Foxconn International Holdings Ltd. (a) | 2,000 | | 1,399 |
SMART Modular Technologies (WWH), Inc. (a) | 4,416 | | 13,160 |
Trimble Navigation Ltd. (a) | 1,719 | | 40,757 |
| | 88,300 |
Technology Distributors - 0.1% |
Brightpoint, Inc. (a) | 718 | | 4,265 |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | | 126,585 |
INTERNET SOFTWARE & SERVICES - 2.8% |
Internet Software & Services - 2.8% |
comScore, Inc. (a) | 200 | | 3,044 |
Equinix, Inc. (a) | 300 | | 24,519 |
Keynote Systems, Inc. (a) | 5,100 | | 51,306 |
NetEase.com, Inc. sponsored ADR (a) | 200 | | 8,812 |
Sina Corp. (a) | 2,400 | | 79,632 |
Tencent Holdings Ltd. | 10,400 | | 140,369 |
| | 307,682 |
IT SERVICES - 0.8% |
Data Processing & Outsourced Services - 0.1% |
NeuStar, Inc. Class A (a) | 700 | | 15,876 |
IT Consulting & Other Services - 0.7% |
Amdocs Ltd. (a) | 2,700 | | 64,584 |
Yucheng Technologies Ltd. (a) | 1,200 | | 9,996 |
| | 74,580 |
TOTAL IT SERVICES | | 90,456 |
MEDIA - 0.6% |
Advertising - 0.3% |
VisionChina Media, Inc. ADR (a) | 4,700 | | 30,879 |
Cable & Satellite - 0.3% |
Virgin Media, Inc. | 3,850 | | 40,233 |
TOTAL MEDIA | | 71,112 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.2% |
Semiconductor Equipment - 0.8% |
Tessera Technologies, Inc. (a) | 2,900 | | 81,461 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - 8.4% |
Actel Corp. (a) | 451 | | $ 5,024 |
Altera Corp. | 1,200 | | 22,428 |
Applied Micro Circuits Corp. (a) | 2,758 | | 23,857 |
ARM Holdings PLC sponsored ADR | 2,800 | | 17,892 |
Cavium Networks, Inc. (a) | 8,854 | | 167,075 |
Ceva, Inc. (a) | 1,400 | | 12,278 |
Conexant Systems, Inc. (a) | 1,280 | | 1,920 |
CSR PLC (a) | 14,086 | | 100,488 |
Exar Corp. (a) | 143 | | 1,005 |
Hittite Microwave Corp. (a) | 100 | | 3,512 |
Ikanos Communications, Inc. (a) | 3,985 | | 7,014 |
Infineon Technologies AG (a) | 47,400 | | 191,491 |
Infineon Technologies AG rights 8/3/09 (a) | 60,700 | | 28,453 |
Microsemi Corp. (a) | 449 | | 6,129 |
Mindspeed Technologies, Inc. (a) | 2,501 | | 6,753 |
Netlogic Microsystems, Inc. (a) | 2,716 | | 107,934 |
Omnivision Technologies, Inc. (a) | 1,900 | | 25,137 |
ON Semiconductor Corp. (a) | 7,285 | | 53,181 |
Pericom Semiconductor Corp. (a) | 1,700 | | 16,150 |
Pixelplus Co. Ltd. ADR (a) | 900 | | 270 |
PLX Technology, Inc. (a) | 1,400 | | 5,460 |
PMC-Sierra, Inc. (a) | 3,100 | | 28,365 |
Silicon Storage Technology, Inc. (a) | 1,200 | | 2,256 |
Standard Microsystems Corp. (a) | 1,200 | | 27,840 |
TriQuint Semiconductor, Inc. (a) | 5,000 | | 35,900 |
Xilinx, Inc. | 900 | | 19,521 |
| | 917,333 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 998,794 |
SOFTWARE - 6.2% |
Application Software - 3.0% |
Citrix Systems, Inc. (a) | 2,300 | | 81,880 |
KongZhong Corp. sponsored ADR (a) | 4,100 | | 50,922 |
NetScout Systems, Inc. (a) | 1,200 | | 11,940 |
Smith Micro Software, Inc. (a) | 10,961 | | 125,284 |
Synchronoss Technologies, Inc. (a) | 2,600 | | 30,888 |
Taleo Corp. Class A (a) | 100 | | 1,750 |
Ulticom, Inc. | 13,765 | | 24,777 |
| | 327,441 |
|
| Shares | | Value |
Home Entertainment Software - 0.3% |
Ubisoft Entertainment SA (a) | 1,600 | | $ 27,331 |
Systems Software - 2.9% |
Allot Communications Ltd. (a) | 300 | | 1,200 |
Opnet Technologies, Inc. | 400 | | 3,800 |
TeleCommunication Systems, Inc.
Class A (a) | 37,897 | | 313,787 |
| | 318,787 |
TOTAL SOFTWARE | | 673,559 |
WIRELESS TELECOMMUNICATION SERVICES - 2.5% |
Wireless Telecommunication Services - 2.5% |
Crown Castle International Corp. (a) | 400 | | 11,496 |
Leap Wireless International, Inc. (a) | 300 | | 7,185 |
SBA Communications Corp. Class A (a) | 1,216 | | 31,725 |
Syniverse Holdings, Inc. (a) | 12,420 | | 217,723 |
| | 268,129 |
TOTAL COMMON STOCKS (Cost $10,198,498) | 10,729,333 |
Convertible Bonds - 0.1% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.1% |
Communications Equipment - 0.1% |
Ciena Corp. 0.25% 5/1/13
(Cost $20,000) | | $ 20,000 | | 13,998 |
Money Market Funds - 3.8% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b)
(Cost $413,521) | 413,521 | | 413,521 |
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $10,632,019) | | 11,156,852 |
NET OTHER ASSETS - (2.3)% | | (255,101) |
NET ASSETS - 100% | $ 10,901,751 |
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 | $ 3,395 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 71,112 | $ 71,112 | $ - | $ - |
Information Technology | 10,390,092 | 10,170,148 | 219,944 | - |
Telecommunication Services | 268,129 | 268,129 | - | - |
Corporate Bonds | 13,998 | - | 13,998 | - |
Money Market Funds | 413,521 | 413,521 | - | - |
Total Investments in Securities: | $ 11,156,852 | $ 10,922,910 | $ 233,942 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.2% |
Germany | 2.2% |
China | 2.1% |
Canada | 1.9% |
United Kingdom | 1.7% |
France | 1.3% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $601,215 of which $207,917 and $393,298 will expire on July 31, 2016 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $1,583,417 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Advisor Communications Equipment Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $10,218,498) | $ 10,743,331 | |
Fidelity Central Funds (cost $413,521) | 413,521 | |
Total Investments (cost $10,632,019) | | $ 11,156,852 |
Receivable for investments sold | | 70,963 |
Receivable for fund shares sold | | 25,985 |
Dividends receivable | | 1,285 |
Interest receivable | | 12 |
Distributions receivable from Fidelity Central Funds | | 131 |
Prepaid expenses | | 21 |
Receivable from investment adviser for expense reductions | | 4,637 |
Other receivables | | 16 |
Total assets | | 11,259,902 |
| | |
Liabilities | | |
Payable for investments purchased | $ 295,630 | |
Payable for fund shares redeemed | 12,609 | |
Accrued management fee | 4,559 | |
Distribution fees payable | 4,592 | |
Other affiliated payables | 2,674 | |
Other payables and accrued expenses | 38,087 | |
Total liabilities | | 358,151 |
| | |
Net Assets | | $ 10,901,751 |
Net Assets consist of: | | |
Paid in capital | | $ 12,706,664 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (2,329,322) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 524,409 |
Net Assets | | $ 10,901,751 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($3,476,172 ÷ 477,211 shares) | | $ 7.28 |
| | |
Maximum offering price per share (100/94.25 of $7.28) | | $ 7.72 |
Class T:
Net Asset Value and redemption price per share ($2,396,203 ÷ 336,031 shares) | | $ 7.13 |
| | |
Maximum offering price per share (100/96.50 of $7.13) | | $ 7.39 |
Class B:
Net Asset Value and offering price per share ($1,280,585 ÷ 187,570 shares)A | | $ 6.83 |
| | |
Class C:
Net Asset Value and offering price per share ($2,791,678 ÷ 409,118 shares)A | | $ 6.82 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($957,113 ÷ 128,521 shares) | | $ 7.45 |
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, 2009 |
Investment Income | | |
Dividends | | $ 25,197 |
Special dividends | | 63,044 |
Interest | | 69 |
Income from Fidelity Central Funds | | 3,395 |
Total income | | 91,705 |
| | |
Expenses | | |
Management fee | $ 31,077 | |
Transfer agent fees | 20,269 | |
Distribution fees | 31,455 | |
Accounting fees and expenses | 2,144 | |
Custodian fees and expenses | 7,317 | |
Independent trustees' compensation | 34 | |
Registration fees | 50,096 | |
Audit | 47,883 | |
Legal | 35 | |
Miscellaneous | 153 | |
Total expenses before reductions | 190,463 | |
Expense reductions | (95,366) | 95,097 |
Net investment income (loss) | | (3,392) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (2,043,606) | |
Foreign currency transactions | (1,842) | |
Total net realized gain (loss) | | (2,045,448) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,654,702 | |
Assets and liabilities in foreign currencies | (309) | |
Total change in net unrealized appreciation (depreciation) | | 1,654,393 |
Net gain (loss) | | (391,055) |
Net increase (decrease) in net assets resulting from operations | | $ (394,447) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (3,392) | $ (110,235) |
Net realized gain (loss) | (2,045,448) | 45,848 |
Change in net unrealized appreciation (depreciation) | 1,654,393 | (1,477,802) |
Net increase (decrease) in net assets resulting from operations | (394,447) | (1,542,189) |
Distributions to shareholders from net realized gain | - | (150,546) |
Share transactions - net increase (decrease) | 4,154,179 | (1,556,420) |
Redemption fees | 239 | 979 |
Total increase (decrease) in net assets | 3,759,971 | (3,248,176) |
| | |
Net Assets | | |
Beginning of period | 7,141,780 | 10,389,956 |
End of period | $ 10,901,751 | $ 7,141,780 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 F | (.08) | (.09) | (.09) | (.07) |
Net realized and unrealized gain (loss) | (.56) | (1.45) | 2.29 | (.32) | 1.24 |
Total from investment operations | (.54) | (1.53) | 2.20 | (.41) | 1.17 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 7.28 | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 |
Total Return A,B | (6.91)% | (16.43)% | 30.18% | (5.32)% | 17.92% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.15% | 2.25% | 2.24% | 2.13% | 2.32% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.45% |
Expenses net of all reductions | 1.40% | 1.39% | 1.40% | 1.32% | 1.28% |
Net investment income (loss) | .26% F | (.91)% | (1.00)% | (1.05)% | (.92)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,476 | $ 2,459 | $ 2,825 | $ 3,145 | $ 2,406 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - F,H | (.10) | (.11) | (.11) | (.08) |
Net realized and unrealized gain (loss) | (.55) | (1.42) | 2.26 | (.31) | 1.21 |
Total from investment operations | (.55) | (1.52) | 2.15 | (.42) | 1.13 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 7.13 | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 |
Total Return A,B | (7.16)% | (16.59)% | 29.90% | (5.52)% | 17.44% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.52% | 2.62% | 2.57% | 2.51% | 2.78% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.71% |
Expenses net of all reductions | 1.65% | 1.65% | 1.64% | 1.57% | 1.54% |
Net investment income (loss) | .01% F | (1.16)% | (1.25)% | (1.30)% | (1.18)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,396 | $ 2,138 | $ 3,271 | $ 2,932 | $ 3,034 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) F | (.14) | (.14) | (.14) | (.12) |
Net realized and unrealized gain (loss) | (.53) | (1.36) | 2.18 | (.31) | 1.20 |
Total from investment operations | (.56) | (1.50) | 2.04 | (.45) | 1.08 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 6.83 | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 |
Total Return A,B | (7.58)% | (16.94)% | 29.18% | (6.05)% | 16.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.98% | 3.03% | 3.00% | 2.94% | 3.14% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.20% |
Expenses net of all reductions | 2.15% | 2.15% | 2.15% | 2.07% | 2.04% |
Net investment income (loss) | (.49)% F | (1.67)% | (1.75)% | (1.80)% | (1.68)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,281 | $ 1,219 | $ 2,225 | $ 2,406 | $ 2,864 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) F | (.14) | (.14) | (.15) | (.12) |
Net realized and unrealized gain (loss) | (.53) | (1.37) | 2.18 | (.30) | 1.20 |
Total from investment operations | (.56) | (1.51) | 2.04 | (.45) | 1.08 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 6.82 | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 |
Total Return A,B | (7.59)% | (17.06)% | 29.18% | (6.05)% | 16.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.63% | 3.02% | 2.98% | 2.86% | 3.07% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.15% | 2.15% | 2.07% | 2.02% |
Net investment income (loss) | (.49)% F | (1.67)% | (1.75)% | (1.81)% | (1.66)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,792 | $ 1,097 | $ 1,745 | $ 1,768 | $ 1,846 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .03 E | (.06) | (.07) | (.07) | (.05) |
Net realized and unrealized gain (loss) | (.56) | (1.47) | 2.33 | (.33) | 1.24 |
Total from investment operations | (.53) | (1.53) | 2.26 | (.40) | 1.19 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 7.45 | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 |
Total Return A | (6.64)% | (16.16)% | 30.58% | (5.13)% | 18.03% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | 2.44% | 1.94% | 1.87% | 1.70% | 1.85% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.15% | 1.18% |
Expenses net of all reductions | 1.15% | 1.14% | 1.15% | 1.07% | 1.01% |
Net investment income (loss) | .51% E | (.66)% | (.75)% | (.80)% | (.65)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 957 | $ 229 | $ 324 | $ 379 | $ 319 |
Portfolio turnover rate D | 97% | 63% | 58% | 174% | 250% |
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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, 2009
1. Organization.
Fidelity Advisor Communications Equipment Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,575,201 | |
Unrealized depreciation | (1,195,476) | |
Net unrealized appreciation (depreciation) | $ 379,725 | |
Capital loss carryforward | $ (601,215) | |
Cost for federal income tax purposes | $ 10,777,127 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Long-term Capital Gains | $ - | $ 150,546 |
Communications Equipment
3. Significant Accounting Policies - continued
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 $10,176,027 and $5,443,377, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | -% | .25% | $ 4,583 | $ 97 |
Class T | .25% | .25% | 7,680 | 6 |
Class B | .75% | .25% | 8,179 | 6,136 |
Class C | .75% | .25% | 11,013 | 1,861 |
| | | $ 31,455 | $ 8,100 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 3,618 |
Class T | 1,757 |
Class B* | 2,479 |
Class C* | 187 |
| $ 8,041 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 6,206 | .34 |
Class T | 6,869 | .45 |
Class B | 2,791 | .34 |
Class C | 3,803 | .34 |
Institutional Class | 600 | .26 |
| $ 20,269 | |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The fee is based on the level of average net assets for the month.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $515 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $23 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 32,129 |
Class T | 1.65% | 28,837 |
Class B | 2.15% | 15,001 |
Class C | 2.15% | 16,297 |
Institutional Class | 1.15% | 2,937 |
| | $ 95,201 |
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 $165 for the period
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ - | $ 39,064 |
Class T | - | 47,716 |
Class B | - | 32,890 |
Class C | - | 26,349 |
Institutional Class | - | 4,527 |
Total | $ - | $ 150,546 |
9. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 355,106 | 160,354 | $ 2,309,221 | $ 1,394,318 |
Reinvestment of distributions | - | 4,001 | - | 38,211 |
Shares redeemed | (192,148) | (147,761) | (977,112) | (1,297,098) |
Net increase (decrease) | 162,958 | 16,594 | $ 1,332,109 | $ 135,431 |
Communications Equipment
9. Share Transactions - continued
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class T | | | | |
Shares sold | 141,676 | 64,977 | $ 842,215 | $ 556,295 |
Reinvestment of distributions | - | 5,010 | - | 47,041 |
Shares redeemed | (84,049) | (141,880) | (471,168) | (1,263,739) |
Net increase (decrease) | 57,627 | (71,893) | $ 371,047 | $ (660,403) |
Class B | | | | |
Shares sold | 79,696 | 20,643 | $ 489,378 | $ 176,765 |
Reinvestment of distributions | - | 3,437 | - | 31,211 |
Shares redeemed | (57,101) | (105,422) | (282,381) | (851,909) |
Net increase (decrease) | 22,595 | (81,342) | $ 206,997 | $ (643,933) |
Class C | | | | |
Shares sold | 334,255 | 39,088 | $ 2,000,139 | $ 340,813 |
Reinvestment of distributions | - | 2,609 | - | 23,659 |
Shares redeemed | (73,743) | (86,305) | (434,705) | (711,202) |
Net increase (decrease) | 260,512 | (44,608) | $ 1,565,434 | $ (346,730) |
Institutional Class | | | | |
Shares sold | 116,053 | 5,041 | $ 776,070 | $ 45,930 |
Reinvestment of distributions | - | 356 | - | 3,461 |
Shares redeemed | (16,263) | (10,196) | (97,478) | (90,176) |
Net increase (decrease) | 99,790 | (4,799) | $ 678,592 | $ (40,785) |
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
Advisor Consumer Discretionary Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge)C | -15.00% | -2.47% | -1.81% |
Class T (incl. 3.50% sales charge)C | -13.19% | -2.24% | -1.80% |
Class B (incl. contingent deferred sales charge) A, C | -15.00% | -2.35% | -1.74% |
Class C (incl. contingent deferred sales charge) B, C | -11.50% | -2.06% | -1.96% |
A Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
C Prior to October 1, 2006, Advisor Consumer Discretionary operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Discretionary Fund - Class A on July 31, 1999, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Consumer Discretionary
Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund: For the 12-month period ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares fell 9.81%, 10.04%, 10.53% and 10.61%, respectively (excluding sales charges), beating the S&P 500®. The fund's sector benchmark, the MSCI® US Investable Market Consumer Discretionary Index, fell 10.18%. The fund outperformed the MSCI index during the first half of the period by owning what I believed to be quality firms whose earnings would hold up better in the downbeat environment. However, over time, investors increased their appetite for risk, and within the consumer discretionary space, a number of lower-quality stocks began to outperform this past spring as they were revalued upwards. Given my quality bias, I decided not to chase the risk trade, which unfortunately turned out to be much stronger than I expected, hampering the fund's relative return during the latter part of the period. Significant contributors to results included Iconix Brand Group, which buys down-and-out brands and re-launches them through "big-box," value-oriented retailers like Wal-Mart. Adult education firm Apollo Group enjoyed solid enrollment gains, and its shares rose early in the period when most other stocks declined. Home improvement retailer Lowe's, a leading franchise in its category, was another success story. On the negative side, our shares in casino operator Las Vegas Sands plummeted when the company's business in Macau, China, was slowed by governmental actions there, while here in the U.S., visits to the firm's Las Vegas property also declined. Underweighting home improvement giant Home Depot detracted when the company's stock outperformed the index. Underweighting Ford Motor hurt as well. The company was the only domestic automaker to avoid government assistance, and its shares surged during the second half of the period.
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund: For the 12-month period ending July 31, 2009, the fund's Institutional Class shares fell 9.59%, outperforming the S&P 500® and the fund's sector benchmark, the MSCI US Investable Market Consumer Discretionary Index, which declined 10.18%. The fund outperformed the MSCI index during the first half of the period by owning what I believed to be quality firms whose earnings would hold up better in the downbeat environment. However, over time, investors increased their appetite for risk, and within the consumer discretionary space, a number of lower-quality stocks began to outperform this past spring as they were revalued upwards. Given my quality bias, I decided not to chase the risk trade, which unfortunately turned out to be much stronger than I expected, hampering the fund's relative return during the latter part of the period. Significant contributors to results included Iconix Brand Group, which buys down-and-out brands and re-launches them through "big-box," value-oriented retailers like Wal-Mart. Adult education firm Apollo Group enjoyed solid enrollment gains, and its shares rose early in the period when most other stocks declined. Home improvement retailer Lowe's, a leading franchise in its category, was another success story. On the negative side, our shares in casino operator Las Vegas Sands plummeted when the company's business in Macau, China, was slowed by governmental actions there, while here in the U.S., visits to the firm's Las Vegas property also declined. Underweighting home improvement giant Home Depot detracted when the company's stock outperformed the index. Underweighting Ford Motor hurt as well. The company was the only domestic automaker to avoid government assistance, and its shares surged during the second half of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Consumer Discretionary
Advisor Consumer Discretionary Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,298.70 | $ 7.98 |
HypotheticalA | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,296.00 | $ 9.39 |
Hypothetical A | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,293.30 | $ 12.23 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,292.90 | $ 12.22 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% | | | |
Actual | | $ 1,000.00 | $ 1,300.00 | $ 6.56 |
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).
Annual Report
Advisor Consumer Discretionary Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Lowe's Companies, Inc. | 7.6 | 6.4 |
Target Corp. | 6.6 | 6.4 |
McDonald's Corp. | 5.6 | 8.8 |
The Walt Disney Co. | 5.1 | 4.6 |
Comcast Corp. Class A | 3.5 | 5.0 |
Staples, Inc. | 2.9 | 3.3 |
Amazon.com, Inc. | 2.6 | 2.4 |
Advance Auto Parts, Inc. | 2.6 | 2.0 |
Home Depot, Inc. | 2.5 | 3.8 |
Carnival Corp. unit | 2.1 | 1.2 |
| 41.1 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Specialty Retail | 25.4% | |
| Media | 19.9% | |
| Hotels, Restaurants
& Leisure | 18.8% | |
| Multiline Retail | 6.6% | |
| Textiles, Apparel
& Luxury Goods | 5.3% | |
| All Others* | 24.0% | |
As of January 31, 2009 |
| Media | 26.0% | |
| Specialty Retail | 22.7% | |
| Hotels, Restaurants
& Leisure | 18.9% | |
| Multiline Retail | 7.0% | |
| Textiles, Apparel
& Luxury Goods | 6.5% | |
| All Others* | 18.9% | |
* Includes short-term investments and net other assets. |
Consumer Discretionary
Advisor Consumer Discretionary Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.7% |
| Shares | | Value |
AUTO COMPONENTS - 3.7% |
Auto Parts & Equipment - 3.7% |
Autoliv, Inc. | 2,400 | | $ 85,944 |
BorgWarner, Inc. | 7,200 | | 238,968 |
Federal-Mogul Corp. Class A (a) | 5,800 | | 81,954 |
Gentex Corp. | 6,000 | | 89,820 |
Johnson Controls, Inc. | 26,400 | | 683,232 |
| | 1,179,918 |
AUTOMOBILES - 2.2% |
Automobile Manufacturers - 1.7% |
Ford Motor Co. (a) | 67,400 | | 539,200 |
Motorcycle Manufacturers - 0.5% |
Harley-Davidson, Inc. (d) | 8,100 | | 183,060 |
TOTAL AUTOMOBILES | | 722,260 |
CONSUMER FINANCE - 0.5% |
Consumer Finance - 0.5% |
Capital One Financial Corp. | 5,600 | | 171,920 |
DISTRIBUTORS - 0.9% |
Distributors - 0.9% |
Li & Fung Ltd. | 104,000 | | 306,638 |
DIVERSIFIED CONSUMER SERVICES - 2.7% |
Education Services - 2.4% |
Apollo Group, Inc. Class A (non-vtg.) (a) | 3,000 | | 207,120 |
DeVry, Inc. | 4,100 | | 203,934 |
Lincoln Educational Services Corp. (a) | 1,800 | | 36,648 |
Princeton Review, Inc. (a) | 13,729 | | 74,411 |
Strayer Education, Inc. | 1,300 | | 276,094 |
| | 798,207 |
Specialized Consumer Services - 0.3% |
Regis Corp. | 6,700 | | 91,522 |
TOTAL DIVERSIFIED CONSUMER SERVICES | | 889,729 |
FOOD & STAPLES RETAILING - 3.8% |
Food Retail - 0.8% |
Susser Holdings Corp. (a) | 22,405 | | 263,707 |
Hypermarkets & Super Centers - 3.0% |
Costco Wholesale Corp. | 12,400 | | 613,800 |
Wal-Mart Stores, Inc. | 6,800 | | 339,184 |
| | 952,984 |
TOTAL FOOD & STAPLES RETAILING | | 1,216,691 |
HOTELS, RESTAURANTS & LEISURE - 18.8% |
Casinos & Gaming - 4.4% |
Ameristar Casinos, Inc. | 5,600 | | 104,664 |
Bally Technologies, Inc. (a) | 1,800 | | 65,178 |
International Game Technology | 8,800 | | 173,800 |
|
| Shares | | Value |
Las Vegas Sands Corp. unit | 2,100 | | $ 331,527 |
Penn National Gaming, Inc. (a) | 11,400 | | 361,494 |
WMS Industries, Inc. (a) | 10,000 | | 361,600 |
| | 1,398,263 |
Hotels, Resorts & Cruise Lines - 4.4% |
Carnival Corp. unit | 24,700 | | 691,353 |
Marriott International, Inc. Class A | 8,437 | | 181,733 |
Starwood Hotels & Resorts Worldwide, Inc. | 5,200 | | 122,772 |
Wyndham Worldwide Corp. | 30,700 | | 428,265 |
| | 1,424,123 |
Restaurants - 10.0% |
Burger King Holdings, Inc. | 17,700 | | 301,254 |
Darden Restaurants, Inc. | 12,900 | | 417,831 |
Jack in the Box, Inc. (a) | 4,800 | | 101,280 |
McDonald's Corp. | 32,900 | | 1,811,474 |
P.F. Chang's China Bistro, Inc. (a)(d) | 4,000 | | 135,640 |
Sonic Corp. (a) | 12,000 | | 132,360 |
Yum! Brands, Inc. | 9,300 | | 329,778 |
| | 3,229,617 |
TOTAL HOTELS, RESTAURANTS & LEISURE | | 6,052,003 |
HOUSEHOLD DURABLES - 3.6% |
Home Furnishings - 0.5% |
Mohawk Industries, Inc. (a) | 3,200 | | 165,056 |
Homebuilding - 1.8% |
Centex Corp. | 7,700 | | 84,007 |
Lennar Corp. Class A | 7,930 | | 93,891 |
M.D.C. Holdings, Inc. | 1,200 | | 42,288 |
NVR, Inc. (a) | 100 | | 60,115 |
Pulte Homes, Inc. (d) | 20,100 | | 228,537 |
Toll Brothers, Inc. (a) | 3,700 | | 72,372 |
| | 581,210 |
Household Appliances - 0.8% |
Whirlpool Corp. | 4,200 | | 239,778 |
Housewares & Specialties - 0.5% |
Newell Rubbermaid, Inc. | 12,900 | | 166,023 |
TOTAL HOUSEHOLD DURABLES | | 1,152,067 |
INTERNET & CATALOG RETAIL - 2.6% |
Internet Retail - 2.6% |
Amazon.com, Inc. (a) | 9,700 | | 831,872 |
INTERNET SOFTWARE & SERVICES - 1.8% |
Internet Software & Services - 1.8% |
Google, Inc. Class A (a) | 1,000 | | 443,050 |
Tencent Holdings Ltd. | 9,400 | | 126,872 |
| | 569,922 |
LEISURE EQUIPMENT & PRODUCTS - 0.7% |
Leisure Products - 0.7% |
Hasbro, Inc. | 8,716 | | 230,974 |
Common Stocks - continued |
| Shares | | Value |
MEDIA - 19.9% |
Advertising - 1.8% |
Interpublic Group of Companies, Inc. (a) | 70,600 | | $ 367,826 |
Lamar Advertising Co. Class A (a)(d) | 9,396 | | 197,692 |
| | 565,518 |
Cable & Satellite - 8.2% |
Comcast Corp. Class A | 74,850 | | 1,112,271 |
DISH Network Corp. Class A (a) | 3,800 | | 64,410 |
Liberty Media Corp. Entertainment Series A (a) | 13,100 | | 366,407 |
The DIRECTV Group, Inc. (a)(d) | 16,500 | | 427,350 |
Time Warner Cable, Inc. | 16,397 | | 542,085 |
Virgin Media, Inc. | 12,600 | | 131,670 |
| | 2,644,193 |
Movies & Entertainment - 9.1% |
News Corp. Class A | 24,000 | | 247,920 |
The Walt Disney Co. | 66,200 | | 1,662,944 |
Time Warner, Inc. | 18,233 | | 486,092 |
Viacom, Inc. Class B (non-vtg.) (a) | 23,500 | | 544,260 |
| | 2,941,216 |
Publishing - 0.8% |
McGraw-Hill Companies, Inc. | 8,100 | | 253,935 |
TOTAL MEDIA | | 6,404,862 |
MULTILINE RETAIL - 6.6% |
General Merchandise Stores - 6.6% |
Target Corp. | 48,700 | | 2,124,294 |
SOFTWARE - 0.2% |
Application Software - 0.2% |
Blackboard, Inc. (a) | 1,894 | | 64,339 |
SPECIALTY RETAIL - 25.4% |
Apparel Retail - 4.5% |
Citi Trends, Inc. (a) | 6,447 | | 188,252 |
DSW, Inc. Class A (a)(d) | 3,288 | | 44,355 |
Gymboree Corp. (a) | 2,100 | | 83,538 |
Pacific Sunwear of California, Inc. (a) | 34,800 | | 115,536 |
Ross Stores, Inc. | 9,600 | | 423,264 |
TJX Companies, Inc. | 6,100 | | 221,003 |
Urban Outfitters, Inc. (a) | 10,493 | | 252,252 |
Zumiez, Inc. (a) | 14,500 | | 138,475 |
| | 1,466,675 |
Automotive Retail - 3.9% |
Advance Auto Parts, Inc. | 17,800 | | 822,894 |
AutoZone, Inc. (a) | 1,500 | | 230,355 |
Monro Muffler Brake, Inc. | 3,000 | | 79,770 |
Penske Automotive Group, Inc. | 5,700 | | 117,876 |
| | 1,250,895 |
|
| Shares | | Value |
Computer & Electronics Retail - 1.7% |
Best Buy Co., Inc. | 6,800 | | $ 254,116 |
Gamestop Corp. Class A (a) | 8,400 | | 183,876 |
RadioShack Corp. | 6,200 | | 96,162 |
| | 534,154 |
Home Improvement Retail - 11.1% |
Home Depot, Inc. | 31,356 | | 813,375 |
Lowe's Companies, Inc. | 109,100 | | 2,450,386 |
Lumber Liquidators, Inc. (a)(d) | 19,025 | | 312,391 |
| | 3,576,152 |
Homefurnishing Retail - 0.0% |
Aarons, Inc. | 500 | | 13,735 |
Specialty Stores - 4.2% |
PetSmart, Inc. | 3,300 | | 73,821 |
Sally Beauty Holdings, Inc. (a) | 16,800 | | 117,264 |
Staples, Inc. | 44,138 | | 927,781 |
Tiffany & Co., Inc. | 3,500 | | 104,405 |
Zale Corp. (a) | 21,300 | | 126,096 |
| | 1,349,367 |
TOTAL SPECIALTY RETAIL | | 8,190,978 |
TEXTILES, APPAREL & LUXURY GOODS - 5.3% |
Apparel, Accessories & Luxury Goods - 1.8% |
Coach, Inc. | 17,679 | | 523,122 |
Hanesbrands, Inc. (a) | 3,800 | | 75,620 |
| | 598,742 |
Footwear - 3.5% |
Deckers Outdoor Corp. (a) | 1,900 | | 128,459 |
Iconix Brand Group, Inc. (a) | 21,024 | | 368,340 |
NIKE, Inc. Class B | 11,100 | | 628,704 |
| | 1,125,503 |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | | 1,724,245 |
TOTAL COMMON STOCKS (Cost $33,057,810) | 31,832,712 |
Money Market Funds - 5.9% |
| Shares | | Value |
Fidelity Cash Central Fund, 0.37% (b) | 507,701 | | $ 507,701 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 1,388,675 | | 1,388,675 |
TOTAL MONEY MARKET FUNDS (Cost $1,896,376) | 1,896,376 |
TOTAL INVESTMENT PORTFOLIO - 104.6% (Cost $34,954,186) | | 33,729,088 |
NET OTHER ASSETS - (4.6)% | | (1,486,448) |
NET ASSETS - 100% | $ 32,242,640 |
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 | $ 3,271 |
Fidelity Securities Lending Cash Central Fund | 29,176 |
Total | $ 32,447 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 29,809,840 | $ 29,478,313 | $ 331,527 | $ - |
Consumer Staples | 1,216,691 | 1,216,691 | - | - |
Financials | 171,920 | 171,920 | - | - |
Information Technology | 634,261 | 634,261 | - | - |
Money Market Funds | 1,896,376 | 1,896,376 | - | - |
Total Investments in Securities | $ 33,729,088 | $ 33,397,561 | $ 331,527 | $ - |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $5,178,091 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $3,918,129 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Discretionary Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $1,366,413) - See accompanying schedule: Unaffiliated issuers (cost $33,057,810) | $ 31,832,712 | |
Fidelity Central Funds (cost $1,896,376) | 1,896,376 | |
Total Investments (cost $34,954,186) | | $ 33,729,088 |
Foreign currency held at value
(cost $5) | | 4 |
Receivable for investments sold | | 1,140,880 |
Receivable for fund shares sold | | 161,985 |
Dividends receivable | | 5,866 |
Distributions receivable from Fidelity Central Funds | | 532 |
Prepaid expenses | | 101 |
Receivable from investment adviser for expense reductions | | 732 |
Total assets | | 35,039,188 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,277,467 | |
Payable for fund shares redeemed | 59,508 | |
Accrued management fee | 14,166 | |
Distribution fees payable | 10,319 | |
Other affiliated payables | 9,169 | |
Other payables and accrued expenses | 37,244 | |
Collateral on securities loaned, at value | 1,388,675 | |
Total liabilities | | 2,796,548 |
| | |
Net Assets | | $ 32,242,640 |
Net Assets consist of: | | |
Paid in capital | | $ 42,890,661 |
Undistributed net investment income | | 5,602 |
Accumulated undistributed net realized gain (loss) on investments | | (9,428,524) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (1,225,099) |
Net Assets | | $ 32,242,640 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($13,009,975 ÷ 1,268,249 shares) | | $ 10.26 |
| | |
Maximum offering price per share (100/94.25 of $10.26) | | $ 10.89 |
Class T:
Net Asset Value and redemption price per share ($6,738,080 ÷ 677,905 shares) | | $ 9.94 |
| | |
Maximum offering price per share (100/96.50 of $9.94) | | $ 10.30 |
Class B:
Net Asset Value and offering price per share ($3,550,387 ÷ 383,380 shares) A | | $ 9.26 |
| | |
Class C:
Net Asset Value and offering price per share ($2,954,664 ÷ 318,579 shares) A | | $ 9.27 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($5,989,534 ÷ 561,921 shares) | | $ 10.66 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Discretionary Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 409,975 |
Interest | | 31 |
Income from Fidelity Central Funds (including $29,176 from security lending) | | 32,447 |
Total income | | 442,453 |
| | |
Expenses | | |
Management fee | $ 136,955 | |
Transfer agent fees | 78,739 | |
Distribution fees | 120,665 | |
Accounting and security lending fees | 10,026 | |
Custodian fees and expenses | 8,663 | |
Independent trustees' compensation | 164 | |
Registration fees | 50,599 | |
Audit | 45,747 | |
Legal | 132 | |
Miscellaneous | 1,549 | |
Total expenses before reductions | 453,239 | |
Expense reductions | (52,328) | 400,911 |
Net investment income (loss) | | 41,542 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | | (6,306,395) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 3,085,864 | |
Assets and liabilities in foreign currencies | (1) | |
Total change in net unrealized appreciation (depreciation) | | 3,085,863 |
Net gain (loss) | | (3,220,532) |
Net increase (decrease) in net assets resulting from operations | | $ (3,178,990) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 41,542 | $ (64,816) |
Net realized gain (loss) | (6,306,395) | (2,749,077) |
Change in net unrealized appreciation (depreciation) | 3,085,863 | (6,918,327) |
Net increase (decrease) in net assets resulting from operations | (3,178,990) | (9,732,220) |
Distributions to shareholders from net investment income | (36,930) | - |
Distributions to shareholders from net realized gain | - | (4,774,547) |
Total distributions | (36,930) | (4,774,547) |
Share transactions - net increase (decrease) | 5,542,508 | (10,594,844) |
Redemption fees | 4,036 | 847 |
Total increase (decrease) in net assets | 2,330,624 | (25,100,764) |
| | |
Net Assets | | |
Beginning of period | 29,912,016 | 55,012,780 |
End of period (including undistributed net investment income of $5,602 and accumulated net investment loss of $4, respectively) | $ 32,242,640 | $ 29,912,016 |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .04 | .02 | .02 F | (.04) | (.07) |
Net realized and unrealized gain (loss) | (1.16) | (3.09) | 1.83 | (.07) | 2.71 |
Total from investment operations | (1.12) | (3.07) | 1.85 | (.11) | 2.64 |
Distributions from net investment income | (.03) | - | (.05) | - | - |
Distributions from net realized gain | - | (1.41) | (2.30) | (.12) | (.53) |
Total distributions | (.03) | (1.41) | (2.35) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 10.26 | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 |
Total Return A,B | (9.81)% | (21.24)% | 11.67% | (.69)% | 18.85% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.62% | 1.40% | 1.42% | 1.42% | 1.47% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.44% |
Expenses net of all reductions | 1.40% | 1.40% | 1.39% | 1.39% | 1.42% |
Net investment income (loss) | .42% | .15% | .11% F | (.23)% | (.45)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,010 | $ 11,899 | $ 19,708 | $ 16,935 | $ 17,887 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .01 | (.01) | (.02) F | (.07) | (.11) |
Net realized and unrealized gain (loss) | (1.12) | (3.00) | 1.79 | (.07) | 2.66 |
Total from investment operations | (1.11) | (3.01) | 1.77 | (.14) | 2.55 |
Distributions from net investment income | (.02) | - | (.03) | - | - |
Distributions from net realized gain | - | (1.39) | (2.30) | (.12) | (.53) |
Total distributions | (.02) | (1.39) | (2.33) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 9.94 | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 |
Total Return A,B | (10.04)% | (21.41)% | 11.43% | (.89)% | 18.52% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.89% | 1.64% | 1.69% | 1.69% | 1.75% |
Expenses net of fee waivers, if any | 1.65% | 1.64% | 1.65% | 1.65% | 1.69% |
Expenses net of all reductions | 1.65% | 1.62% | 1.61% | 1.62% | 1.67% |
Net investment income (loss) | .17% | (.08)% | (.10)% F | (.46)% | (.70)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 6,738 | $ 9,095 | $ 14,787 | $ 14,267 | $ 16,782 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) | (.07) | (.10) F | (.15) | (.17) |
Net realized and unrealized gain (loss) | (1.06) | (2.81) | 1.70 | (.07) | 2.55 |
Total from investment operations | (1.09) | (2.88) | 1.60 | (.22) | 2.38 |
Distributions from net realized gain | - | (1.33) | (2.30) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 9.26 | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 |
Total Return A,B | (10.53)% | (21.80)% | 10.82% | (1.45)% | 17.97% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.38% | 2.14% | 2.20% | 2.19% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.14% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.14% | 2.15% | 2.14% | 2.16% |
Net investment income (loss) | (.33)% | (.60)% | (.64)% F | (.98)% | (1.20)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,550 | $ 5,090 | $ 11,081 | $ 14,088 | $ 18,862 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) | (.07) | (.10) F | (.15) | (.17) |
Net realized and unrealized gain (loss) | (1.07) | (2.81) | 1.71 | (.07) | 2.55 |
Total from investment operations | (1.10) | (2.88) | 1.61 | (.22) | 2.38 |
Distributions from net realized gain | - | (1.34) | (2.30) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 9.27 | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 |
Total Return A,B | (10.61)% | (21.77)% | 10.88% | (1.45)% | 17.94% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.38% | 2.15% | 2.16% | 2.12% | 2.17% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.12% | 2.17% |
Expenses net of all reductions | 2.15% | 2.14% | 2.15% | 2.12% | 2.14% |
Net investment income (loss) | (.33)% | (.60)% | (.64)% F | (.95)% | (1.18)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,955 | $ 3,430 | $ 8,051 | $ 7,160 | $ 8,505 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .06 | .06 | .06 E | - G | (.03) |
Net realized and unrealized gain (loss) | (1.20) | (3.22) | 1.89 | (.07) | 2.76 |
Total from investment operations | (1.14) | (3.16) | 1.95 | (.07) | 2.73 |
Distributions from net investment income | (.04) | - | (.06) | - | - |
Distributions from net realized gain | - | (1.41) | (2.30) | (.12) | (.53) |
Total distributions | (.04) | (1.41) | (2.36) | (.12) | (.53) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 10.66 | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 |
Total Return A | (9.59)% | (21.09)% | 12.04% | (.44)% | 19.08% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | 1.15% | 1.14% | 1.15% | 1.18% | 1.26% |
Expenses net of fee waivers, if any | 1.15% | 1.14% | 1.15% | 1.15% | 1.20% |
Expenses net of all reductions | 1.15% | 1.14% | 1.14% | 1.14% | 1.17% |
Net investment income (loss) | .67% | .40% | .36% E | .02% | (.21)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,990 | $ 398 | $ 1,385 | $ 1,144 | $ 1,371 |
Portfolio turnover rate D | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.07)%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Consumer Discretionary Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 2,491,877 | |
Unrealized depreciation | (4,049,280) | |
Net unrealized appreciation (depreciation) | $ (1,557,403) | |
Undistributed ordinary income | $ 5,602 | |
Capital loss carryforward | $ (5,178,091) | |
Cost for federal income tax purposes | $ 35,286,491 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 36,930 | $ 2,279,900 |
Long-term Capital Gains | - | 2,494,647 |
Total | $ 36,930 | $ 4,774,547 |
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.
Consumer Discretionary
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $29,642,758 and $24,462,462, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 25,093 | $ 620 |
Class T | .25% | .25% | 33,396 | 158 |
Class B | .75% | .25% | 35,454 | 26,685 |
Class C | .75% | .25% | 26,722 | 2,706 |
| | | $ 120,665 | $ 30,169 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 9,438 |
Class T | 1,513 |
Class B* | 8,682 |
Class C* | 137 |
| $ 19,770 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 32,778 | .33 |
Class T | 22,187 | .33 |
Class B | 11,374 | .32 |
Class C | 8,652 | .32 |
Institutional Class | 3,748 | .27 |
| $ 78,739 | |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
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 $1,565 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $107 and is reflected in Miscellaneous Expense 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.
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 21,880 |
Class T | 1.65% | 16,098 |
Class B | 2.15% | 8,165 |
Class C | 2.15% | 6,136 |
Institutional Class | 1.15% | 36 |
| | $ 52,315 |
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 $13 for the period.
Consumer Discretionary
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 24,249 | $ - |
Class T | 11,523 | - |
Institutional Class | 1,158 | - |
Total | $ 36,930 | $ - |
From net realized gain | | |
Class A | $ - | $ 1,697,903 |
Class T | - | 1,304,169 |
Class B | - | 954,937 |
Class C | - | 712,594 |
Institutional Class | - | 104,944 |
Total | $ - | $ 4,774,547 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 816,977 | 231,645 | $ 7,713,175 | $ 3,074,782 |
Reinvestment of distributions | 2,650 | 104,669 | 22,145 | 1,531,841 |
Shares redeemed | (593,853) | (533,803) | (5,358,348) | (7,132,154) |
Net increase (decrease) | 225,774 | (197,489) | $ 2,376,972 | $ (2,525,531) |
Class T | | | | |
Shares sold | 78,811 | 113,866 | $ 695,608 | $ 1,488,704 |
Reinvestment of distributions | 1,356 | 84,915 | 11,014 | 1,207,897 |
Shares redeemed | (223,538) | (333,215) | (1,973,930) | (4,304,558) |
Net increase (decrease) | (143,371) | (134,434) | $ (1,267,308) | $ (1,607,957) |
Class B | | | | |
Shares sold | 72,993 | 34,749 | $ 620,027 | $ 420,244 |
Reinvestment of distributions | - | 65,209 | - | 871,754 |
Shares redeemed | (181,364) | (369,099) | (1,535,455) | (4,475,959) |
Net increase (decrease) | (108,371) | (269,141) | $ (915,428) | $ (3,183,961) |
Class C | | | | |
Shares sold | 90,426 | 46,115 | $ 763,994 | $ 563,853 |
Reinvestment of distributions | - | 37,909 | - | 507,333 |
Shares redeemed | (102,729) | (304,893) | (841,041) | (3,642,610) |
Net increase (decrease) | (12,303) | (220,869) | $ (77,047) | $ (2,571,424) |
Institutional Class | | | | |
Shares sold | 581,111 | 41,241 | $ 5,891,294 | $ 586,738 |
Reinvestment of distributions | 104 | 5,683 | 903 | 86,193 |
Shares redeemed | (52,903) | (97,732) | (466,878) | (1,378,902) |
Net increase (decrease) | 528,312 | (50,808) | $ 5,425,319 | $ (705,971) |
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
Advisor Electronics Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Life of
fundA |
Class A (incl. 5.75% sales charge) | -8.53% | -1.15% | -5.39% |
Class T (incl. 3.50% sales charge) | -6.54% | -0.92% | -5.35% |
Class B (incl. contingent deferred
sales charge) B | -8.55% | -1.13% | -5.29% |
Class C (incl. contingent deferred
sales charge) C | -4.70% | -0.73% | -5.44% |
A From December 27, 2000.
B Class B shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 5%, 2%, and 0%, respectively.
C Class C shares' contingent deferred sales charges included in the past one year, past five years, and life of fund total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Electronics Fund - Class A on December 27, 2000, when the fund started, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Electronics Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -2.95%, -3.15%, -3.73% and -3.74%, respectively (excluding sales charges), topping the -9.17% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock selection in the fund's core areas of semiconductors and semiconductor equipment aided performance. Some out-of-benchmark picks in computer storage and peripherals helped as well. Amkor Technology, the fund's top relative contributor, provides packaging and testing services for the chip industry. Further bolstering our results were Marvell Technology Group, a producer of chips for computer hard-disk drives and smartphones, and MEMC Electronic Materials, which makes silicon wafers for the solar and semiconductor industries. Taiwan Semiconductor Manufacturing and hard-disk drive maker Seagate Technology - both out-of-index positions - also helped. Conversely, unfavorable picks in electrical components/equipment and life science tools/services detracted. Additionally, the fund's foreign holdings were hampered in part by currency fluctuations. Underweighting strong-performing index component Cypress Semiconductor hurt. Other detractors included chip maker Atmel, as well as nanotechnology products developer Arrowhead Research and solar power components maker Renewable Energy, the latter two being out-of-index positions.
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 -2.74%, topping the -9.17% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock selection in the fund's core areas of semiconductors and semiconductor equipment aided performance. Some out-of-benchmark picks in computer storage and peripherals helped as well. Amkor Technology, the fund's top relative contributor, provides packaging and testing services for the chip industry. Further bolstering our results were Marvell Technology Group, a producer of chips for computer hard-disk drives and smartphones, and MEMC Electronic Materials, which makes silicon wafers for the solar and semiconductor industries. Taiwan Semiconductor Manufacturing and hard-disk drive maker Seagate Technology - both out-of-index positions - also helped. Conversely, unfavorable picks in electrical components/equipment and life science tools/services detracted. Additionally, the fund's foreign holdings were hampered in part by currency fluctuations. Underweighting strong-performing index component Cypress Semiconductor hurt. Other detractors included chip maker Atmel, as well as nanotechnology products developer Arrowhead Research and solar power components maker Renewable Energy, the latter two being out-of-index positions.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Electronics
Advisor Electronics Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,631.20 | $ 9.13 |
Hypothetical A | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,627.20 | $ 10.75 |
Hypothetical A | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,624.70 | $ 13.99 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,622.00 | $ 13.98 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% | | | |
Actual | | $ 1,000.00 | $ 1,630.40 | $ 7.50 |
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).
Annual Report
Advisor Electronics Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Intel Corp. | 23.5 | 24.0 |
Texas Instruments, Inc. | 9.3 | 10.1 |
Applied Materials, Inc. | 6.0 | 7.4 |
Marvell Technology Group Ltd. | 3.4 | 3.2 |
Micron Technology, Inc. | 3.1 | 1.5 |
Atmel Corp. | 2.5 | 1.3 |
National Semiconductor Corp. | 2.3 | 2.4 |
Analog Devices, Inc. | 2.3 | 2.9 |
Fairchild Semiconductor International, Inc. | 1.9 | 0.9 |
NVIDIA Corp. | 1.9 | 1.3 |
| 56.2 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Semiconductors & Semiconductor Equipment | 85.3% | |
| Electronic Equipment
& Components | 3.8% | |
| Computers
& Peripherals | 3.2% | |
| Communications Equipment | 1.8% | |
| Electrical Equipment | 0.4% | |
| All Others* | 5.5% | |
As of January 31, 2009 |
| Semiconductors & Semiconductor Equipment | 86.2% | |
| Electronic Equipment
& Components | 4.5% | |
| Communications Equipment | 2.6% | |
| Electrical Equipment | 1.6% | |
| Computers
& Peripherals | 1.0% | |
| All Others* | 4.1% | |
* Includes short-term investments and net other assets. |
Electronics
Advisor Electronics Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 93.4% |
| Shares | | Value |
COMMUNICATIONS EQUIPMENT - 1.5% |
Communications Equipment - 1.5% |
Cisco Systems, Inc. (a) | 1,000 | | $ 22,010 |
QUALCOMM, Inc. | 4,100 | | 189,461 |
| | 211,471 |
COMPUTERS & PERIPHERALS - 3.2% |
Computer Hardware - 1.6% |
Dell, Inc. (a) | 9,970 | | 133,399 |
Hewlett-Packard Co. | 2,300 | | 99,590 |
| | 232,989 |
Computer Storage & Peripherals - 1.6% |
SanDisk Corp. (a) | 4,166 | | 74,238 |
Seagate Technology | 10,900 | | 131,236 |
Western Digital Corp. (a) | 500 | | 15,125 |
| | 220,599 |
TOTAL COMPUTERS & PERIPHERALS | | 453,588 |
ELECTRICAL EQUIPMENT - 0.3% |
Electrical Components & Equipment - 0.3% |
Motech Industries, Inc. | 1 | | 4 |
Sunpower Corp. Class B (a) | 1,700 | | 46,410 |
| | 46,414 |
ELECTRONIC EQUIPMENT & COMPONENTS - 3.6% |
Electronic Components - 0.6% |
Everlight Electronics Co. Ltd. | 14,559 | | 40,602 |
Vishay Intertechnology, Inc. (a) | 6,300 | | 44,793 |
| | 85,395 |
Electronic Manufacturing Services - 1.6% |
DDi Corp. (a) | 3,344 | | 16,051 |
Flextronics International Ltd. (a) | 24,700 | | 131,404 |
Jabil Circuit, Inc. | 5,304 | | 48,585 |
Tyco Electronics Ltd. | 1,700 | | 36,499 |
| | 232,539 |
Technology Distributors - 1.4% |
Arrow Electronics, Inc. (a) | 2,100 | | 54,117 |
Avnet, Inc. (a) | 5,621 | | 137,152 |
| | 191,269 |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | | 509,203 |
HOUSEHOLD DURABLES - 0.4% |
Consumer Electronics - 0.4% |
Harman International Industries, Inc. | 2,000 | | 49,360 |
LIFE SCIENCES TOOLS & SERVICES - 0.2% |
Life Sciences Tools & Services - 0.2% |
Arrowhead Research Corp. warrants 5/21/17 (a) | 64,879 | | 23,885 |
|
| Shares | | Value |
METALS & MINING - 0.0% |
Diversified Metals & Mining - 0.0% |
Timminco Ltd. (a) | 2,600 | | $ 2,534 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 84.1% |
Semiconductor Equipment - 18.1% |
Advanced Energy Industries, Inc. (a) | 200 | | 2,406 |
Aixtron AG | 3,100 | | 50,810 |
Amkor Technology, Inc. (a) | 38,400 | | 240,384 |
Applied Materials, Inc. | 62,000 | | 855,600 |
ASML Holding NV (NY Shares) | 6,730 | | 175,047 |
ATMI, Inc. (a) | 1,500 | | 27,285 |
Brooks Automation, Inc. (a) | 300 | | 1,779 |
Cabot Microelectronics Corp. (a) | 100 | | 3,392 |
Cohu, Inc. | 100 | | 1,213 |
Cymer, Inc. (a) | 4,400 | | 150,524 |
Entegris, Inc. (a) | 600 | | 2,238 |
FEI Co. (a) | 200 | | 4,900 |
FormFactor, Inc. (a) | 5,250 | | 121,013 |
KLA-Tencor Corp. | 2,930 | | 93,408 |
Kulicke & Soffa Industries, Inc. (a) | 9,365 | | 54,973 |
Lam Research Corp. (a) | 8,290 | | 249,197 |
LTX-Credence Corp. (a) | 1,044 | | 940 |
Mattson Technology, Inc. (a) | 16,930 | | 25,564 |
MEMC Electronic Materials, Inc. (a) | 9,846 | | 173,487 |
MKS Instruments, Inc. (a) | 1,295 | | 25,084 |
Teradyne, Inc. (a) | 2,500 | | 19,700 |
Tessera Technologies, Inc. (a) | 300 | | 8,427 |
Ultratech, Inc. (a) | 100 | | 1,191 |
Varian Semiconductor Equipment Associates, Inc. (a) | 6,000 | | 192,240 |
Veeco Instruments, Inc. (a) | 200 | | 3,768 |
Verigy Ltd. (a) | 6,700 | | 89,043 |
| | 2,573,613 |
Semiconductors - 66.0% |
Actel Corp. (a) | 100 | | 1,114 |
Advanced Analogic Technologies, Inc. (a) | 7,130 | | 34,367 |
Advanced Micro Devices, Inc. (a) | 9,900 | | 36,234 |
Altera Corp. | 1,800 | | 33,642 |
Analog Devices, Inc. | 11,800 | | 322,966 |
Applied Micro Circuits Corp. (a) | 1,900 | | 16,435 |
ARM Holdings PLC sponsored ADR | 15,700 | | 100,323 |
Atheros Communications, Inc. (a) | 1,000 | | 25,000 |
Atmel Corp. (a) | 86,500 | | 360,705 |
AuthenTec, Inc. (a) | 2,800 | | 6,860 |
Broadcom Corp. Class A (a) | 8,050 | | 227,252 |
California Micro Devices Corp. (a) | 12,426 | | 39,763 |
Chartered Semiconductor Manufacturing Ltd. (a) | 3,700 | | 5,759 |
Chartered Semiconductor Manufacturing Ltd. ADR (a) | 2,914 | | 45,896 |
Cirrus Logic, Inc. (a) | 2,309 | | 12,422 |
Cree, Inc. (a) | 400 | | 12,824 |
Cypress Semiconductor Corp. (a) | 7,100 | | 75,402 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - continued |
Diodes, Inc. (a) | 200 | | $ 3,692 |
DSP Group, Inc. (a) | 200 | | 1,742 |
Exar Corp. (a) | 200 | | 1,406 |
Fairchild Semiconductor International, Inc. (a) | 30,500 | | 269,315 |
Global Unichip Corp. | 5,596 | | 30,700 |
Himax Technologies, Inc. sponsored ADR | 10,800 | | 41,256 |
Infineon Technologies AG (a) | 38,200 | | 154,324 |
Infineon Technologies AG rights 8/3/09 (a) | 34,700 | | 16,266 |
Inotera Memories, Inc. sponsored ADR (a)(c) | 5,600 | | 29,186 |
Intel Corp. | 173,490 | | 3,339,679 |
International Rectifier Corp. (a) | 9,053 | | 149,918 |
Intersil Corp. Class A | 2,500 | | 35,925 |
Linear Technology Corp. | 2,800 | | 75,236 |
LSI Corp. (a) | 4,600 | | 23,828 |
Marvell Technology Group Ltd. (a) | 35,950 | | 479,573 |
Maxim Integrated Products, Inc. | 4,200 | | 74,424 |
Microchip Technology, Inc. | 3,200 | | 86,176 |
Micron Technology, Inc. (a) | 69,730 | | 445,575 |
Microsemi Corp. (a) | 3,100 | | 42,315 |
Monolithic Power Systems, Inc. (a) | 200 | | 4,438 |
National Semiconductor Corp. | 22,000 | | 331,320 |
Netlogic Microsystems, Inc. (a) | 100 | | 3,974 |
NVIDIA Corp. (a) | 20,300 | | 262,479 |
O2Micro International Ltd. sponsored ADR (a) | 2,700 | | 13,986 |
Omnivision Technologies, Inc. (a) | 1,100 | | 14,553 |
ON Semiconductor Corp. (a) | 24,529 | | 179,062 |
PMC-Sierra, Inc. (a) | 5,400 | | 49,410 |
Rambus, Inc. (a) | 500 | | 8,465 |
Samsung Electronics Co. Ltd. | 150 | | 88,820 |
Semiconductor Manufacturing International Corp. sponsored ADR (a) | 6,900 | | 18,285 |
Semtech Corp. (a) | 400 | | 7,360 |
Sigma Designs, Inc. (a) | 100 | | 1,617 |
Silicon Image, Inc. (a) | 4,955 | | 12,140 |
Silicon Laboratories, Inc. (a) | 300 | | 12,849 |
Silicon Storage Technology, Inc. (a) | 500 | | 940 |
Standard Microsystems Corp. (a) | 2,100 | | 48,720 |
STATS ChipPAC Ltd. (a) | 73,000 | | 38,042 |
STMicroelectronics NV (NY Shares) | 1,500 | | 11,385 |
Supertex, Inc. (a) | 60 | | 1,383 |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 5,744 | | 60,140 |
Texas Instruments, Inc. | 54,900 | | 1,320,345 |
TriQuint Semiconductor, Inc. (a) | 800 | | 5,744 |
Volterra Semiconductor Corp. (a) | 200 | | 3,318 |
|
| Shares | | Value |
Xilinx, Inc. | 9,900 | | $ 214,731 |
Zoran Corp. (a) | 300 | | 3,456 |
| | 9,374,462 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 11,948,075 |
SOFTWARE - 0.1% |
Application Software - 0.1% |
Mentor Graphics Corp. (a) | 2,629 | | 18,245 |
TOTAL COMMON STOCKS (Cost $14,266,418) | 13,262,775 |
Convertible Bonds - 1.8% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.3% |
Communications Equipment - 0.3% |
Lucent Technologies, Inc. 2.875% 6/15/25 | | $ 50,000 | | 39,233 |
ELECTRICAL EQUIPMENT - 0.1% |
Electrical Components & Equipment - 0.1% |
Sunpower Corp. 4.75% 4/15/14 | | 10,000 | | 13,290 |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% |
Electronic Manufacturing Services - 0.2% |
TTM Technologies, Inc. 3.25% 5/15/15 | | 30,000 | | 25,809 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.2% |
Semiconductors - 1.2% |
Advanced Micro Devices, Inc. 6% 5/1/15 | | 220,000 | | 133,100 |
Xilinx, Inc. 3.125% 3/15/37 | | 60,000 | | 47,400 |
| | 180,500 |
TOTAL CONVERTIBLE BONDS (Cost $172,539) | 258,832 |
Money Market Funds - 4.4% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b)
(Cost $627,002) | 627,002 | | 627,002 |
Cash Equivalents - 0.2% |
| Maturity Amount | | Value |
Investments in repurchase agreements in a joint trading account at 0.19%, dated 7/31/09 due 8/3/09 (Collateralized by U.S. Treasury Obligations) #
(Cost $33,000) | $ 33,001 | | $ 33,000 |
TOTAL INVESTMENT PORTFOLIO - 99.8% (Cost $15,098,959) | | 14,181,609 |
NET OTHER ASSETS - 0.2% | | 26,585 |
NET ASSETS - 100% | $ 14,208,194 |
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) 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 $29,186 or 0.2% of net assets. |
# Additional information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$33,000 due 8/03/09 at 0.19% |
BNP Paribas Securities Corp. | $ 1,486 |
Barclays Capital, Inc. | 5,754 |
Credit Suisse Securities (USA) LLC | 1,509 |
Deutsche Bank Securities, Inc. | 4,833 |
HSBC Securities (USA), Inc. | 6,288 |
ING Financial Markets LLC | 6,905 |
J.P. Morgan Securities, Inc. | 1,046 |
Mizuho Securities USA, Inc. | 1,151 |
Morgan Stanley & Co., Inc. | 1,151 |
Societe Generale, New York Branch | 2,877 |
| $ 33,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,292 |
Fidelity Securities Lending Cash Central Fund | 19 |
Total | $ 3,311 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 49,360 | $ 49,360 | $ - | $ - |
Health Care | 23,885 | - | 23,885 | - |
Industrials | 46,414 | 46,414 | - | - |
Information Technology | 13,140,582 | 12,940,806 | 199,776 | - |
Materials | 2,534 | 2,534 | - | - |
Cash Equivalents | 33,000 | - | 33,000 | - |
Corporate Bonds | 258,832 | - | 258,832 | - |
Money Market Funds | 627,002 | 627,002 | - | - |
Total Investments in Securities: | $ 14,181,609 | $ 13,666,116 | $ 515,493 | $ - |
United States of America | 87.4% |
Bermuda | 3.4% |
Singapore | 2.1% |
Germany | 1.6% |
Cayman Islands | 1.5% |
Netherlands | 1.3% |
Taiwan | 1.1% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $12,832,682 of which $4,774,109, $2,265,871, $279,201, $310,663 and $5,202,838 will expire on July 31, 2011, 2012, 2013, 2016 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $2,011,669 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Electronics
Advisor Electronics Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including repurchase agreements of $33,000) - See accompanying schedule: Unaffiliated issuers (cost $14,471,957) | $ 13,554,607 | |
Fidelity Central Funds (cost $627,002) | 627,002 | |
Total Investments (cost $15,098,959) | | $ 14,181,609 |
Cash | | 7,029 |
Receivable for investments sold | | 59,977 |
Receivable for fund shares sold | | 290,782 |
Dividends receivable | | 9,325 |
Interest receivable | | 4,463 |
Distributions receivable from Fidelity Central Funds | | 148 |
Prepaid expenses | | 42 |
Receivable from investment adviser for expense reductions | | 8,412 |
Other receivables | | 3 |
Total assets | | 14,561,790 |
| | |
Liabilities | | |
Payable for investments purchased | $ 289,647 | |
Payable for fund shares redeemed | 10,888 | |
Accrued management fee | 5,753 | |
Distribution fees payable | 5,684 | |
Other affiliated payables | 3,578 | |
Other payables and accrued expenses | 38,046 | |
Total liabilities | | 353,596 |
| | |
Net Assets | | $ 14,208,194 |
Net Assets consist of: | | |
Paid in capital | | $ 30,441,535 |
Undistributed net investment income | | 33,992 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (15,349,966) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (917,367) |
Net Assets | | $ 14,208,194 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($5,432,735 ÷ 824,831 shares) | | $ 6.59 |
| | |
Maximum offering price per share (100/94.25 of $6.59) | | $ 6.99 |
Class T:
Net Asset Value and redemption price per share ($4,195,215 ÷ 649,598 shares) | | $ 6.46 |
| | |
Maximum offering price per share (100/96.50 of $6.46) | | $ 6.69 |
Class B:
Net Asset Value and offering price per share ($1,196,587 ÷ 193,287 shares) A | | $ 6.19 |
| | |
Class C:
Net Asset Value and offering price per share ($3,016,214 ÷ 487,759 shares) A | | $ 6.18 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($367,443 ÷ 54,421 shares) | | $ 6.75 |
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, 2009 |
| | |
Investment Income | | |
Dividends | | $ 169,557 |
Interest | | 31,978 |
Income from Fidelity Central Funds | | 3,311 |
Total income | | 204,846 |
| | |
Expenses | | |
Management fee | $ 55,064 | |
Transfer agent fees | 33,932 | |
Distribution fees | 57,204 | |
Accounting and security lending fees | 3,800 | |
Custodian fees and expenses | 22,887 | |
Independent trustees' compensation | 65 | |
Registration fees | 50,693 | |
Audit | 50,445 | |
Legal | 120 | |
Miscellaneous | 1,380 | |
Total expenses before reductions | 275,590 | |
Expense reductions | (105,465) | 170,125 |
Net investment income (loss) | | 34,721 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (3,410,322) | |
Foreign currency transactions | (1,936) | |
Total net realized gain (loss) | | (3,412,258) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 2,662,786 | |
Assets and liabilities in foreign currencies | 95 | |
Total change in net unrealized appreciation (depreciation) | | 2,662,881 |
Net gain (loss) | | (749,377) |
Net increase (decrease) in net assets resulting from operations | | $ (714,656) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 34,721 | $ (90,535) |
Net realized gain (loss) | (3,412,258) | (4,347,575) |
Change in net unrealized appreciation (depreciation) | 2,662,881 | (2,232,309) |
Net increase (decrease) in net assets resulting from operations | (714,656) | (6,670,419) |
Share transactions - net increase (decrease) | 612,433 | (8,363,960) |
Redemption fees | 572 | 266 |
Total increase (decrease) in net assets | (101,651) | (15,034,113) |
| | |
Net Assets | | |
Beginning of period | 14,309,845 | 29,343,958 |
End of period (including undistributed net investment income of $33,992 and $0, respectively) | $ 14,208,194 | $ 14,309,845 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .04 | - G | (.03) | (.04) | (.07) |
Net realized and unrealized gain (loss) | (.24) | (2.32) | 1.76 | (.62) | 1.53 |
Total from investment operations | (.20) | (2.32) | 1.73 | (.66) | 1.46 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.59 | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 |
Total Return A,B | (2.95)% | (25.47)% | 23.44% | (8.21)% | 22.19% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.44% | 1.72% | 1.60% | 1.50% | 1.59% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.45% |
Expenses net of all reductions | 1.40% | 1.39% | 1.38% | 1.36% | 1.38% |
Net investment income (loss) | .69% | (.02)% | (.35)% | (.52)% | (.96)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,433 | $ 3,970 | $ 7,551 | $ 7,916 | $ 11,397 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.02) | (.05) | (.06) | (.08) |
Net realized and unrealized gain (loss) | (.23) | (2.29) | 1.74 | (.61) | 1.51 |
Total from investment operations | (.21) | (2.31) | 1.69 | (.67) | 1.43 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.46 | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 |
Total Return A,B | (3.15)% | (25.72)% | 23.18% | (8.42)% | 21.90% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.77% | 2.02% | 1.89% | 1.82% | 1.89% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.69% |
Expenses net of all reductions | 1.65% | 1.64% | 1.64% | 1.61% | 1.61% |
Net investment income (loss) | .44% | (.27)% | (.60)% | (.77)% | (1.20)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 4,195 | $ 4,635 | $ 8,103 | $ 9,048 | $ 12,085 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - G | (.06) | (.09) | (.10) | (.12) |
Net realized and unrealized gain (loss) | (.24) | (2.21) | 1.69 | (.58) | 1.48 |
Total from investment operations | (.24) | (2.27) | 1.60 | (.68) | 1.36 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.19 | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 |
Total Return A,B | (3.73)% | (26.09)% | 22.54% | (8.74)% | 21.18% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.22% | 2.48% | 2.36% | 2.29% | 2.41% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.21% |
Expenses net of all reductions | 2.15% | 2.14% | 2.13% | 2.11% | 2.13% |
Net investment income (loss) | (.06)% | (.77)% | (1.10)% | (1.27)% | (1.72)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,197 | $ 2,027 | $ 4,572 | $ 6,123 | $ 8,963 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - G | (.06) | (.09) | (.10) | (.11) |
Net realized and unrealized gain (loss) | (.24) | (2.21) | 1.69 | (.58) | 1.47 |
Total from investment operations | (.24) | (2.27) | 1.60 | (.68) | 1.36 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.18 | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 |
Total Return A,B | (3.74)% | (26.12)% | 22.57% | (8.75)% | 21.22% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.21% | 2.47% | 2.34% | 2.26% | 2.31% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.18% |
Expenses net of all reductions | 2.15% | 2.14% | 2.13% | 2.11% | 2.11% |
Net investment income (loss) | (.06)% | (.77)% | (1.10)% | (1.27)% | (1.69)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,016 | $ 3,325 | $ 8,389 | $ 7,009 | $ 11,058 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .05 | .02 | (.01) | (.02) | (.05) |
Net realized and unrealized gain (loss) | (.24) | (2.38) | 1.80 | (.62) | 1.55 |
Total from investment operations | (.19) | (2.36) | 1.79 | (.64) | 1.50 |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 6.75 | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 |
Total Return A | (2.74)% | (25.38)% | 23.83% | (7.85)% | 22.56% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 2.16% | 1.47% | 1.26% | 1.11% | 1.16% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.11% | 1.16% |
Expenses net of all reductions | 1.15% | 1.14% | 1.13% | 1.07% | 1.08% |
Net investment income (loss) | .94% | .23% | (.10)% | (.23)% | (.67)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 367 | $ 353 | $ 730 | $ 750 | $ 899 |
Portfolio turnover rate D | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Electronics Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds, pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Electronics
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,768,361 | |
Unrealized depreciation | (3,184,922) | |
Net unrealized appreciation (depreciation) | $ (1,416,561) | |
Undistributed ordinary income | $ 27,572 | |
Capital loss carryforward | $ (12,832,682) | |
Cost for federal income tax purposes | $ 15,598,170 | |
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.
Annual Report
Notes to Financial Statements - continued
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $9,256,381 and $9,054,538, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 7,374 | $ 202 |
Class T | .25% | .25% | 15,986 | 152 |
Class B | .75% | .25% | 11,254 | 8,471 |
Class C | .75% | .25% | 22,590 | 1,350 |
| | | $ 57,204 | $ 10,175 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 3,636 |
Class T | 1,113 |
Class B* | 4,193 |
Class C* | 85 |
| $ 9,027 |
* 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.
Electronics
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 9,685 | .33 |
Class T | 12,326 | .38 |
Class B | 3,672 | .33 |
Class C | 7,460 | .33 |
Institutional Class | 789 | .33 |
| $ 33,932 | |
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 $925 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $43 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $19.
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.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 30,793 |
Class T | 1.65% | 35,853 |
Class B | 2.15% | 12,082 |
Class C | 2.15% | 24,086 |
Institutional Class | 1.15% | 2,401 |
| | $ 105,215 |
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 $250 for the period.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 454,229 | 161,701 | $ 2,515,743 | $ 1,242,418 |
Shares redeemed | (214,204) | (405,321) | (1,126,041) | (3,221,767) |
Net increase (decrease) | 240,025 | (243,620) | $ 1,389,702 | $ (1,979,349) |
Class T | | | | |
Shares sold | 211,424 | 93,832 | $ 1,046,750 | $ 747,770 |
Shares redeemed | (256,279) | (301,416) | (1,247,787) | (2,324,905) |
Net increase (decrease) | (44,855) | (207,584) | $ (201,037) | $ (1,577,135) |
Class B | | | | |
Shares sold | 57,656 | 35,607 | $ 278,136 | $ 276,103 |
Shares redeemed | (179,676) | (246,055) | (832,636) | (1,804,727) |
Net increase (decrease) | (122,020) | (210,448) | $ (554,500) | $ (1,528,624) |
Class C | | | | |
Shares sold | 132,135 | 107,517 | $ 684,005 | $ 865,728 |
Shares redeemed | (162,035) | (555,338) | (721,474) | (3,939,431) |
Net increase (decrease) | (29,900) | (447,821) | $ (37,469) | $ (3,073,703) |
Institutional Class | | | | |
Shares sold | 29,924 | 9,123 | $ 158,084 | $ 82,426 |
Shares redeemed | (26,319) | (36,772) | (142,347) | (287,575) |
Net increase (decrease) | 3,605 | (27,649) | $ 15,737 | $ (205,149) |
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
Advisor Energy Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) C | -42.37% | 8.27% | 8.07% |
Class T (incl. 3.50% sales charge) C | -41.13% | 8.55% | 8.10% |
Class B (incl. contingent deferred sales charge) A,C | -41.84% | 8.48% | 8.15% |
Class C (incl. contingent deferred sales charge) B,C | -39.81% | 8.78% | 7.94% |
A Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
C Prior to October 1, 2006, Advisor Energy operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Energy Fund - Class A on July 31, 1999, 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
Advisor Energy Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the 12 months ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -38.86%, -38.99%, -39.31% and -39.31%, respectively (excluding sales charges), lagging the S&P 500® and the -30.31% return of the MSCI® US Investable Market Energy Index. Energy stocks suffered setbacks along with much of the market during the period's first half. The fund's fairly aggressive positioning in mid- and smaller-sized company stocks, along with a large underweighting in stronger-performing integrated oil stocks, led to its underperformance versus the MSCI index, though it regained momentum during the period's final months. The biggest detractor was a sizable underweighting in index giant Exxon Mobil. Large positions in drill-rig manufacturer National Oilwell Varco and rig leasing company Nabors Industries also dampened results. An overweighting in the poorly-performing refining/marketing group hurt, highlighted by a big position in refiner Valero Energy. A major stake in coal producer Peabody Energy also disappointed. I sold the position. Brighter spots included large stakes in low-cost natural gas exploration/production companies Range Resources and Southwestern Energy. Coal producer Massey Energy also contributed, as did underweighting integrated oil producer ConocoPhillips when the stock faltered amid the company's financial difficulties and falling oil prices.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the 12 months ending July 31, 2009, the fund's Institutional Class shares returned -38.68%, lagging the S&P 500® and the -30.31% return of the MSCI® US Investable Market Energy Index. Energy stocks suffered setbacks along with much of the market during the period's first half. The fund's fairly aggressive positioning in mid- and smaller-sized company stocks, along with a large underweighting in stronger-performing integrated oil stocks, led to its underperformance versus the MSCI index, though it regained momentum during the period's final months. The biggest detractor was a sizable underweighting in index giant Exxon Mobil. Large positions in drill-rig manufacturer National Oilwell Varco and rig leasing company Nabors Industries also dampened results. An overweighting in the poorly-performing refining/marketing group hurt, highlighted by a big position in refiner Valero Energy. A major stake in coal producer Peabody Energy also disappointed. I sold the position. Brighter spots included large stakes in low-cost natural gas exploration/production companies Range Resources and Southwestern Energy. Coal producer Massey Energy also contributed, as did underweighting integrated oil producer ConocoPhillips when the stock faltered amid the company's financial difficulties and falling oil prices.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund
Annual Report
Advisor Energy Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.24% | | | |
Actual | | $ 1,000.00 | $ 1,246.10 | $ 6.91 |
Hypothetical A | | $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.48% | | | |
Actual | | $ 1,000.00 | $ 1,245.10 | $ 8.24 |
Hypothetical A | | $ 1,000.00 | $ 1,017.46 | $ 7.40 |
Class B | 1.99% | | | |
Actual | | $ 1,000.00 | $ 1,241.40 | $ 11.06 |
Hypothetical A | | $ 1,000.00 | $ 1,014.93 | $ 9.94 |
Class C | 1.98% | | | |
Actual | | $ 1,000.00 | $ 1,241.80 | $ 11.01 |
Hypothetical A | | $ 1,000.00 | $ 1,014.98 | $ 9.89 |
Institutional Class | .97% | | | |
Actual | | $ 1,000.00 | $ 1,247.90 | $ 5.41 |
Hypothetical A | | $ 1,000.00 | $ 1,019.98 | $ 4.86 |
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
Advisor Energy Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Occidental Petroleum Corp. | 6.2 | 4.8 |
Schlumberger Ltd. | 5.8 | 2.3 |
Southwestern Energy Co. | 4.9 | 4.8 |
Petrohawk Energy Corp. | 4.0 | 2.9 |
Transocean Ltd. | 3.8 | 2.5 |
Marathon Oil Corp. | 3.5 | 2.4 |
Chevron Corp. | 3.4 | 3.2 |
Noble Corp. | 3.3 | 4.9 |
Weatherford International Ltd. | 3.3 | 1.7 |
Range Resources Corp. | 3.2 | 4.2 |
| 41.4 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Oil, Gas &
Consumable Fuels | 58.0% | |
 | Energy Equipment & Services | 37.0% | |
| Electrical Equipment | 3.1% | |
| Gas Utilities | 1.1% | |
| Construction & Engineering | 0.5% | |
| All Others* | 0.3% | |
|
As of January 31, 2009 |
| Oil, Gas &
Consumable Fuels | 69.1% | |
| Energy Equipment & Services | 26.1% | |
| Electrical Equipment | 1.9% | |
| Gas Utilities | 1.0% | |
| Construction & Engineering | 0.7% | |
| All Others* | 1.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Energy Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.9% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 0.0% |
Environmental & Facility Services - 0.0% |
Fuel Tech, Inc. (a) | 16,062 | | $ 143,916 |
CONSTRUCTION & ENGINEERING - 0.5% |
Construction & Engineering - 0.5% |
Jacobs Engineering Group, Inc. (a) | 65,300 | | 2,675,994 |
ELECTRICAL EQUIPMENT - 3.0% |
Electrical Components & Equipment - 2.8% |
centrotherm photovoltaics AG (a) | 25,223 | | 1,305,671 |
Energy Conversion Devices, Inc. (a)(c) | 103,019 | | 1,466,991 |
Evergreen Solar, Inc. (a)(c) | 242,942 | | 510,178 |
First Solar, Inc. (a)(c) | 35,000 | | 5,403,650 |
JA Solar Holdings Co. Ltd. ADR (a)(c) | 959,395 | | 4,614,690 |
Q-Cells SE (a)(c) | 16,793 | | 302,289 |
Sunpower Corp.: | | | |
Class A (a) | 22,200 | | 714,840 |
Class B (a) | 94,500 | | 2,579,850 |
| | 16,898,159 |
Heavy Electrical Equipment - 0.2% |
Vestas Wind Systems AS (a) | 12,700 | | 894,486 |
TOTAL ELECTRICAL EQUIPMENT | | 17,792,645 |
ENERGY EQUIPMENT & SERVICES - 37.0% |
Oil & Gas Drilling - 14.5% |
Atwood Oceanics, Inc. (a) | 305,546 | | 8,811,947 |
Diamond Offshore Drilling, Inc. | 100 | | 8,987 |
ENSCO International, Inc. | 35,400 | | 1,341,306 |
Helmerich & Payne, Inc. | 285,453 | | 9,808,165 |
Hercules Offshore, Inc. (a) | 164,594 | | 780,176 |
Nabors Industries Ltd. (a) | 740,822 | | 12,608,790 |
Noble Corp. | 584,243 | | 19,782,468 |
Patterson-UTI Energy, Inc. | 116,517 | | 1,609,100 |
Pride International, Inc. (a) | 188,287 | | 4,720,355 |
Seadrill Ltd. | 205,100 | | 3,291,260 |
Songa Offshore Se (a) | 89,000 | | 320,763 |
Transocean Ltd. (a) | 286,264 | | 22,812,378 |
| | 85,895,695 |
Oil & Gas Equipment & Services - 22.5% |
Baker Hughes, Inc. | 5,500 | | 222,750 |
Basic Energy Services, Inc. (a) | 33,140 | | 223,695 |
BJ Services Co. | 943,674 | | 13,381,297 |
Cameron International Corp. (a) | 20,200 | | 630,846 |
Complete Production Services, Inc. (a) | 37,254 | | 307,718 |
Core Laboratories NV | 23,200 | | 1,994,272 |
Dresser-Rand Group, Inc. (a) | 35,900 | | 1,045,049 |
Dril-Quip, Inc. (a) | 112,455 | | 4,755,722 |
Exterran Holdings, Inc. (a) | 77,875 | | 1,354,246 |
FMC Technologies, Inc. (a) | 112,900 | | 4,911,150 |
Fugro NV (Certificaten Van Aandelen) unit | 1,693 | | 75,972 |
Global Industries Ltd. (a) | 328,703 | | 2,245,041 |
Halliburton Co. | 371,660 | | 8,209,969 |
|
| Shares | | Value |
Helix Energy Solutions Group, Inc. (a) | 69,700 | | $ 731,153 |
Hornbeck Offshore Services, Inc. (a) | 41,015 | | 893,307 |
Key Energy Services, Inc. (a) | 56,200 | | 390,028 |
Lufkin Industries, Inc. | 7,190 | | 326,426 |
National Oilwell Varco, Inc. (a) | 390,457 | | 14,033,025 |
Newpark Resources, Inc. (a) | 19,781 | | 52,024 |
Oceaneering International, Inc. (a) | 132,100 | | 6,726,532 |
Oil States International, Inc. (a) | 39,300 | | 1,065,816 |
Schlumberger Ltd. | 643,600 | | 34,432,600 |
Smith International, Inc. | 154,300 | | 3,877,559 |
Superior Energy Services, Inc. (a) | 174,884 | | 2,901,326 |
Tenaris SA sponsored ADR | 107,100 | | 3,247,272 |
Tidewater, Inc. | 46,959 | | 2,113,155 |
TSC Offshore Group Ltd. (a) | 1,258,000 | | 219,140 |
Weatherford International Ltd. (a) | 1,053,164 | | 19,757,357 |
Willbros Group, Inc. (a) | 263,094 | | 3,628,066 |
| | 133,752,513 |
TOTAL ENERGY EQUIPMENT & SERVICES | | 219,648,208 |
GAS UTILITIES - 1.1% |
Gas Utilities - 1.1% |
EQT Corp. | 56,300 | | 2,160,794 |
Questar Corp. | 122,000 | | 4,034,540 |
Zhongyu Gas Holdings Ltd. (a) | 6,538,000 | | 455,560 |
| | 6,650,894 |
METALS & MINING - 0.3% |
Diversified Metals & Mining - 0.3% |
Teck Resources Ltd. Class B (sub. vtg.) | 59,900 | | 1,576,243 |
MULTI-UTILITIES - 0.0% |
Multi-Utilities - 0.0% |
Sempra Energy | 4 | | 210 |
OIL, GAS & CONSUMABLE FUELS - 58.0% |
Coal & Consumable Fuels - 8.6% |
Alpha Natural Resources, Inc. (a) | 81,700 | | 2,721,427 |
Arch Coal, Inc. | 523,385 | | 9,112,133 |
CONSOL Energy, Inc. | 229,613 | | 8,158,150 |
Foundation Coal Holdings, Inc. | 356,286 | | 12,801,356 |
Massey Energy Co. | 655,644 | | 17,440,130 |
PT Bumi Resources Tbk | 2,851,800 | | 804,541 |
| | 51,037,737 |
Integrated Oil & Gas - 16.0% |
Chevron Corp. | 293,300 | | 20,375,551 |
ConocoPhillips | 141,346 | | 6,178,234 |
Exxon Mobil Corp. | 831 | | 58,494 |
Hess Corp. | 119,750 | | 6,610,200 |
Marathon Oil Corp. | 635,253 | | 20,486,909 |
Occidental Petroleum Corp. | 517,600 | | 36,925,578 |
Suncor Energy, Inc. | 146,900 | | 4,750,542 |
| | 95,385,508 |
Common Stocks - continued |
| Shares | | Value |
OIL, GAS & CONSUMABLE FUELS - CONTINUED |
Oil & Gas Exploration & Production - 29.6% |
Anadarko Petroleum Corp. | 222,600 | | $ 10,729,320 |
Apache Corp. | 120,100 | | 10,082,395 |
Berry Petroleum Co. Class A | 74,901 | | 1,776,652 |
Cabot Oil & Gas Corp. | 506,702 | | 17,800,441 |
Canadian Natural Resources Ltd. | 94,300 | | 5,668,416 |
Chesapeake Energy Corp. | 663,546 | | 14,226,426 |
Comstock Resources, Inc. (a) | 189,211 | | 7,284,624 |
Concho Resources, Inc. (a) | 96,998 | | 2,977,839 |
Denbury Resources, Inc. (a) | 369,243 | | 6,129,434 |
EOG Resources, Inc. | 1,284 | | 95,055 |
EXCO Resources, Inc. (a) | 528,347 | | 7,259,488 |
Forest Oil Corp. (a) | 41,200 | | 694,220 |
Newfield Exploration Co. (a) | 52,650 | | 2,070,725 |
Niko Resources Ltd. | 16,500 | | 1,162,436 |
Noble Energy, Inc. | 7,400 | | 452,288 |
Oil Search Ltd. | 349,202 | | 1,647,092 |
OPTI Canada, Inc. (a)(c) | 144,200 | | 210,140 |
Petrobank Energy & Resources Ltd. (a) | 25,100 | | 763,705 |
Petrohawk Energy Corp. (a) | 971,626 | | 23,591,079 |
Plains Exploration & Production Co. (a) | 276,469 | | 7,920,837 |
Quicksilver Resources, Inc. (a)(c) | 210,500 | | 2,412,330 |
Range Resources Corp. | 412,988 | | 19,166,773 |
SandRidge Energy, Inc. (a) | 51,550 | | 481,993 |
Southwestern Energy Co. (a) | 704,100 | | 29,170,863 |
Talisman Energy, Inc. | 5,000 | | 77,273 |
Ultra Petroleum Corp. (a) | 41,200 | | 1,817,744 |
| | 175,669,588 |
Oil & Gas Refining & Marketing - 3.1% |
Frontier Oil Corp. | 326,359 | | 4,536,390 |
Holly Corp. | 244,079 | | 5,191,560 |
Sunoco, Inc. | 110,300 | | 2,723,307 |
Tesoro Corp. | 133,876 | | 1,752,437 |
Valero Energy Corp. | 225,563 | | 4,060,134 |
| | 18,263,828 |
|
| Shares | | Value |
Oil & Gas Storage & Transport - 0.7% |
El Paso Corp. | 298,100 | | $ 2,998,886 |
Williams Companies, Inc. | 83,877 | | 1,399,907 |
| | 4,398,793 |
TOTAL OIL, GAS & CONSUMABLE FUELS | | 344,755,454 |
TOTAL COMMON STOCKS (Cost $575,114,875) | 593,243,564 |
Convertible Bonds - 0.1% |
| Principal Amount | | |
ELECTRICAL EQUIPMENT - 0.1% |
Electrical Components & Equipment - 0.1% |
Sunpower Corp. 4.75% 4/15/14
(Cost $320,000) | | $ 320,000 | | 425,280 |
Money Market Funds - 2.7% |
| Shares | | |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(d)
(Cost $16,132,988) | 16,132,988 | | 16,132,988 |
TOTAL INVESTMENT PORTFOLIO - 102.7% (Cost $591,567,863) | | 609,801,832 |
NET OTHER ASSETS - (2.7)% | | (15,754,586) |
NET ASSETS - 100% | $ 594,047,246 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) 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 | $ 67,263 |
Fidelity Securities Lending Cash Central Fund | 260,635 |
Total | $ 327,898 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Energy | $ 564,403,662 | $ 564,403,662 | $ - | $ - |
Industrials | 20,612,555 | 20,612,555 | - | - |
Materials | 1,576,243 | 1,576,243 | - | - |
Utilities | 6,651,104 | 6,651,104 | - | - |
Corporate Bonds | 425,280 | - | 425,280 | - |
Money Market Funds | 16,132,988 | 16,132,988 | - | - |
Total Investments in Securities: | $ 609,801,832 | $ 609,376,552 | $ 425,280 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 77.7% |
Switzerland | 10.4% |
Netherlands Antilles | 5.8% |
Canada | 2.8% |
Others (individually less than 1%) | 3.3% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $106,222,894 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $79,621,140 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Energy
Advisor Energy Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $14,613,637) - See accompanying schedule: Unaffiliated issuers (cost $575,434,875) | $ 593,668,844 | |
Fidelity Central Funds (cost $16,132,988) | 16,132,988 | |
Total Investments (cost $591,567,863) | | $ 609,801,832 |
Receivable for investments sold | | 8,745,983 |
Receivable for fund shares sold | | 624,703 |
Dividends receivable | | 170,103 |
Interest receivable | | 3,631 |
Distributions receivable from Fidelity Central Funds | | 10,611 |
Prepaid expenses | | 2,220 |
Other receivables | | 941 |
Total assets | | 619,360,024 |
| | |
Liabilities | | |
Payable to custodian bank | $ 941,099 | |
Payable for investments purchased | 5,895,387 | |
Payable for fund shares redeemed | 1,622,339 | |
Accrued management fee | 260,687 | |
Distribution fees payable | 234,627 | |
Other affiliated payables | 182,812 | |
Other payables and accrued expenses | 42,839 | |
Collateral on securities loaned, at value | 16,132,988 | |
Total liabilities | | 25,312,778 |
| | |
Net Assets | | $ 594,047,246 |
Net Assets consist of: | | |
Paid in capital | | $ 784,094,022 |
Accumulated net investment loss | | (108) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (208,278,596) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 18,231,928 |
Net Assets | | $ 594,047,246 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($216,595,298 ÷ 8,387,697 shares) | | $ 25.82 |
| | |
Maximum offering price per share (100/94.25 of $25.82) | | $ 27.40 |
Class T:
Net Asset Value and redemption price per share ($224,375,948 ÷ 8,477,233 shares) | | $ 26.47 |
| | |
Maximum offering price per share (100/96.50 of $26.47) | | $ 27.43 |
Class B:
Net Asset Value and offering price per share ($47,795,293 ÷ 1,952,217 shares)A | | $ 24.48 |
| | |
Class C:
Net Asset Value and offering price per share ($86,649,865 ÷ 3,514,920 shares)A | | $ 24.65 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($18,630,842 ÷ 694,381 shares) | | $ 26.83 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Energy
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 5,736,564 |
Interest | | 3,658 |
Income from Fidelity Central Funds | | 327,898 |
Total income | | 6,068,120 |
| | |
Expenses | | |
Management fee | $ 3,178,324 | |
Transfer agent fees | 1,772,403 | |
Distribution fees | 2,918,713 | |
Accounting and security lending fees | 214,986 | |
Custodian fees and expenses | 34,973 | |
Independent trustees' compensation | 3,527 | |
Registration fees | 120,752 | |
Audit | 54,744 | |
Legal | 3,977 | |
Interest | 2,024 | |
Miscellaneous | 36,597 | |
Total expenses before reductions | 8,341,020 | |
Expense reductions | (16,532) | 8,324,488 |
Net investment income (loss) | | (2,256,368) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (205,504,221) | |
Foreign currency transactions | (156,579) | |
Total net realized gain (loss) | | (205,660,800) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (183,346,663) | |
Assets and liabilities in foreign currencies | 49 | |
Total change in net unrealized appreciation (depreciation) | | (183,346,614) |
Net gain (loss) | | (389,007,414) |
Net increase (decrease) in net assets resulting from operations | | $ (391,263,782) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (2,256,368) | $ (6,384,696) |
Net realized gain (loss) | (205,660,800) | 190,336,922 |
Change in net unrealized appreciation (depreciation) | (183,346,614) | (81,040,623) |
Net increase (decrease) in net assets resulting from operations | (391,263,782) | 102,911,603 |
Distributions to shareholders from net realized gain | (137,595,735) | (64,657,747) |
Share transactions - net increase (decrease) | 82,598,513 | 82,916,045 |
Redemption fees | 78,335 | 43,632 |
Total increase (decrease) in net assets | (446,182,669) | 121,213,533 |
| | |
Net Assets | | |
Beginning of period | 1,040,229,915 | 919,016,382 |
End of period (including accumulated net investment loss of $108 and accumulated net investment loss of $795, respectively) | $ 594,047,246 | $ 1,040,229,915 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.04) | (.17) | (.02) F | (.04) | .06 |
Net realized and unrealized gain (loss) | (17.48) | 5.59 | 8.42 | 12.30 | 12.21 |
Total from investment operations | (17.52) | 5.42 | 8.40 | 12.26 | 12.27 |
Distributions from net investment income | - | - | - | - | (.06) |
Distributions from net realized gain | (6.90) | (3.46) | (6.51) | (6.81) | (.41) |
Total distributions | (6.90) | (3.46) | (6.51) | (6.81) | (.47) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 25.82 | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 |
Total Return A,B | (38.86)% | 11.52% | 22.08% | 32.90% | 42.69% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.22% | 1.14% | 1.19% | 1.21% | 1.25% |
Expenses net of fee waivers, if any | 1.22% | 1.14% | 1.19% | 1.21% | 1.25% |
Expenses net of all reductions | 1.21% | 1.14% | 1.19% | 1.17% | 1.19% |
Net investment income (loss) | (.14)% | (.32)% | (.05)% F | (.09)% | .19% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 216,595 | $ 355,200 | $ 268,108 | $ 204,391 | $ 90,342 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.17)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.10) | (.29) | (.11) F | (.13) | - H |
Net realized and unrealized gain (loss) | (17.93) | 5.72 | 8.61 | 12.49 | 12.37 |
Total from investment operations | (18.03) | 5.43 | 8.50 | 12.36 | 12.37 |
Distributions from net investment income | - | - | - | - | (.03) |
Distributions from net realized gain | (6.90) | (3.29) | (6.42) | (6.65) | (.41) |
Total distributions | (6.90) | (3.29) | (6.42) | (6.65) | (.44) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 26.47 | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 |
Total Return A,B | (38.99)% | 11.27% | 21.84% | 32.60% | 42.41% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.45% | 1.36% | 1.40% | 1.42% | 1.44% |
Expenses net of fee waivers, if any | 1.45% | 1.36% | 1.40% | 1.42% | 1.44% |
Expenses net of all reductions | 1.45% | 1.35% | 1.39% | 1.38% | 1.39% |
Net investment income (loss) | (.38)% | (.54)% | (.26)% F | (.29)% | (.01)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 224,376 | $ 407,784 | $ 382,222 | $ 362,272 | $ 280,820 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.37)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.22) | (.56) | (.34) F | (.35) | (.18) |
Net realized and unrealized gain (loss) | (16.75) | 5.41 | 8.17 | 11.98 | 11.93 |
Total from investment operations | (16.97) | 4.85 | 7.83 | 11.63 | 11.75 |
Distributions from net realized gain | (6.90) | (3.14) | (6.29) | (6.43) | (.41) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 24.48 | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 |
Total Return A,B | (39.31)% | 10.62% | 21.18% | 31.86% | 41.66% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 1.93% | 1.96% | 1.96% | 1.98% |
Expenses net of fee waivers, if any | 1.96% | 1.93% | 1.96% | 1.96% | 1.98% |
Expenses net of all reductions | 1.96% | 1.93% | 1.95% | 1.92% | 1.93% |
Net investment income (loss) | (.89)% | (1.11)% | (.82)% F | (.84)% | (.55)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 47,795 | $ 98,602 | $ 116,487 | $ 130,973 | $ 102,003 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.93)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.21) | (.54) | (.32) F | (.34) | (.17) |
Net realized and unrealized gain (loss) | (16.87) | 5.45 | 8.20 | 12.06 | 11.99 |
Total from investment operations | (17.08) | 4.91 | 7.88 | 11.72 | 11.82 |
Distributions from net realized gain | (6.90) | (3.16) | (6.33) | (6.50) | (.41) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 24.65 | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 |
Total Return A,B | (39.31)% | 10.71% | 21.22% | 31.96% | 41.70% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 1.87% | 1.91% | 1.92% | 1.94% |
Expenses net of fee waivers, if any | 1.96% | 1.87% | 1.91% | 1.92% | 1.94% |
Expenses net of all reductions | 1.95% | 1.87% | 1.91% | 1.88% | 1.89% |
Net investment income (loss) | (.88)% | (1.05)% | (.77)% F | (.79)% | (.51)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 86,650 | $ 156,393 | $ 135,072 | $ 125,424 | $ 72,832 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.88)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .03 | (.02) | .11 E | .12 | .19 |
Net realized and unrealized gain (loss) | (18.06) | 5.74 | 8.67 | 12.56 | 12.44 |
Total from investment operations | (18.03) | 5.72 | 8.78 | 12.68 | 12.63 |
Distributions from net investment income | - | - | - | - | (.11) |
Distributions from net realized gain | (6.90) | (3.64) | (6.58) | (6.97) | (.41) |
Total distributions | (6.90) | (3.64) | (6.58) | (6.97) | (.52) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | .01 |
Net asset value, end of period | $ 26.83 | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 |
Total Return A | (38.68)% | 11.83% | 22.47% | 33.35% | 43.21% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .95% | .85% | .88% | .87% | .89% |
Expenses net of fee waivers, if any | .95% | .85% | .88% | .87% | .89% |
Expenses net of all reductions | .94% | .85% | .88% | .83% | .84% |
Net investment income (loss) | .13% | (.03)% | .25% E | .26% | .54% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 18,631 | $ 22,250 | $ 17,127 | $ 19,553 | $ 9,433 |
Portfolio turnover rate D | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Energy Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds, pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, net operating losses and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 103,421,824 | |
Unrealized depreciation | (107,624,464) | |
Net unrealized appreciation (depreciation) | $ (4,202,640) | |
| | |
Capital loss carryforward | $ (106,222,894) | |
| | |
Cost for federal income tax purposes | $ 614,004,472 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ - | $ 4,772,747 |
Long-term Capital Gains | 137,595,735 | 59,885,000 |
Total | $ 137,595,735 | $ 64,657,747 |
Energy
3. Significant Accounting Policies - continued
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 $884,680,102 and $936,618,293, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 495,972 | $ 16,561 |
Class T | .25% | .25% | 1,105,084 | 8,598 |
Class B | .75% | .25% | 498,256 | 374,110 |
Class C | .75% | .25% | 819,401 | 145,902 |
| | | $ 2,918,713 | $ 545,171 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 158,560 |
Class T | 35,423 |
Class B* | 127,592 |
Class C* | 28,192 |
| $ 349,767 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 636,855 | .32 |
Class T | 680,042 | .31 |
Class B | 159,600 | .32 |
Class C | 257,524 | .31 |
Institutional Class | 38,382 | .30 |
| $ 1,772,403 | |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
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 $5,063 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 10,970,000 | 2.87% | $ 875 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $2,544 and is reflected in Miscellaneous Expense 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 $260,635.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $6,162,000. The weighted average interest rate was 3.36%. The interest expense amounted to $1,149 under the bank borrowing program.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $15,931 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $601.
Energy
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ 46,997,290 | $ 20,341,408 |
Class T | 53,170,678 | 25,677,389 |
Class B | 13,492,835 | 7,474,589 |
Class C | 21,034,743 | 9,397,317 |
Institutional Class | 2,900,189 | 1,767,044 |
Total | $ 137,595,735 | $ 64,657,747 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 3,517,345 | 3,202,103 | $ 85,305,714 | $ 169,499,687 |
Reinvestment of distributions | 1,158,188 | 375,188 | 42,134,872 | 18,473,322 |
Shares redeemed | (3,358,560) | (2,059,529) | (88,397,497) | (107,985,396) |
Net increase (decrease) | 1,316,973 | 1,517,762 | $ 39,043,089 | $ 79,987,613 |
Class T | | | | |
Shares sold | 2,191,463 | 1,610,611 | $ 53,583,018 | $ 87,007,613 |
Reinvestment of distributions | 1,332,408 | 478,816 | 49,792,078 | 24,107,280 |
Shares redeemed | (2,980,646) | (1,914,780) | (77,608,101) | (102,045,896) |
Net increase (decrease) | 543,225 | 174,647 | $ 25,766,995 | $ 9,068,997 |
Class B | | | | |
Shares sold | 529,128 | 504,843 | $ 12,513,157 | $ 25,728,046 |
Reinvestment of distributions | 339,485 | 135,516 | 11,786,924 | 6,434,106 |
Shares redeemed | (955,690) | (1,098,735) | (23,571,286) | (55,433,977) |
Net increase (decrease) | (87,077) | (458,376) | $ 728,795 | $ (23,271,825) |
Class C | | | | |
Shares sold | 1,217,008 | 993,512 | $ 28,382,837 | $ 51,238,082 |
Reinvestment of distributions | 507,064 | 161,795 | 17,726,948 | 7,736,565 |
Shares redeemed | (1,425,212) | (820,290) | (35,998,056) | (41,459,377) |
Net increase (decrease) | 298,860 | 335,017 | $ 10,111,729 | $ 17,515,270 |
Institutional Class | | | | |
Shares sold | 470,080 | 839,635 | $ 12,030,140 | $ 44,656,187 |
Reinvestment of distributions | 54,219 | 25,669 | 2,044,586 | 1,318,208 |
Shares redeemed | (259,760) | (780,213) | (7,126,821) | (46,358,405) |
Net increase (decrease) | 264,539 | 85,091 | $ 6,947,905 | $ (384,010) |
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
Advisor Financial Services Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) | -30.13% | -9.12% | -2.05% |
Class T (incl. 3.50% sales charge) | -28.59% | -8.90% | -2.04% |
Class B (incl. contingent deferred sales charge) A | -29.98% | -8.96% | -1.98% |
Class C (incl. contingent deferred sales charge) B | -27.10% | -8.68% | -2.16% |
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, 1999, 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
Advisor Financial Services Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -25.87%, -26.00%, -26.35% and -26.38%, respectively (excluding sales charges). This performance beat the MSCI® US Investable Market Financials Index, which returned -33.29%, but lagged the S&P 500®. Overweightings in investment banking/brokerage, life/health insurance and reinsurance helped relative to the MSCI index, as did strong stock selection in property/casualty insurance, data processing/outsourced services and diversified banks. Contributors included Fidelity National Financial, a title insurer that benefited as falling interest rates boosted mortgage refinancings, and non-index holding BM&F BOVESPA, the Brazilian stock and futures exchange, which rallied on improved trading volumes. A large overweighting in investment bank Morgan Stanley also helped, as the stock declined less than the index. Stock selection within other diversified financial services, regional banks, thrifts/mortgage finance and retail real estate investment trusts (REITs) hindered performance versus the index. Detractors included CIT Group, a specialized finance company hurt by worse-than-expected credit losses, and KeyCorp, a regional bank that sank after a poorly executed capital offering. CIT was gone from the portfolio before period end.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2009, the fund's Institutional Class shares returned -25.68%. This performance beat the MSCI® US Investable Market Financials Index, which returned - -33.29%, but lagged the S&P 500®. Overweightings in investment banking/brokerage, life/health insurance and reinsurance helped relative to the MSCI index, as did strong stock selection in property/casualty insurance, data processing/outsourced services and diversified banks. Contributors included Fidelity National Financial, a title insurer that benefited as falling interest rates boosted mortgage refinancings, and non-index holding BM&F BOVESPA, the Brazilian stock and futures exchange, which rallied on improved trading volumes. A large overweighting in investment bank Morgan Stanley also helped, as the stock declined less than the index. Stock selection within other diversified financial services, regional banks, thrifts/mortgage finance and retail real estate investment trusts (REITs) hindered performance versus the index. Detractors included CIT Group, a specialized finance company hurt by worse-than-expected credit losses, and KeyCorp, a regional bank that sank after a poorly executed capital offering. CIT was gone from the portfolio before period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor 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, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.31% | | | |
Actual | | $ 1,000.00 | $ 1,373.20 | $ 7.71 |
Hypothetical A | | $ 1,000.00 | $ 1,018.30 | $ 6.56 |
Class T | 1.58% | | | |
Actual | | $ 1,000.00 | $ 1,371.80 | $ 9.29 |
Hypothetical A | | $ 1,000.00 | $ 1,016.96 | $ 7.90 |
Class B | 2.06% | | | |
Actual | | $ 1,000.00 | $ 1,368.00 | $ 12.09 |
Hypothetical A | | $ 1,000.00 | $ 1,014.58 | $ 10.29 |
Class C | 2.06% | | | |
Actual | | $ 1,000.00 | $ 1,368.30 | $ 12.10 |
Hypothetical A | | $ 1,000.00 | $ 1,014.58 | $ 10.29 |
Institutional Class | 1.06% | | | |
Actual | | $ 1,000.00 | $ 1,374.50 | $ 6.24 |
Hypothetical A | | $ 1,000.00 | $ 1,019.54 | $ 5.31 |
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
Advisor Financial Services Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Morgan Stanley | 5.1 | 4.4 |
Deutsche Bank AG (NY Shares) | 4.3 | 0.0 |
Genworth Financial, Inc. Class A | 4.1 | 0.0 |
Goldman Sachs Group, Inc. | 4.1 | 5.1 |
Euronet Worldwide, Inc. | 3.6 | 0.0 |
Mizuho Financial Group, Inc. | 3.6 | 0.0 |
JPMorgan Chase & Co. | 3.6 | 5.7 |
McGraw-Hill Companies, Inc. | 3.5 | 0.0 |
China Merchants Bank Co. Ltd. (H Shares) | 3.1 | 0.0 |
Xinyuan Real Estate Co. Ltd. ADR | 3.0 | 0.3 |
| 38.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Capital Markets | 28.9% | |
| Commercial Banks | 18.3% | |
| Insurance | 16.1% | |
| Diversified
Financial Services | 10.9% | |
| IT Services | 8.6% | |
| All Others* | 17.2% | |
As of January 31, 2009 |
| Capital Markets | 27.3% | |
| Insurance | 23.6% | |
| Diversified
Financial Services | 17.5% | |
| Commercial Banks | 9.5% | |
| IT Services | 4.9% | |
| All Others* | 17.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.5% |
| Shares | | Value |
CAPITAL MARKETS - 28.9% |
Asset Management & Custody Banks - 11.5% |
AllianceBernstein Holding LP | 70,800 | | $ 1,461,312 |
Bank Sarasin & Co. Ltd.: | | | |
rights 9/15/09 (a) | 44,316 | | 40,640 |
Series B (Reg.) | 44,316 | | 1,445,200 |
EFG International (c) | 185,392 | | 2,289,968 |
Franklin Resources, Inc. | 31,105 | | 2,758,391 |
GLG Partners, Inc. | 21,100 | | 85,033 |
Janus Capital Group, Inc. | 45,400 | | 620,164 |
Julius Baer Holding Ltd. | 33,161 | | 1,579,465 |
KKR Private Equity Investors, LP Restricted Depositary Units (a)(d) | 17,200 | | 116,960 |
Legg Mason, Inc. (c) | 83,353 | | 2,345,553 |
T. Rowe Price Group, Inc. | 34,025 | | 1,589,308 |
The Blackstone Group LP | 247,400 | | 2,785,724 |
| | 17,117,718 |
Diversified Capital Markets - 4.8% |
Credit Suisse Group sponsored ADR | 15,400 | | 729,498 |
Deutsche Bank AG (NY Shares) | 99,800 | | 6,477,020 |
| | 7,206,518 |
Investment Banking & Brokerage - 12.6% |
GFI Group, Inc. | 465,278 | | 3,001,043 |
Goldman Sachs Group, Inc. | 36,900 | | 6,025,770 |
Lazard Ltd. Class A | 29,100 | | 1,076,409 |
MF Global Ltd. (a) | 167,606 | | 1,069,326 |
Morgan Stanley | 268,900 | | 7,663,648 |
| | 18,836,196 |
TOTAL CAPITAL MARKETS | | 43,160,432 |
COMMERCIAL BANKS - 18.3% |
Diversified Banks - 11.7% |
Banco Macro SA sponsored ADR (a)(c) | 125,343 | | 2,128,324 |
BBVA Banco Frances SA sponsored ADR (a)(c) | 72,400 | | 338,108 |
China Citic Bank Corp. Ltd. Class H | 3,247,000 | | 2,262,470 |
China Merchants Bank Co. Ltd. (H Shares) | 1,948,500 | | 4,580,949 |
Mizuho Financial Group, Inc. (c) | 2,366,500 | | 5,377,841 |
U.S. Bancorp, Delaware | 62,400 | | 1,273,584 |
Wells Fargo & Co. | 62,100 | | 1,518,966 |
| | 17,480,242 |
Regional Banks - 6.6% |
Bank of Hawaii Corp. | 25,042 | | 960,862 |
Cathay General Bancorp (c) | 16,988 | | 154,931 |
Fifth Third Bancorp | 50,500 | | 479,750 |
Glacier Bancorp, Inc. (c) | 107,929 | | 1,680,455 |
Huntington Bancshares, Inc. | 93,000 | | 380,370 |
KeyCorp | 636,300 | | 3,677,814 |
PNC Financial Services Group, Inc. | 28,045 | | 1,028,130 |
|
| Shares | | Value |
Umpqua Holdings Corp. (c) | 72,584 | | $ 704,065 |
Zions Bancorp (c) | 59,200 | | 803,936 |
| | 9,870,313 |
TOTAL COMMERCIAL BANKS | | 27,350,555 |
CONSUMER FINANCE - 0.7% |
Consumer Finance - 0.7% |
Capital One Financial Corp. | 24,487 | | 751,751 |
Promise Co. Ltd. | 25,300 | | 266,611 |
| | 1,018,362 |
DIVERSIFIED FINANCIAL SERVICES - 10.9% |
Other Diversified Financial Services - 7.4% |
Bank of America Corp. | 285,262 | | 4,219,025 |
Citigroup, Inc. | 472,076 | | 1,496,481 |
JPMorgan Chase & Co. | 138,848 | | 5,366,475 |
| | 11,081,981 |
Specialized Finance - 3.5% |
BM&F BOVESPA SA | 222,700 | | 1,436,928 |
CME Group, Inc. | 1,470 | | 409,880 |
JSE Ltd. | 20,600 | | 160,579 |
Moody's Corp. | 132,099 | | 3,136,030 |
| | 5,143,417 |
TOTAL DIVERSIFIED FINANCIAL SERVICES | | 16,225,398 |
INSURANCE - 16.1% |
Insurance Brokers - 0.5% |
Arthur J. Gallagher & Co. | 22,700 | | 519,830 |
National Financial Partners Corp. | 19,000 | | 142,500 |
| | 662,330 |
Life & Health Insurance - 5.5% |
Lincoln National Corp. | 91,119 | | 1,930,812 |
MetLife, Inc. | 94,605 | | 3,211,840 |
Principal Financial Group, Inc. | 126,100 | | 2,988,570 |
Protective Life Corp. | 9,000 | | 134,550 |
| | 8,265,772 |
Multi-Line Insurance - 4.6% |
Genworth Financial, Inc. Class A | 885,085 | | 6,107,087 |
Hartford Financial Services Group, Inc. | 47,900 | | 789,871 |
| | 6,896,958 |
Property & Casualty Insurance - 3.5% |
CNA Financial Corp. | 92,800 | | 1,582,240 |
Fidelity National Financial, Inc. Class A | 40,796 | | 585,423 |
United America Indemnity Ltd. Class A (a) | 14,200 | | 76,822 |
XL Capital Ltd. Class A | 209,189 | | 2,945,381 |
| | 5,189,866 |
Reinsurance - 2.0% |
Everest Re Group Ltd. | 20,300 | | 1,628,466 |
Common Stocks - continued |
| Shares | | Value |
INSURANCE - CONTINUED |
Reinsurance - continued |
Transatlantic Holdings, Inc. | 2,100 | | $ 99,351 |
Validus Holdings Ltd. (c) | 54,500 | | 1,237,150 |
| | 2,964,967 |
TOTAL INSURANCE | | 23,979,893 |
INTERNET SOFTWARE & SERVICES - 2.1% |
Internet Software & Services - 2.1% |
China Finance Online Co. Ltd. ADR (a) | 252,815 | | 3,142,490 |
IT SERVICES - 8.6% |
Data Processing & Outsourced Services - 7.7% |
CyberSource Corp. (a) | 16,853 | | 292,231 |
Euronet Worldwide, Inc. (a) | 257,244 | | 5,412,414 |
MasterCard, Inc. Class A | 4,300 | | 834,329 |
MoneyGram International, Inc. (a) | 551,830 | | 1,236,099 |
Visa, Inc. Class A | 56,300 | | 3,685,398 |
| | 11,460,471 |
IT Consulting & Other Services - 0.9% |
Cognizant Technology Solutions Corp. Class A (a) | 39,200 | | 1,159,928 |
Satyam Computer Services Ltd. sponsored ADR | 44,900 | | 226,296 |
| | 1,386,224 |
TOTAL IT SERVICES | | 12,846,695 |
MEDIA - 3.5% |
Publishing - 3.5% |
McGraw-Hill Companies, Inc. | 167,147 | | 5,240,058 |
PROFESSIONAL SERVICES - 0.4% |
Research & Consulting Services - 0.4% |
First Advantage Corp. Class A (a) | 36,831 | | 598,872 |
REAL ESTATE INVESTMENT TRUSTS - 0.4% |
Industrial REITs - 0.1% |
ProLogis Trust | 11,800 | | 103,722 |
Mortgage REITs - 0.0% |
Chimera Investment Corp. | 15,800 | | 56,564 |
Residential REITs - 0.3% |
UDR, Inc. | 37,841 | | 395,438 |
Retail REITs - 0.0% |
CBL & Associates Properties, Inc. | 8,102 | | 48,126 |
Developers Diversified Realty Corp. | 1,147 | | 6,435 |
| | 54,561 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 610,285 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 5.8% |
Diversified Real Estate Activities - 0.4% |
Mitsubishi Estate Co. Ltd. | 38,000 | | 633,400 |
|
| Shares | | Value |
Real Estate Development - 5.4% |
Central China Real Estate Ltd. | 11,725,000 | | $ 3,494,874 |
Xinyuan Real Estate Co. Ltd. ADR (a)(c) | 657,952 | | 4,474,074 |
| | 7,968,948 |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | | 8,602,348 |
ROAD & RAIL - 2.5% |
Trucking - 2.5% |
Arkansas Best Corp. | 67,000 | | 1,908,160 |
Dollar Thrifty Automotive Group, Inc. (a) | 115,210 | | 1,906,726 |
| | 3,814,886 |
SPECIALTY RETAIL - 0.1% |
Home Improvement Retail - 0.1% |
Home Depot, Inc. | 6,600 | | 171,204 |
THRIFTS & MORTGAGE FINANCE - 0.2% |
Thrifts & Mortgage Finance - 0.2% |
Radian Group, Inc. | 79,900 | | 266,067 |
TOTAL COMMON STOCKS (Cost $129,519,080) | 147,027,545 |
Money Market Funds - 10.2% |
| | | |
Fidelity Cash Central Fund, 0.37% (e) | 1,230,596 | | 1,230,596 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(e) | 14,013,335 | | 14,013,335 |
TOTAL MONEY MARKET FUNDS (Cost $15,243,931) | 15,243,931 |
TOTAL INVESTMENT PORTFOLIO - 108.7% (Cost $144,763,011) | | 162,271,476 |
NET OTHER ASSETS - (8.7)% | | (12,977,570) |
NET ASSETS - 100% | $ 149,293,906 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $116,960 or 0.1% of net assets. |
(e) 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 | $ 81,244 |
Fidelity Securities Lending Cash Central Fund | 892,645 |
Total | $ 973,889 |
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 | 69.1% |
China | 6.7% |
Cayman Islands | 5.4% |
Germany | 4.3% |
Japan | 4.2% |
Switzerland | 4.1% |
Bermuda | 3.3% |
Argentina | 1.6% |
Brazil | 1.0% |
Others (individually less than 1%) | 0.3% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $55,672,202 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $56,712,899 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $13,162,343) - See accompanying schedule: Unaffiliated issuers (cost $129,519,080) | $ 147,027,545 | |
Fidelity Central Funds (cost $15,243,931) | 15,243,931 | |
Total Investments (cost $144,763,011) | | $ 162,271,476 |
Cash | | 15,783 |
Foreign currency held at value (cost $2) | | 2 |
Receivable for investments sold | | 2,744,984 |
Receivable for fund shares sold | | 511,732 |
Dividends receivable | | 36,308 |
Distributions receivable from Fidelity Central Funds | | 27,464 |
Prepaid expenses | | 688 |
Other receivables | | 306 |
Total assets | | 165,608,743 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,870,714 | |
Payable for fund shares redeemed | 218,158 | |
Accrued management fee | 65,379 | |
Distribution fees payable | 59,827 | |
Other affiliated payables | 45,204 | |
Other payables and accrued expenses | 42,220 | |
Collateral on securities loaned, at value | 14,013,335 | |
Total liabilities | | 16,314,837 |
| | |
Net Assets | | $ 149,293,906 |
Net Assets consist of: | | |
Paid in capital | | $ 249,738,210 |
Undistributed net investment income | | 1,248,708 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (119,201,760) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 17,508,748 |
Net Assets | | $ 149,293,906 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($68,244,752 ÷ 7,160,921 shares) | | $ 9.53 |
| | |
Maximum offering price per share (100/94.25 of $9.53) | | $ 10.11 |
Class T:
Net Asset Value and redemption price per share ($34,926,732 ÷ 3,670,248 shares) | | $ 9.52 |
| | |
Maximum offering price per share (100/96.50 of $9.52) | | $ 9.87 |
Class B:
Net Asset Value and offering price per share ($12,476,834 ÷ 1,337,962 shares) A | | $ 9.33 |
| | |
Class C:
Net Asset Value and offering price per share ($29,848,683 ÷ 3,228,183 shares) A | | $ 9.25 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($3,796,905 ÷ 391,840 shares) | | $ 9.69 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Financial Services Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 3,813,685 |
Interest | | 3,096 |
Income from Fidelity Central Funds (including $892,645 from security lending) | | 973,889 |
Total income | | 4,790,670 |
| | |
Expenses | | |
Management fee | $ 791,277 | |
Transfer agent fees | 447,700 | |
Distribution fees | 725,190 | |
Accounting and security lending fees | 58,144 | |
Custodian fees and expenses | 39,474 | |
Independent trustees' compensation | 980 | |
Registration fees | 63,566 | |
Audit | 50,802 | |
Legal | 1,422 | |
Miscellaneous | 14,361 | |
Total expenses before reductions | 2,192,916 | |
Expense reductions | (9,561) | 2,183,355 |
Net investment income (loss) | | 2,607,315 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (88,890,295) | |
Investment not meeting investment restrictions | (2,593) | |
Foreign currency transactions | 31,910 | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 2,593 | |
Total net realized gain (loss) | | (88,858,385) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 30,047,813 | |
Assets and liabilities in foreign currencies | (40) | |
Total change in net unrealized appreciation (depreciation) | | 30,047,773 |
Net gain (loss) | | (58,810,612) |
Net increase (decrease) in net assets resulting from operations | | $ (56,203,297) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 2,607,315 | $ 3,920,838 |
Net realized gain (loss) | (88,858,385) | (25,372,931) |
Change in net unrealized appreciation (depreciation) | 30,047,773 | (75,621,214) |
Net increase (decrease) in net assets resulting from operations | (56,203,297) | (97,073,307) |
Distributions to shareholders from net investment income | (3,219,822) | (2,830,191) |
Distributions to shareholders from net realized gain | (320,528) | (22,361,262) |
Total distributions | (3,540,350) | (25,191,453) |
Share transactions - net increase (decrease) | 1,444,825 | (845,081) |
Redemption fees | 13,297 | 10,552 |
Total increase (decrease) in net assets | (58,285,525) | (123,099,289) |
| | |
Net Assets | | |
Beginning of period | 207,579,431 | 330,678,720 |
End of period (including undistributed net investment income of $1,248,708 and undistributed net investment income of $2,125,111, respectively) | $ 149,293,906 | $ 207,579,431 |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .19 | .30 | .23 | .20 | .19 |
Net realized and unrealized gain (loss) | (3.58) | (6.41) | .92 | 2.02 | 2.48 |
Total from investment operations | (3.39) | (6.11) | 1.15 | 2.22 | 2.67 |
Distributions from net investment income | (.24) | (.27) | (.22) | (.26) | (.07) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.63) | (1.76) |
Total distributions | (.26) | (1.73) | (3.47) H | (1.89) | (1.83) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.53 | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 |
Total Return A,B | (25.87)% | (31.67)% | 4.54% | 10.32% | 12.60% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.29% | 1.21% | 1.23% | 1.25% | 1.26% |
Expenses net of fee waivers, if any | 1.29% | 1.21% | 1.23% | 1.25% | 1.26% |
Expenses net of all reductions | 1.28% | 1.21% | 1.22% | 1.23% | 1.23% |
Net investment income (loss) | 2.12% | 1.75% | 1.01% | .87% | .88% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 68,245 | $ 90,037 | $ 106,722 | $ 85,356 | $ 68,012 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.47 per share is comprised of distributions from net investment income of $.223 and distributions from net realized gain of $3.250 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .16 | .26 | .18 | .15 | .14 |
Net realized and unrealized gain (loss) | (3.56) | (6.41) | .91 | 2.02 | 2.47 |
Total from investment operations | (3.40) | (6.15) | 1.09 | 2.17 | 2.61 |
Distributions from net investment income | (.20) | (.19) | (.16) | (.15) | (.05) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.63) | (1.76) |
Total distributions | (.22) | (1.65) | (3.41) H | (1.78) | (1.81) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.52 | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 |
Total Return A,B | (26.00)% | (31.85)% | 4.25% | 10.11% | 12.37% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.55% | 1.47% | 1.46% | 1.47% | 1.48% |
Expenses net of fee waivers, if any | 1.55% | 1.47% | 1.46% | 1.47% | 1.48% |
Expenses net of all reductions | 1.54% | 1.47% | 1.46% | 1.46% | 1.46% |
Net investment income (loss) | 1.86% | 1.50% | .77% | .65% | .66% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 34,927 | $ 53,526 | $ 95,426 | $ 113,344 | $ 128,388 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.41 per share is comprised of distributions from net investment income of $.156 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .12 | .18 | .06 | .03 | .03 |
Net realized and unrealized gain (loss) | (3.50) | (6.29) | .89 | 1.97 | 2.41 |
Total from investment operations | (3.38) | (6.11) | .95 | 2.00 | 2.44 |
Distributions from net investment income | (.12) | (.04) | (.02) | (.01) | - |
Distributions from net realized gain | (.02) | (1.44) | (3.25) | (1.57) | (1.76) |
Total distributions | (.14) | (1.48) | (3.26) H | (1.58) | (1.76) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.33 | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 |
Total Return A,B | (26.35)% | (32.21)% | 3.71% | 9.52% | 11.78% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.04% | 1.96% | 1.98% | 1.99% | 2.00% |
Expenses net of fee waivers, if any | 2.04% | 1.96% | 1.98% | 1.99% | 2.00% |
Expenses net of all reductions | 2.03% | 1.96% | 1.98% | 1.98% | 1.98% |
Net investment income (loss) | 1.38% | 1.01% | .25% | .13% | .14% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 12,477 | $ 20,420 | $ 64,837 | $ 113,652 | $ 145,046 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.26 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $3.247 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .12 | .17 | .06 | .04 | .04 |
Net realized and unrealized gain (loss) | (3.48) | (6.24) | .90 | 1.98 | 2.42 |
Total from investment operations | (3.36) | (6.07) | .96 | 2.02 | 2.46 |
Distributions from net investment income | (.15) | (.09) | (.05) | (.02) | (.01) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.60) | (1.76) |
Total distributions | (.17) | (1.55) | (3.30) H | (1.62) | (1.77) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.25 | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 |
Total Return A,B | (26.38)% | (32.18)% | 3.75% | 9.58% | 11.88% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.04% | 1.96% | 1.94% | 1.94% | 1.95% |
Expenses net of fee waivers, if any | 2.04% | 1.96% | 1.94% | 1.94% | 1.95% |
Expenses net of all reductions | 2.03% | 1.96% | 1.94% | 1.93% | 1.92% |
Net investment income (loss) | 1.37% | 1.01% | .29% | .18% | .19% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 29,849 | $ 37,777 | $ 55,219 | $ 62,469 | $ 72,181 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.30 per share is comprised of distributions from net investment income of $.049 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .21 | .36 | .31 | .29 | .29 |
Net realized and unrealized gain (loss) | (3.63) | (6.51) | .93 | 2.05 | 2.50 |
Total from investment operations | (3.42) | (6.15) | 1.24 | 2.34 | 2.79 |
Distributions from net investment income | (.25) | (.33) | (.30) | (.37) | (.11) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.63) | (1.76) |
Total distributions | (.27) | (1.79) | (3.55) G | (2.00) | (1.87) |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 9.69 | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 |
Total Return A | (25.68)% | (31.47)% | 4.88% | 10.78% | 13.06% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 1.04% | .93% | .89% | .86% | .86% |
Expenses net of fee waivers, if any | 1.04% | .93% | .89% | .86% | .86% |
Expenses net of all reductions | 1.03% | .92% | .88% | .85% | .84% |
Net investment income (loss) | 2.37% | 2.04% | 1.34% | 1.26% | 1.28% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,797 | $ 5,819 | $ 8,474 | $ 11,892 | $ 12,629 |
Portfolio turnover rate D | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
G Total distributions of $3.55 per share is comprised of distributions from net investment income of $.298 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Financial Services Fund (the Fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Financial Services
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 24,622,992 | |
Unrealized depreciation | (13,962,815) | |
Net unrealized appreciation (depreciation) | $ 10,660,177 | |
Undistributed ordinary income | $ 1,280,618 | |
Capital loss carryforward | $ (55,672,202) | |
Cost for federal income tax purposes | $ 151,611,299 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 3,219,822 | $ 3,522,419 |
Long-term Capital Gains | 320,528 | 21,669,034 |
Total | $ 3,540,350 | $ 25,191,453 |
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.
Annual Report
Notes to Financial Statements - continued
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 $389,494,837 and $376,625,610, respectively.
The Fund realized a loss of $2,593 on the sale of an investment not meeting the investment restrictions of the Fund. The loss was fully reimbursed by the Fund's investment advisor.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 156,975 | $ 2,652 |
Class T | .25% | .25% | 172,146 | 1,242 |
Class B | .75% | .25% | 126,814 | 95,214 |
Class C | .75% | .25% | 269,255 | 66,998 |
| | | $ 725,190 | $ 166,106 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 58,766 |
Class T | 8,548 |
Class B* | 33,196 |
Class C* | 12,567 |
| $ 113,077 |
* 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
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
Average
Net Assets |
Class A | $ 198,975 | .32 |
Class T | 112,385 | .33 |
Class B | 39,964 | .31 |
Class C | 85,377 | .32 |
Institutional Class | 10,999 | .31 |
| $ 447,700 | |
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 $77,056 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $637 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $9,561 for the period.
Annual Report
Notes to Financial Statements - continued
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 1,698,174 | $ 1,429,035 |
Class T | 781,807 | 833,715 |
Class B | 182,682 | 103,026 |
Class C | 461,265 | 241,388 |
Institutional Class | 95,894 | 223,027 |
Total | $ 3,219,822 | $ 2,830,191 |
From net realized gain | | |
Class A | $ 139,687 | $ 7,599,793 |
Class T | 80,989 | 6,343,916 |
Class B | 31,565 | 3,935,726 |
Class C | 60,568 | 3,829,942 |
Institutional Class | 7,719 | 651,885 |
Total | $ 320,528 | $ 22,361,262 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,723,908 | 3,476,462 | $ 24,853,928 | $ 58,217,275 |
Reinvestment of distributions | 159,397 | 413,881 | 1,638,390 | 8,062,306 |
Shares redeemed | (2,556,039) | (2,133,725) | (22,026,835) | (36,028,050) |
Net increase (decrease) | 327,266 | 1,756,618 | $ 4,465,483 | $ 30,251,531 |
Class T | | | | |
Shares sold | 995,392 | 825,338 | $ 8,604,735 | $ 13,397,557 |
Reinvestment of distributions | 77,111 | 344,513 | 791,775 | 6,720,713 |
Shares redeemed | (1,475,806) | (1,652,503) | (12,935,480) | (28,919,771) |
Net increase (decrease) | (403,303) | (482,652) | $ (3,538,970) | $ (8,801,501) |
Class B | | | | |
Shares sold | 506,058 | 511,474 | $ 4,460,037 | $ 8,246,792 |
Reinvestment of distributions | 19,064 | 187,873 | 185,301 | 3,607,784 |
Shares redeemed | (776,048) | (2,282,248) | (6,568,493) | (40,060,805) |
Net increase (decrease) | (250,926) | (1,582,901) | $ (1,923,155) | $ (28,206,229) |
Class C | | | | |
Shares sold | 1,273,214 | 1,114,854 | $ 11,448,111 | $ 17,550,045 |
Reinvestment of distributions | 43,964 | 173,040 | 431,812 | 3,294,216 |
Shares redeemed | (1,045,476) | (1,038,077) | (8,677,353) | (17,222,702) |
Net increase (decrease) | 271,702 | 249,817 | $ 3,202,570 | $ 3,621,559 |
Institutional Class | | | | |
Shares sold | 270,723 | 1,075,511 | $ 2,262,133 | $ 20,129,434 |
Reinvestment of distributions | 6,287 | 36,137 | 65,572 | 687,993 |
Shares redeemed | (320,256) | (1,074,000) | (3,088,808) | (18,527,868) |
Net increase (decrease) | (43,246) | 37,648 | $ (761,103) | $ 2,289,559 |
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.
Financial Services
Advisor Health Care Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, 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, 2009 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) | -16.47% | 1.50% | 1.68% |
Class T (incl. 3.50% sales charge) | -14.74% | 1.71% | 1.67% |
Class B (incl. contingent deferred sales charge) A | -16.37% | 1.60% | 1.76% |
Class C (incl. contingent deferred sales charge) B | -12.95% | 1.96% | 1.56% |
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, 1999, 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
Advisor Health Care Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -11.37%, -11.65%, -12.07% and -12.09%, respectively (excluding sales charges), narrowly underperforming the MSCI® US Investable Market Health Care Index, which returned -10.73%, but beating the S&P 500®. Early in the period, the economic downturn took its toll on Mosaic and Monsanto, two out-of-benchmark fertilizers/agricultural chemicals stocks, and on Thermo Fisher Scientific, which makes analytical instruments and laboratory equipment. We sold our positions in Mosaic and Thermo Fisher. Underweightings in pharmaceuticals heavyweights Johnson & Johnson and Pfizer hurt during the flight to quality that followed the downturn. An out-of-benchmark investment in Switzerland-based Alcon, a maker of eye-care products, also detracted, and we sold this position. The fund's foreign holdings disappointed, overall, hampered in part by currency fluctuations. Some of the fund's losses were recouped later in the period. We benefited from good stock picking in the pharmaceuticals industry, including overweightings in Wyeth and Schering-Plough, which were acquired; an underweighting in Abbott Laboratories, which lost ground; and an out-of-benchmark investment in Teva Pharmaceutical, a maker of generic drugs. Our investments in Genentech, a biotech firm that was acquired, and in pharmacy benefits manager Medco Health Solutions also boosted relative performance.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2009, the fund's Institutional Class shares returned -11.19%, narrowly underperforming the MSCI® US Investable Market Health Care Index, which returned - -10.73%, but beating the S&P 500®. Early in the period, the economic downturn took its toll on Mosaic and Monsanto, two out-of-benchmark fertilizers/agricultural chemicals stocks, and on Thermo Fisher Scientific, which makes analytical instruments and laboratory equipment. We sold our positions in Mosaic and Thermo Fisher. Underweightings in pharmaceuticals heavyweights Johnson & Johnson and Pfizer hurt during the defensive flight to quality that followed the downturn. An out-of-benchmark investment in Switzerland-based Alcon, a maker of eye-care products, also detracted, and we sold this position. The fund's foreign holdings disappointed overall, hampered in part by currency fluctuations. Some of the fund's losses were recouped later in the period. We benefited from good stock picking in the pharmaceuticals industry, including overweightings in Wyeth and Schering-Plough, which were acquired; an underweighting in Abbott Laboratories, which lost ground; and an out-of-benchmark investment in Teva Pharmaceutical, a maker of generic drugs. Our investments in Genentech, a biotech firm that was acquired, and in pharmacy benefits manager Medco Health Solutions also boosted relative performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
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, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.24% | | | |
Actual | | $ 1,000.00 | $ 1,150.20 | $ 6.61 |
Hypothetical A | | $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.51% | | | |
Actual | | $ 1,000.00 | $ 1,148.70 | $ 8.04 |
Hypothetical A | | $ 1,000.00 | $ 1,017.31 | $ 7.55 |
Class B | 1.99% | | | |
Actual | | $ 1,000.00 | $ 1,145.60 | $ 10.59 |
HypotheticalA | | $ 1,000.00 | $ 1,014.93 | $ 9.94 |
Class C | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,145.10 | $ 10.64 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | .99% | | | |
Actual | | $ 1,000.00 | $ 1,151.60 | $ 5.28 |
HypotheticalA | | $ 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).
Health Care
Advisor Health Care Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Pfizer, Inc. | 7.6 | 6.5 |
Covidien PLC | 5.5 | 4.4 |
Allergan, Inc. | 5.3 | 1.7 |
Medco Health Solutions, Inc. | 5.1 | 5.3 |
Amgen, Inc. | 4.9 | 3.4 |
Merck & Co., Inc. | 4.7 | 6.4 |
Express Scripts, Inc. | 4.0 | 2.4 |
Baxter International, Inc. | 3.6 | 4.7 |
Illumina, Inc. | 3.0 | 1.1 |
CIGNA Corp. | 3.0 | 0.0 |
| 46.7 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Pharmaceuticals | 25.4% | |
| Health Care
Equipment & Supplies | 23.3% | |
| Health Care
Providers & Services | 21.3% | |
| Biotechnology | 14.4% | |
| Life Sciences
Tools & Services | 10.7% | |
| All Others* | 4.9% | |
As of January 31, 2009 |
| Pharmaceuticals | 35.4% | |
| Biotechnology | 20.6% | |
| Health Care
Providers & Services | 20.4% | |
| Health Care
Equipment & Supplies | 18.0% | |
| Life Sciences
Tools & Services | 2.9% | |
| All Others* | 2.7% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Health Care Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.7% |
| Shares | | Value |
BIOTECHNOLOGY - 14.4% |
Biotechnology - 14.4% |
Alexion Pharmaceuticals, Inc. (a) | 68,312 | | $ 3,009,144 |
Alnylam Pharmaceuticals, Inc. (a) | 52,137 | | 1,213,228 |
Amgen, Inc. (a) | 308,312 | | 19,210,921 |
Biogen Idec, Inc. (a) | 175,479 | | 8,344,026 |
BioMarin Pharmaceutical, Inc. (a) | 192,767 | | 3,163,306 |
Dendreon Corp. (a) | 38,700 | | 936,927 |
Genzyme Corp. (a) | 18,500 | | 959,965 |
Gilead Sciences, Inc. (a) | 122,811 | | 6,009,142 |
GTx, Inc. (a)(c) | 49,917 | | 525,127 |
Human Genome Sciences, Inc. (a) | 11,900 | | 170,170 |
ImmunoGen, Inc. (a) | 6,700 | | 58,223 |
Micromet, Inc. (a) | 30,900 | | 198,687 |
Momenta Pharmaceuticals, Inc. (a)(c) | 54,305 | | 589,209 |
Myriad Genetics, Inc. (a) | 101,341 | | 2,778,770 |
OncoGenex Pharmaceuticals, Inc. (a) | 23,098 | | 674,000 |
OSI Pharmaceuticals, Inc. (a) | 63,000 | | 2,128,770 |
Targacept, Inc. (a) | 5,000 | | 53,650 |
Theravance, Inc. (a) | 82,913 | | 1,251,986 |
United Therapeutics Corp. (a) | 51,200 | | 4,742,144 |
| | 56,017,395 |
CHEMICALS - 0.7% |
Fertilizers & Agricultural Chemicals - 0.7% |
Monsanto Co. | 32,900 | | 2,763,600 |
DIVERSIFIED CONSUMER SERVICES - 0.5% |
Specialized Consumer Services - 0.5% |
Carriage Services, Inc. Class A (a) | 252,255 | | 925,776 |
Stewart Enterprises, Inc. Class A | 186,543 | | 912,195 |
| | 1,837,971 |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.5% |
Electronic Equipment & Instruments - 0.5% |
Agilent Technologies, Inc. | 92,100 | | 2,138,562 |
FOOD & STAPLES RETAILING - 1.0% |
Drug Retail - 1.0% |
CVS Caremark Corp. | 112,653 | | 3,771,622 |
HEALTH CARE EQUIPMENT & SUPPLIES - 23.3% |
Health Care Equipment - 19.2% |
Abiomed, Inc. (a) | 154,409 | | 1,165,788 |
Baxter International, Inc. | 248,076 | | 13,984,044 |
Boston Scientific Corp. (a) | 706,042 | | 7,582,891 |
C.R. Bard, Inc. | 136,131 | | 10,015,158 |
Conceptus, Inc. (a) | 96,217 | | 1,615,483 |
Covidien PLC | 564,145 | | 21,330,322 |
Edwards Lifesciences Corp. (a) | 71,686 | | 4,688,981 |
Electro-Optical Sciences, Inc.: | | | |
warrants 11/2/11 (a)(f) | 60,018 | | 217,950 |
warrants 8/2/12 (a)(f) | 16,500 | | 62,672 |
|
| Shares | | Value |
ev3, Inc. (a) | 170,583 | | $ 2,093,053 |
HeartWare International, Inc. unit (a) | 668,258 | | 435,914 |
Kinetic Concepts, Inc. (a) | 31,200 | | 986,544 |
Masimo Corp. (a) | 32,592 | | 796,874 |
Micrus Endovascular Corp. (a) | 136,736 | | 1,231,991 |
Nobel Biocare Holding AG (Switzerland) | 89,747 | | 2,131,455 |
NuVasive, Inc. (a) | 68,000 | | 2,814,520 |
Orthofix International NV (a) | 37,017 | | 1,031,294 |
St. Jude Medical, Inc. (a) | 61,600 | | 2,322,936 |
William Demant Holding AS (a) | 1,600 | | 95,236 |
| | 74,603,106 |
Health Care Supplies - 4.1% |
Align Technology, Inc. (a)(c) | 84,648 | | 923,510 |
Cooper Companies, Inc. | 153,811 | | 4,220,574 |
InfuSystems Holdings, Inc. (a) | 453,700 | | 1,134,250 |
InfuSystems Holdings, Inc. warrants 4/11/11 (a) | 41,900 | | 2,095 |
Inverness Medical Innovations, Inc. (a) | 211,080 | | 7,102,842 |
Quidel Corp. (a) | 82,529 | | 1,232,158 |
RTI Biologics, Inc. (a) | 283,750 | | 1,257,013 |
| | 15,872,442 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 90,475,548 |
HEALTH CARE PROVIDERS & SERVICES - 21.3% |
Health Care Distributors & Services - 1.8% |
Henry Schein, Inc. (a) | 103,403 | | 5,312,846 |
Profarma Distribuidora de Produtos Farmaceuticos SA (a) | 214,800 | | 1,554,019 |
| | 6,866,865 |
Health Care Facilities - 2.1% |
Hanger Orthopedic Group, Inc. (a) | 155,165 | | 2,128,864 |
Health Management Associates, Inc. Class A (a) | 461,400 | | 2,782,242 |
Universal Health Services, Inc. Class B | 61,359 | | 3,412,174 |
| | 8,323,280 |
Health Care Services - 10.2% |
Express Scripts, Inc. (a) | 225,026 | | 15,760,821 |
Fresenius Medical Care AG & Co. KGaA sponsored ADR | 40,600 | | 1,863,134 |
Genoptix, Inc. (a) | 22,700 | | 710,737 |
Health Grades, Inc. (a) | 301,898 | | 1,443,072 |
Medco Health Solutions, Inc. (a) | 374,915 | | 19,818,007 |
| | 39,595,771 |
Managed Health Care - 7.2% |
Aetna, Inc. | 76,900 | | 2,073,993 |
CIGNA Corp. | 408,200 | | 11,592,880 |
Health Net, Inc. (a) | 128,100 | | 1,733,193 |
Humana, Inc. (a) | 152,379 | | 5,005,650 |
Common Stocks - continued |
| Shares | | Value |
HEALTH CARE PROVIDERS & SERVICES - CONTINUED |
Managed Health Care - continued |
UnitedHealth Group, Inc. | 161,169 | | $ 4,522,402 |
WellPoint, Inc. (a) | 58,300 | | 3,068,912 |
| | 27,997,030 |
TOTAL HEALTH CARE PROVIDERS & SERVICES | | 82,782,946 |
HEALTH CARE TECHNOLOGY - 0.8% |
Health Care Technology - 0.8% |
Allscripts-Misys Healthcare Solutions, Inc. | 78,027 | | 1,344,405 |
Cerner Corp. (a)(c) | 15,427 | | 1,003,989 |
MedAssets, Inc. (a) | 31,114 | | 581,210 |
| | 2,929,604 |
INTERNET SOFTWARE & SERVICES - 0.4% |
Internet Software & Services - 0.4% |
WebMD Health Corp. Class A (a) | 46,757 | | 1,562,151 |
LIFE SCIENCES TOOLS & SERVICES - 10.7% |
Life Sciences Tools & Services - 10.7% |
Bruker BioSciences Corp. (a) | 210,704 | | 2,119,682 |
Illumina, Inc. (a) | 321,284 | | 11,611,204 |
Life Technologies Corp. (a) | 201,119 | | 9,156,948 |
Millipore Corp. (a) | 31,500 | | 2,192,400 |
PerkinElmer, Inc. | 150,800 | | 2,658,604 |
QIAGEN NV (a) | 423,171 | | 8,023,322 |
Waters Corp. (a) | 117,706 | | 5,914,727 |
| | 41,676,887 |
PHARMACEUTICALS - 25.1% |
Pharmaceuticals - 25.1% |
Abbott Laboratories | 105,763 | | 4,758,277 |
Allergan, Inc. | 380,763 | | 20,344,167 |
Ardea Biosciences, Inc. (a) | 58,800 | | 1,145,424 |
Auxilium Pharmaceuticals, Inc. (a) | 21,400 | | 661,902 |
Cadence Pharmaceuticals, Inc. (a) | 136,986 | | 1,657,531 |
Cardiome Pharma Corp. (a) | 156,000 | | 650,151 |
Johnson & Johnson | 46,109 | | 2,807,577 |
King Pharmaceuticals, Inc. (a) | 423,100 | | 3,837,517 |
Merck & Co., Inc. | 610,551 | | 18,322,636 |
Optimer Pharmaceuticals, Inc. (a) | 83,562 | | 1,177,389 |
Pfizer, Inc. | 1,859,221 | | 29,617,393 |
Piramal Healthcare Ltd. | 61,392 | | 401,728 |
Pronova BioPharma ASA (a) | 253,100 | | 788,364 |
Roche Holding AG (participation certificate) | 22,966 | | 3,621,177 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 125,882 | | 6,714,546 |
XenoPort, Inc. (a) | 46,791 | | 950,325 |
| | 97,456,104 |
TOTAL COMMON STOCKS (Cost $350,331,398) | 383,412,390 |
Nonconvertible Bonds - 0.3% |
| Principal Amount | | Value |
PHARMACEUTICALS - 0.3% |
Pharmaceuticals - 0.3% |
Elan Finance PLC/Elan Finance Corp. 4.8831% 11/15/11 (d)
(Cost $866,072) | | $ 1,100,000 | | $ 1,045,000 |
Money Market Funds - 1.5% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (e) | 3,717,248 | | 3,717,248 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(e) | 2,289,750 | | 2,289,750 |
TOTAL MONEY MARKET FUNDS (Cost $6,006,998) | 6,006,998 |
TOTAL INVESTMENT PORTFOLIO - 100.5% (Cost $357,204,468) | | 390,464,388 |
NET OTHER ASSETS - (0.5)% | | (1,967,478) |
NET ASSETS - 100% | $ 388,496,910 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(e) 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. |
(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 $280,622 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Electro-Optical Sciences, Inc. warrants 11/2/11 | 11/1/06 | $ 6 |
Electro-Optical Sciences, Inc. warrants 8/2/12 | 8/1/07 | $ 17 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 74,419 |
Fidelity Securities Lending Cash Central Fund | 175,315 |
Total | $ 249,734 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 1,837,971 | $ 1,837,971 | $ - | $ - |
Consumer Staples | 3,771,622 | 3,771,622 | - | - |
Health Care | 371,338,484 | 371,057,862 | 280,622 | - |
Information Technology | 3,700,713 | 3,700,713 | - | - |
Materials | 2,763,600 | 2,763,600 | - | - |
Corporate Bonds | 1,045,000 | - | 1,045,000 | - |
Money Market Funds | 6,006,998 | 6,006,998 | - | - |
Total Investments in Securities | $ 390,464,388 | $ 389,138,766 | $ 1,325,622 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.6% |
Ireland | 5.8% |
Netherlands | 2.1% |
Israel | 1.7% |
Switzerland | 1.4% |
Others (individually less than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $30,833,729 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $34,215,799 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Advisor Health Care Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $2,191,377) - See accompanying schedule: Unaffiliated issuers (cost $351,197,470) | $ 384,457,390 | |
Fidelity Central Funds (cost $6,006,998) | 6,006,998 | |
Total Investments (cost $357,204,468) | | $ 390,464,388 |
Cash | | 17,869 |
Foreign currency held at value (cost $7,193) | | 7,247 |
Receivable for investments sold | | 7,850,744 |
Receivable for fund shares sold | | 155,936 |
Dividends receivable | | 207,481 |
Interest receivable | | 11,191 |
Distributions receivable from Fidelity Central Funds | | 4,573 |
Prepaid expenses | | 1,751 |
Other receivables | | 35,737 |
Total assets | | 398,756,917 |
| | |
Liabilities | | |
Payable for investments purchased | $ 6,770,664 | |
Payable for fund shares redeemed | 715,137 | |
Accrued management fee | 173,797 | |
Distribution fees payable | 150,930 | |
Other affiliated payables | 116,855 | |
Other payables and accrued expenses | 42,874 | |
Collateral on securities loaned, at value | 2,289,750 | |
Total liabilities | | 10,260,007 |
| | |
Net Assets | | $ 388,496,910 |
Net Assets consist of: | | |
Paid in capital | | $ 429,184,577 |
Undistributed net investment income | | 43,822 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (73,985,169) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 33,253,680 |
Net Assets | | $ 388,496,910 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($177,889,969 ÷ 10,373,850 shares) | | $ 17.15 |
| | |
Maximum offering price per share (100/94.25 of $17.15) | | $ 18.20 |
Class T:
Net Asset Value and redemption price per share ($103,771,912 ÷ 6,217,297 shares) | | $ 16.69 |
| | |
Maximum offering price per share (100/96.50 of $16.69) | | $ 17.30 |
Class B:
Net Asset Value and offering price per share ($29,380,641 ÷ 1,866,452 shares) A | | $ 15.74 |
| | |
Class C:
Net Asset Value and offering price per share ($64,002,225 ÷ 4,075,838 shares) A | | $ 15.70 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($13,452,163 ÷ 756,564 shares) | | $ 17.78 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Health Care Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 4,826,076 |
Interest | | 142,746 |
Income from Fidelity Central Funds | | 249,734 |
Total income | | 5,218,556 |
| | |
Expenses | | |
Management fee | $ 2,196,970 | |
Transfer agent fees | 1,253,984 | |
Distribution fees | 1,938,962 | |
Accounting and security lending fees | 154,294 | |
Custodian fees and expenses | 65,068 | |
Independent trustees' compensation | 2,709 | |
Registration fees | 65,946 | |
Audit | 61,185 | |
Legal | 3,101 | |
Miscellaneous | 31,275 | |
Total expenses before reductions | 5,773,494 | |
Expense reductions | (8,456) | 5,765,038 |
Net investment income (loss) | | (546,482) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (71,886,398) | |
Foreign currency transactions | (94,820) | |
Total net realized gain (loss) | | (71,981,218) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 3,793,021 | |
Assets and liabilities in foreign currencies | (3,343) | |
Total change in net unrealized appreciation (depreciation) | | 3,789,678 |
Net gain (loss) | | (68,191,540) |
Net increase (decrease) in net assets resulting from operations | | $ (68,738,022) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (546,482) | $ (2,555,905) |
Net realized gain (loss) | (71,981,218) | 27,558,745 |
Change in net unrealized appreciation (depreciation) | 3,789,678 | (58,670,581) |
Net increase (decrease) in net assets resulting from operations | (68,738,022) | (33,667,741) |
Distributions to shareholders from net realized gain | (9,966,416) | (58,232,148) |
Share transactions - net increase (decrease) | (54,481,101) | (48,796,453) |
Redemption fees | 10,268 | 7,557 |
Total increase (decrease) in net assets | (133,175,271) | (140,688,785) |
| | |
Net Assets | | |
Beginning of period | 521,672,181 | 662,360,966 |
End of period (including undistributed net investment income of $43,822 and accumulated net investment loss of $71, respectively) | $ 388,496,910 | $ 521,672,181 |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.03) | (.03) | (.09) | (.05) |
Net realized and unrealized gain (loss) | (2.22) | (1.08) | 1.91 | .96 | 4.08 |
Total from investment operations | (2.20) | (1.11) | 1.88 | .87 | 4.03 |
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 | $ 17.15 | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 |
Total Return A,B | (11.37)% | (5.64)% | 8.54% | 3.79% | 21.31% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.23% | 1.20% | 1.22% | 1.25% | 1.28% |
Expenses net of fee waivers, if any | 1.23% | 1.20% | 1.22% | 1.25% | 1.28% |
Expenses net of all reductions | 1.23% | 1.19% | 1.21% | 1.21% | 1.26% |
Net investment income (loss) | .11% | (.13)% | (.14)% | (.38)% | (.22)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 177,890 | $ 220,888 | $ 234,656 | $ 199,221 | $ 139,158 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.02) | (.08) | (.09) | (.15) | (.09) |
Net realized and unrealized gain (loss) | (2.18) | (1.06) | 1.87 | .95 | 3.99 |
Total from investment operations | (2.20) | (1.14) | 1.78 | .80 | 3.90 |
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 | $ 16.69 | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 |
Total Return A,B | (11.65)% | (5.86)% | 8.25% | 3.55% | 20.97% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.49% | 1.46% | 1.48% | 1.50% | 1.53% |
Expenses net of fee waivers, if any | 1.49% | 1.46% | 1.48% | 1.50% | 1.53% |
Expenses net of all reductions | 1.49% | 1.45% | 1.47% | 1.47% | 1.51% |
Net investment income (loss) | (.15)% | (.40)% | (.40)% | (.63)% | (.47)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 103,772 | $ 143,237 | $ 186,628 | $ 218,280 | $ 243,353 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) | (.18) | (.20) | (.25) | (.19) |
Net realized and unrealized gain (loss) | (2.07) | (.99) | 1.79 | .91 | 3.83 |
Total from investment operations | (2.16) | (1.17) | 1.59 | .66 | 3.64 |
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 | $ 15.74 | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 |
Total Return A,B | (12.07)% | (6.30)% | 7.66% | 3.06% | 20.32% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.98% | 1.95% | 1.99% | 2.01% | 2.04% |
Expenses net of fee waivers, if any | 1.98% | 1.95% | 1.99% | 2.01% | 2.04% |
Expenses net of all reductions | 1.98% | 1.94% | 1.98% | 1.98% | 2.01% |
Net investment income (loss) | (.64)% | (.89)% | (.91)% | (1.14)% | (.98)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 29,381 | $ 55,589 | $ 113,384 | $ 180,364 | $ 266,319 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) | (.17) | (.19) | (.24) | (.17) |
Net realized and unrealized gain (loss) | (2.07) | (1.00) | 1.79 | .91 | 3.84 |
Total from investment operations | (2.16) | (1.17) | 1.60 | .67 | 3.67 |
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 | $ 15.70 | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 |
Total Return A,B | (12.09)% | (6.31)% | 7.75% | 3.10% | 20.46% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.98% | 1.94% | 1.94% | 1.94% | 1.97% |
Expenses net of fee waivers, if any | 1.98% | 1.94% | 1.94% | 1.94% | 1.97% |
Expenses net of all reductions | 1.98% | 1.94% | 1.93% | 1.91% | 1.94% |
Net investment income (loss) | (.64)% | (.88)% | (.86)% | (1.07)% | (.91)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 64,002 | $ 83,133 | $ 105,519 | $ 115,644 | $ 131,277 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .06 | .03 | .05 | - F | .04 |
Net realized and unrealized gain (loss) | (2.30) | (1.12) | 1.96 | .99 | 4.16 |
Total from investment operations | (2.24) | (1.09) | 2.01 | .99 | 4.20 |
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 | $ 17.78 | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 |
Total Return A | (11.19)% | (5.36)% | 8.90% | 4.21% | 21.78% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | .98% | .93% | .88% | .86% | .88% |
Expenses net of fee waivers, if any | .98% | .93% | .88% | .86% | .88% |
Expenses net of all reductions | .98% | .92% | .87% | .83% | .85% |
Net investment income (loss) | .36% | .14% | .19% | .01% | .18% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,452 | $ 18,825 | $ 22,174 | $ 20,652 | $ 19,698 |
Portfolio turnover rate D | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Health Care
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Health Care Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, market discount, partnerships, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 42,847,538 | |
Unrealized depreciation | (18,485,678) | |
Net unrealized appreciation (depreciation) | $ 24,361,860 | |
Capital loss carryforward | $ (30,833,729) | |
Cost for federal income tax purposes | $ 366,102,528 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ - | $ 10,044,071 |
Long-term Capital Gains | 9,966,416 | 48,188,077 |
Total | $ 9,966,416 | $ 58,232,148 |
Health Care
3. Significant Accounting Policies - continued
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 $672,225,886 and $733,888,669, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 430,420 | $ 9,614 |
Class T | .25% | .25% | 528,384 | 4,392 |
Class B | .75% | .25% | 350,642 | 263,466 |
Class C | .75% | .25% | 629,516 | 30,301 |
| | | $ 1,938,962 | $ 307,773 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 27,912 |
Class T | 13,756 |
Class B* | 59,931 |
Class C* | 2,458 |
| $ 104,057 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 549,723 | .32 |
Class T | 348,327 | .33 |
Class B | 111,218 | .32 |
Class C | 201,410 | .32 |
Institutional Class | 43,306 | .32 |
| $ 1,253,984 | |
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 $11,748 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $1,797 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $175,315.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $8,419 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction | |
Class A | $ 35 | |
Institutional Class | 2 | |
| $ 37 | |
Health Care
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ 4,165,896 | $ 21,294,782 |
Class T | 2,716,500 | 16,323,384 |
Class B | 1,072,948 | 9,098,884 |
Class C | 1,667,891 | 9,241,641 |
Institutional Class | 343,181 | 2,273,457 |
Total | $ 9,966,416 | $ 58,232,148 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,119,806 | 3,081,992 | $ 33,600,941 | $ 65,718,810 |
Reinvestment of distributions | 190,190 | 845,716 | 3,682,080 | 18,561,495 |
Shares redeemed | (3,135,479) | (2,977,484) | (48,422,714) | (63,109,379) |
Net increase (decrease) | (825,483) | 950,224 | $ (11,139,693) | $ 21,170,926 |
Class T | | | | |
Shares sold | 602,296 | 746,344 | $ 9,206,132 | $ 15,578,653 |
Reinvestment of distributions | 135,003 | 718,829 | 2,550,205 | 15,418,473 |
Shares redeemed | (1,958,228) | (2,364,110) | (29,483,941) | (48,580,585) |
Net increase (decrease) | (1,220,929) | (898,937) | $ (17,727,604) | $ (17,583,459) |
Class B | | | | |
Shares sold | 212,561 | 261,619 | $ 3,135,162 | $ 5,241,565 |
Reinvestment of distributions | 53,957 | 400,851 | 965,289 | 8,175,269 |
Shares redeemed | (1,442,718) | (2,945,003) | (20,918,367) | (58,341,596) |
Net increase (decrease) | (1,176,200) | (2,282,533) | $ (16,817,916) | $ (44,924,762) |
Class C | | | | |
Shares sold | 511,934 | 383,741 | $ 7,440,670 | $ 7,630,409 |
Reinvestment of distributions | 74,490 | 358,758 | 1,329,646 | 7,307,934 |
Shares redeemed | (1,071,755) | (1,138,609) | (15,223,014) | (22,157,508) |
Net increase (decrease) | (485,331) | (396,110) | $ (6,452,698) | $ (7,219,165) |
Institutional Class | | | | |
Shares sold | 260,510 | 423,102 | $ 4,409,032 | $ 9,559,061 |
Reinvestment of distributions | 12,578 | 64,316 | 251,944 | 1,455,613 |
Shares redeemed | (439,916) | (503,017) | (7,004,166) | (11,254,667) |
Net increase (decrease) | (166,828) | (15,599) | $ (2,343,190) | $ (239,993) |
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
Advisor Industrials Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge)C | -26.95% | 3.38% | 4.77% |
Class T (incl. 3.50% sales charge)C | -25.39% | 3.61% | 4.77% |
Class B (incl. contingent deferred sales charge) A, C | -26.94% | 3.48% | 4.84% |
Class C (incl. contingent deferred sales charge) B, C | -23.86% | 3.83% | 4.62% |
A Class B shares contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
C Prior to October 1, 2006, Advisor Industrials operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Industrials Fund - Class A on July 31, 1999, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Industrials Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -22.49%, -22.68%, -23.10% and -23.09%, respectively (excluding sales charges), topping the -30.10% mark of the MSCI® US Investable Market Industrials Index but trailing the S&P 500®. Versus the MSCI index, the fund benefited from an underweighting and favorable stock picking in industrial conglomerates. Stock selection in the tires and rubber group also helped our results, as did a combination of rewarding stock and industry positioning in aerospace and defense, electrical components and equipment, and air freight and logistics. Further, a modest cash position was timely when the market was declining. Major index component General Electric was our top contributor due to the fund's large underweighting in that poorly performing stock. As the financial crisis worsened, I became increasingly concerned about the exposure of GE's finance division to the rising rate of defaults among its commercial borrowers. I'll also mention Goodyear Tire and Rubber, an out-of-index holding, and package carrier United Parcel Service, both of which helped our results. In the case of Ingersoll-Rand, a maker of commercial air conditioning and climate control systems, avoiding a lot of the steep decline that occurred in October 2008 and increasing the position near the stock's lows accounted for much of the fund's outperformance. Home improvement and building products supplier Masco further bolstered performance. Conversely, a beneficial overweighting in heavy electrical equipment was outweighed by poor stock selection in the group. Weak stock and market selection in industrial machinery hampered performance as well, as did the fund's foreign holdings, which were hurt in part by currency movements. At the stock level, not owning industrial conglomerate 3M worked against us when the market was falling, although I established a position in the stock when it got too cheap to resist and our holdings returned about 58% during the period. Denmark-based Vestas Wind Systems, which had aided the fund's results in prior periods, was a drag on performance this time around. Construction and engineering holding Shaw Group was hurt by the weaker outlook for energy-related projects. Similar comments apply to industrial equipment maker SPX, which derives a significant portion of its revenues from projects for energy companies. Vestas, Shaw Group and SPX were sold during the period.
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund: During the past year, the fund's Institutional Class shares returned -22.31%, topping the -30.10% mark of the MSCI® US Investable Market Industrials Index but trailing the S&P 500®. Versus the MSCI index, the fund benefited from an underweighting and favorable stock picking in industrial conglomerates. Stock selection in the tires and rubber group also helped our results, as did a combination of rewarding stock and industry positioning in aerospace and defense, electrical components and equipment, and air freight and logistics. Further, a modest cash position was timely when the market was declining. Major index component General Electric was our top contributor due to the fund's large underweighting in that poorly performing stock. As the financial crisis worsened, I became increasingly concerned about the exposure of GE's finance division to the rising rate of defaults among its commercial borrowers. I'll also mention Goodyear Tire and Rubber, an out-of-index holding, and package carrier United Parcel Service, both of which helped our results. In the case of Ingersoll-Rand, a maker of commercial air conditioning and climate control systems, avoiding a lot of the steep decline that occurred in October 2008 and increasing the position near the stock's lows accounted for much of the fund's outperformance. Home improvement and building products supplier Masco further aided performance. Conversely, a beneficial overweighting in heavy electrical equipment was outweighed by poor stock selection in the group. Weak stock and market selection in industrial machinery hampered performance as well, as did the fund's foreign holdings, which were hurt in part by currency movements. At the stock level, not owning industrial conglomerate 3M worked against us when the market was falling, although I established a position in the stock when it got too cheap to resist and our holdings returned about 58% during the period. Denmark-based Vestas Wind Systems, which had aided the fund's results in prior periods, was a drag on performance this time around. Construction and engineering holding Shaw Group was hurt by the weaker outlook for energy-related projects. Similar comments apply to industrial equipment maker SPX, which derives a significant portion of its revenues from projects for energy companies. Vestas, Shaw Group and SPX were sold during the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Industrials
Advisor Industrials Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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 Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.25% | | | |
Actual | | $ 1,000.00 | $ 1,318.00 | $ 7.18 |
HypotheticalA | | $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | 1.51% | | | |
Actual | | $ 1,000.00 | $ 1,316.50 | $ 8.67 |
HypotheticalA | | $ 1,000.00 | $ 1,017.31 | $ 7.55 |
Class B | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,313.00 | $ 11.47 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,313.00 | $ 11.47 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | .97% | | | |
Actual | | $ 1,000.00 | $ 1,320.00 | $ 5.58 |
HypotheticalA | | $ 1,000.00 | $ 1,019.98 | $ 4.86 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Advisor Industrials Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
United Technologies Corp. | 5.6 | 6.9 |
Union Pacific Corp. | 5.0 | 4.0 |
Honeywell International, Inc. | 4.6 | 6.4 |
General Electric Co. | 4.4 | 1.7 |
Cummins, Inc. | 3.2 | 3.3 |
Danaher Corp. | 3.1 | 4.0 |
3M Co. | 3.1 | 0.0 |
Lockheed Martin Corp. | 2.8 | 3.9 |
Ingersoll-Rand Co. Ltd. | 2.6 | 0.8 |
Masco Corp. | 2.6 | 1.5 |
| 37.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Aerospace & Defense | 19.0% | |
| Machinery | 18.5% | |
| Road & Rail | 14.0% | |
| Industrial Conglomerates | 10.3% | |
| Electrical Equipment | 8.8% | |
| All Others* | 29.4% | |
As of January 31, 2009 |
| Aerospace & Defense | 28.6% | |
| Machinery | 18.4% | |
| Electrical Equipment | 10.5% | |
| Road & Rail | 9.1% | |
| Industrial Conglomerates | 7.8% | |
| All Others* | 25.6% | |
* Includes short-term investments and net other assets. |
Industrials
Advisor Industrials Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.9% |
| Shares | | Value |
AEROSPACE & DEFENSE - 19.0% |
Aerospace & Defense - 19.0% |
BE Aerospace, Inc. (a) | 76,400 | | $ 1,234,624 |
Goodrich Corp. | 59,200 | | 3,040,512 |
Honeywell International, Inc. | 340,300 | | 11,808,410 |
Lockheed Martin Corp. | 95,800 | | 7,162,008 |
Precision Castparts Corp. | 64,900 | | 5,179,669 |
Raytheon Co. | 106,900 | | 5,018,955 |
Spirit AeroSystems Holdings, Inc. Class A (a) | 48,000 | | 624,480 |
United Technologies Corp. | 263,400 | | 14,347,397 |
| | 48,416,055 |
AIR FREIGHT & LOGISTICS - 4.8% |
Air Freight & Logistics - 4.8% |
C.H. Robinson Worldwide, Inc. | 39,400 | | 2,148,482 |
FedEx Corp. | 85,200 | | 5,779,968 |
United Parcel Service, Inc. Class B | 79,300 | | 4,260,789 |
| | 12,189,239 |
AUTO COMPONENTS - 5.7% |
Auto Parts & Equipment - 3.1% |
BorgWarner, Inc. | 36,300 | | 1,204,797 |
Johnson Controls, Inc. | 251,700 | | 6,513,996 |
WABCO Holdings, Inc. | 12,000 | | 228,120 |
| | 7,946,913 |
Tires & Rubber - 2.6% |
The Goodyear Tire & Rubber Co. (a) | 380,900 | | 6,482,918 |
TOTAL AUTO COMPONENTS | | 14,429,831 |
BUILDING PRODUCTS - 3.4% |
Building Products - 3.4% |
Masco Corp. | 476,600 | | 6,639,038 |
Owens Corning (a) | 115,261 | | 2,118,497 |
| | 8,757,535 |
CHEMICALS - 1.0% |
Specialty Chemicals - 1.0% |
W.R. Grace & Co. (a) | 160,900 | | 2,675,767 |
COMMERCIAL SERVICES & SUPPLIES - 4.8% |
Commercial Printing - 0.9% |
R.R. Donnelley & Sons Co. | 168,200 | | 2,337,980 |
Diversified Support Services - 0.9% |
Cintas Corp. | 84,900 | | 2,137,782 |
Environmental & Facility Services - 1.9% |
Casella Waste Systems, Inc. Class A (a) | 240,947 | | 665,014 |
Clean Harbors, Inc. (a) | 15,600 | | 813,852 |
Republic Services, Inc. | 125,760 | | 3,345,216 |
| | 4,824,082 |
Office Services & Supplies - 0.5% |
United Stationers, Inc. (a) | 29,000 | | 1,346,180 |
|
| Shares | | Value |
Security & Alarm Services - 0.6% |
The Brink's Co. | 56,900 | | $ 1,544,835 |
TOTAL COMMERCIAL SERVICES & SUPPLIES | | 12,190,859 |
CONSTRUCTION MATERIALS - 0.5% |
Construction Materials - 0.5% |
Eagle Materials, Inc. | 25,500 | | 696,150 |
Vulcan Materials Co. (d) | 14,500 | | 688,460 |
| | 1,384,610 |
DIVERSIFIED CONSUMER SERVICES - 0.3% |
Specialized Consumer Services - 0.3% |
Brinks Home Security Holdings, Inc. (a) | 26,710 | | 796,492 |
ELECTRICAL EQUIPMENT - 8.8% |
Electrical Components & Equipment - 8.8% |
Acuity Brands, Inc. (d) | 54,542 | | 1,609,534 |
AMETEK, Inc. | 151,500 | | 4,902,540 |
Cooper Industries Ltd. Class A | 72,700 | | 2,395,465 |
Emerson Electric Co. | 48,720 | | 1,772,434 |
Ener1, Inc. (a)(d) | 120,173 | | 766,704 |
Regal-Beloit Corp. | 92,504 | | 4,288,485 |
Rockwell Automation, Inc. | 133,100 | | 5,511,671 |
Sunpower Corp. Class B (a) | 39,900 | | 1,089,270 |
| | 22,336,103 |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.5% |
Electronic Manufacturing Services - 0.5% |
Tyco Electronics Ltd. | 59,800 | | 1,283,906 |
HOUSEHOLD DURABLES - 1.5% |
Homebuilding - 0.3% |
Centex Corp. | 73,300 | | 799,703 |
Household Appliances - 1.2% |
Black & Decker Corp. | 78,500 | | 2,951,600 |
TOTAL HOUSEHOLD DURABLES | | 3,751,303 |
INDUSTRIAL CONGLOMERATES - 10.3% |
Industrial Conglomerates - 10.3% |
3M Co. | 112,600 | | 7,940,552 |
Carlisle Companies, Inc. | 36,057 | | 1,129,666 |
General Electric Co. | 825,946 | | 11,067,676 |
Textron, Inc. | 128,000 | | 1,720,320 |
Tyco International Ltd. | 146,725 | | 4,434,030 |
| | 26,292,244 |
MACHINERY - 18.5% |
Construction & Farm Machinery & Heavy Trucks - 10.6% |
Caterpillar, Inc. | 18,100 | | 797,486 |
Cummins, Inc. | 192,332 | | 8,272,199 |
Deere & Co. | 116,500 | | 5,095,710 |
Navistar International Corp. (a) | 150,988 | | 5,970,066 |
Common Stocks - continued |
| Shares | | Value |
MACHINERY - CONTINUED |
Construction & Farm Machinery & Heavy Trucks - continued |
PACCAR, Inc. | 158,500 | | $ 5,492,025 |
Toro Co. (d) | 42,071 | | 1,458,181 |
| | 27,085,667 |
Industrial Machinery - 7.9% |
Altra Holdings, Inc. (a) | 84,400 | | 741,876 |
Blount International, Inc. (a) | 73,701 | | 685,419 |
Danaher Corp. | 131,500 | | 8,053,060 |
Graco, Inc. | 49,700 | | 1,229,578 |
Ingersoll-Rand Co. Ltd. | 230,000 | | 6,642,400 |
Parker Hannifin Corp. | 61,800 | | 2,736,504 |
| | 20,088,837 |
TOTAL MACHINERY | | 47,174,504 |
MARINE - 0.3% |
Marine - 0.3% |
Ultrapetrol (Bahamas) Ltd. (a) | 175,033 | | 789,399 |
PROFESSIONAL SERVICES - 2.0% |
Human Resource & Employment Services - 1.2% |
Manpower, Inc. | 61,000 | | 2,924,950 |
Research & Consulting Services - 0.8% |
Equifax, Inc. | 82,307 | | 2,144,097 |
TOTAL PROFESSIONAL SERVICES | | 5,069,047 |
ROAD & RAIL - 14.0% |
Railroads - 9.6% |
CSX Corp. | 134,600 | | 5,400,152 |
Genesee & Wyoming, Inc. Class A (a) | 27,000 | | 736,830 |
Norfolk Southern Corp. | 125,810 | | 5,441,283 |
Union Pacific Corp. | 223,000 | | 12,826,960 |
| | 24,405,225 |
Trucking - 4.4% |
Con-way, Inc. | 94,900 | | 4,322,695 |
Hertz Global Holdings, Inc. (a) | 147,600 | | 1,393,344 |
Ryder System, Inc. | 136,278 | | 4,787,446 |
Saia, Inc. (a) | 42,816 | | 773,257 |
| | 11,276,742 |
TOTAL ROAD & RAIL | | 35,681,967 |
|
| Shares | | Value |
TRADING COMPANIES & DISTRIBUTORS - 3.1% |
Trading Companies & Distributors - 3.1% |
Fastenal Co. (d) | 46,400 | | $ 1,650,448 |
Interline Brands, Inc. (a) | 115,691 | | 1,958,649 |
Rush Enterprises, Inc. Class A (a) | 327,657 | | 4,292,307 |
| | 7,901,404 |
TRANSPORTATION INFRASTRUCTURE - 0.4% |
Marine Ports & Services - 0.4% |
Aegean Marine Petroleum Network, Inc. | 52,800 | | 897,600 |
TOTAL COMMON STOCKS (Cost $246,887,220) | 252,017,865 |
Money Market Funds - 4.4% |
| | | |
Fidelity Cash Central Fund, 0.37% (b) | 5,685,313 | | 5,685,313 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 5,409,403 | | 5,409,403 |
TOTAL MONEY MARKET FUNDS (Cost $11,094,716) | 11,094,716 |
TOTAL INVESTMENT PORTFOLIO - 103.3% (Cost $257,981,936) | | 263,112,581 |
NET OTHER ASSETS - (3.3)% | | (8,362,526) |
NET ASSETS - 100% | $ 254,750,055 |
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 | $ 89,362 |
Fidelity Securities Lending Cash Central Fund | 194,854 |
Total | $ 284,216 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 18,977,626 | $ 18,977,626 | $ - | $ - |
Industrials | 227,695,956 | 227,695,956 | - | - |
Information Technology | 1,283,906 | 1,283,906 | - | - |
Materials | 4,060,377 | 4,060,377 | - | - |
Money Market Funds | 11,094,716 | 11,094,716 | - | - |
Total Investments in Securities: | $ 263,112,581 | $ 263,112,581 | $ - | $ - |
The following is a reconciliation of Investments in Securities for which level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ 33,625 |
Total Realized Gain (Loss) | (35,288) |
Total Unrealized Gain (Loss) | 44,125 |
Cost of Purchases | - |
Proceeds of Sales | (42,462) |
Amortization/Accretion | - |
Transfer in/out of Level 3 | - |
Ending Balance | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investment 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 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $29,658,388 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $69,957,535 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Industrials Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $5,281,039) - See accompanying schedule: Unaffiliated issuers (cost $246,887,220) | $ 252,017,865 | |
Fidelity Central Funds (cost $11,094,716) | 11,094,716 | |
Total Investments (cost $257,981,936) | | $ 263,112,581 |
Receivable for investments sold | | 1,846,410 |
Receivable for fund shares sold | | 322,270 |
Dividends receivable | | 192,318 |
Distributions receivable from Fidelity Central Funds | | 14,840 |
Prepaid expenses | | 1,201 |
Total assets | | 265,489,620 |
| | |
Liabilities | | |
Payable for investments purchased | $ 4,150,255 | |
Payable for fund shares redeemed | 866,727 | |
Accrued management fee | 109,268 | |
Distribution fees payable | 91,250 | |
Other affiliated payables | 74,493 | |
Other payables and accrued expenses | 38,169 | |
Collateral on securities loaned, at value | 5,409,403 | |
Total liabilities | | 10,739,565 |
| | |
Net Assets | | $ 254,750,055 |
Net Assets consist of: | | |
Paid in capital | | $ 356,788,990 |
Undistributed net investment income | | 309,528 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (107,477,163) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 5,128,700 |
Net Assets | | $ 254,750,055 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($130,860,024 ÷ 7,758,461 shares) | | $ 16.87 |
| | |
Maximum offering price per share (100/94.25 of $16.87) | | $ 17.90 |
Class T:
Net Asset Value and redemption price per share ($48,053,558 ÷ 2,888,440 shares) | | $ 16.64 |
| | |
Maximum offering price per share (100/96.50 of $16.64) | | $ 17.24 |
Class B:
Net Asset Value and offering price per share ($25,212,202 ÷ 1,585,251 shares)A | | $ 15.90 |
| | |
Class C:
Net Asset Value and offering price per share ($37,861,997 ÷ 2,374,837 shares)A | | $ 15.94 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($12,762,274 ÷ 731,419 shares) | | $ 17.45 |
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, 2009 |
| | |
Investment Income | | |
Dividends | | $ 5,128,749 |
Interest | | 8 |
Income from Fidelity Central Funds | | 284,216 |
Total income | | 5,412,973 |
| | |
Expenses | | |
Management fee | $ 1,441,506 | |
Transfer agent fees | 797,379 | |
Distribution fees | 1,193,548 | |
Accounting and security lending fees | 101,694 | |
Custodian fees and expenses | 17,298 | |
Independent trustees' compensation | 1,743 | |
Registration fees | 76,779 | |
Audit | 53,161 | |
Legal | 1,416 | |
Interest | 259 | |
Miscellaneous | 16,863 | |
Total expenses before reductions | 3,701,646 | |
Expense reductions | (4,226) | 3,697,420 |
Net investment income (loss) | | 1,715,553 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (102,688,937) | |
Foreign currency transactions | 34,764 | |
Total net realized gain (loss) | | (102,654,173) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,468,404) | |
Assets and liabilities in foreign currencies | (1,142) | |
Total change in net unrealized appreciation (depreciation) | | (6,469,546) |
Net gain (loss) | | (109,123,719) |
Net increase (decrease) in net assets resulting from operations | | $ (107,408,166) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 1,715,553 | $ 880,536 |
Net realized gain (loss) | (102,654,173) | 5,734,188 |
Change in net unrealized appreciation (depreciation) | (6,469,546) | (28,847,344) |
Net increase (decrease) in net assets resulting from operations | (107,408,166) | (22,232,620) |
Distributions to shareholders from net investment income | (1,756,118) | - |
Distributions to shareholders from net realized gain | (285,855) | (36,229,373) |
Total distributions | (2,041,973) | (36,229,373) |
Share transactions - net increase (decrease) | (41,067,612) | 109,034,065 |
Redemption fees | 10,099 | 14,921 |
Total increase (decrease) in net assets | (150,507,652) | 50,586,993 |
| | |
Net Assets | | |
Beginning of period | 405,257,707 | 354,670,714 |
End of period (including undistributed net investment income of $309,528 and undistributed net investment income of $809,200, respectively) | $ 254,750,055 | $ 405,257,707 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .13 | .11 | .09 | .08 | .02 |
Net realized and unrealized gain (loss) | (5.08) | (1.17) | 5.11 | 1.63 | 4.35 |
Total from investment operations | (4.95) | (1.06) | 5.20 | 1.71 | 4.37 |
Distributions from net investment income | (.13) | - | (.06) | - | - |
Distributions from net realized gain | (.02) | (2.46) | (1.81) | (1.08) | (.94) |
Total distributions | (.15) | (2.46) | (1.87) | (1.08) | (.94) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 16.87 | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 |
Total Return A, B | (22.49)% | (4.71)% | 25.13% | 8.40% | 25.04% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.23% | 1.17% | 1.21% | 1.26% | 1.34% |
Expenses net of fee waivers, if any | 1.23% | 1.17% | 1.21% | 1.26% | 1.34% |
Expenses net of all reductions | 1.23% | 1.16% | 1.21% | 1.24% | 1.29% |
Net investment income (loss) | .89% | .46% | .38% | .34% | .09% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 130,860 | $ 188,859 | $ 157,451 | $ 99,255 | $ 40,264 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .10 | .05 | .03 | .02 | (.03) |
Net realized and unrealized gain (loss) | (5.03) | (1.15) | 5.05 | 1.61 | 4.31 |
Total from investment operations | (4.93) | (1.10) | 5.08 | 1.63 | 4.28 |
Distributions from net investment income | (.08) | - | (.03) | - | - |
Distributions from net realized gain | (.02) | (2.40) | (1.74) | (1.04) | (.91) |
Total distributions | (.10) | (2.40) | (1.77) | (1.04) | (.91) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 16.64 | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 |
Total Return A, B | (22.68)% | (4.96)% | 24.82% | 8.13% | 24.78% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.48% | 1.41% | 1.46% | 1.49% | 1.57% |
Expenses net of fee waivers, if any | 1.48% | 1.41% | 1.46% | 1.49% | 1.57% |
Expenses net of all reductions | 1.48% | 1.41% | 1.46% | 1.47% | 1.52% |
Net investment income (loss) | .63% | .21% | .13% | .11% | (.14)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 48,054 | $ 85,025 | $ 75,530 | $ 55,936 | $ 40,126 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Industrials
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.07) | (.09) | (.09) | (.13) |
Net realized and unrealized gain (loss) | (4.82) | (1.10) | 4.87 | 1.55 | 4.17 |
Total from investment operations | (4.80) | (1.17) | 4.78 | 1.46 | 4.04 |
Distributions from net investment income | (.04) | - | - | - | - |
Distributions from net realized gain | - | (2.28) | (1.61) | (.99) | (.76) |
Total distributions | (.04) | (2.28) | (1.61) | (.99) | (.76) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 15.90 | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 |
Total Return A, B | (23.10)% | (5.46)% | 24.18% | 7.54% | 24.12% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.98% | 1.95% | 2.00% | 2.04% | 2.11% |
Expenses net of fee waivers, if any | 1.98% | 1.95% | 2.00% | 2.04% | 2.11% |
Expenses net of all reductions | 1.98% | 1.95% | 2.00% | 2.02% | 2.07% |
Net investment income (loss) | .13% | (.33)% | (.41)% | (.44)% | (.68)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 25,212 | $ 39,989 | $ 44,330 | $ 37,082 | $ 32,242 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.06) | (.08) | (.08) | (.12) |
Net realized and unrealized gain (loss) | (4.83) | (1.11) | 4.88 | 1.56 | 4.19 |
Total from investment operations | (4.81) | (1.17) | 4.80 | 1.48 | 4.07 |
Distributions from net investment income | (.04) | - | - | - | - |
Distributions from net realized gain | - | (2.30) | (1.70) | (1.00) | (.75) |
Total distributions | (.04) | (2.30) | (1.70) | (1.00) | (.75) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 15.94 | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 |
Total Return A, B | (23.09)% | (5.44)% | 24.25% | 7.59% | 24.16% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.98% | 1.91% | 1.94% | 1.99% | 2.07% |
Expenses net of fee waivers, if any | 1.98% | 1.91% | 1.94% | 1.99% | 2.07% |
Expenses net of all reductions | 1.98% | 1.90% | 1.94% | 1.97% | 2.02% |
Net investment income (loss) | .14% | (.28)% | (.35)% | (.38)% | (.64)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 37,862 | $ 57,742 | $ 57,862 | $ 42,363 | $ 20,595 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .19 | .18 | .16 | .16 | .07 |
Net realized and unrealized gain (loss) | (5.27) | (1.19) | 5.27 | 1.66 | 4.46 |
Total from investment operations | (5.08) | (1.01) | 5.43 | 1.82 | 4.53 |
Distributions from net investment income | (.17) | - | (.13) | - | - |
Distributions from net realized gain | (.02) | (2.53) | (1.81) | (1.11) | (.95) |
Total distributions | (.19) | (2.53) | (1.94) | (1.11) | (.95) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 17.45 | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 |
Total Return A | (22.31)% | (4.40)% | 25.53% | 8.73% | 25.41% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .96% | .88% | .92% | .91% | 1.06% |
Expenses net of fee waivers, if any | .96% | .88% | .92% | .91% | 1.06% |
Expenses net of all reductions | .95% | .87% | .91% | .89% | 1.01% |
Net investment income (loss) | 1.16% | .75% | .67% | .69% | .37% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 12,762 | $ 33,642 | $ 19,498 | $ 13,043 | $ 4,379 |
Portfolio turnover rate D | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Industrials
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Industrials Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments, as well as a reconciliation of assets and liabilities for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards, deferred trustee compensation, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 28,486,542 | |
Unrealized depreciation | (31,219,081) | |
Net unrealized appreciation (depreciation) | $ (2,732,539) | |
Undistributed ordinary income | $ 309,528 | |
Capital loss carryforward | $ (29,658,388) | |
Cost for federal income tax purposes | $ 265,845,120 | |
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, 2009 | July 31, 2008 |
Ordinary Income | $ 2,041,973 | $ 17,058,178 |
Long-term Capital Gains | - | 19,171,195 |
Total | $ 2,041,973 | $ 36,229,373 |
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 $350,069,006 and $382,670,613, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 311,483 | $ 11,150 |
Class T | .25% | .25% | 260,762 | 686 |
Class B | .75% | .25% | 252,778 | 189,779 |
Class C | .75% | .25% | 368,525 | 74,024 |
| | | $ 1,193,548 | $ 275,639 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 69,247 |
Class T | 9,296 |
Class B* | 71,891 |
Class C* | 14,329 |
| $ 164,763 |
* 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
Average
Net Assets |
Class A | $ 390,315 | .31 |
Class T | 163,523 | .31 |
Class B | 80,229 | .32 |
Class C | 114,890 | .31 |
Institutional Class | 48,422 | .29 |
| $ 797,379 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $12,845 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 4,540,200 | .41% | $ 259 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $1,165 and is reflected in Miscellaneous Expense 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 $194,854.
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 $4,048 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 $178.
Industrials
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 1,066,448 | $ - |
Class T | 306,371 | - |
Class B | 68,325 | - |
Class C | 103,234 | - |
Institutional Class | 211,740 | - |
Total | $ 1,756,118 | $ - |
From net realized gain | | |
Class A | $ 176,460 | $ 16,681,692 |
Class T | 79,143 | 7,329,611 |
Class B | - | 4,260,086 |
Class C | - | 5,759,702 |
Institutional Class | 30,252 | 2,198,282 |
Total | $ 285,855 | $ 36,229,373 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,551,802 | 3,949,728 | $ 40,597,092 | $ 92,641,467 |
Reinvestment of distributions | 72,593 | 645,516 | 1,139,555 | 15,365,861 |
Shares redeemed | (3,461,949) | (2,176,163) | (50,255,155) | (50,202,759) |
Net increase (decrease) | (837,554) | 2,419,081 | $ (8,518,508) | $ 57,804,569 |
Class T | | | | |
Shares sold | 1,041,987 | 1,380,018 | $ 15,774,329 | $ 31,838,651 |
Reinvestment of distributions | 24,634 | 292,360 | 365,354 | 6,876,188 |
Shares redeemed | (2,101,374) | (750,047) | (29,010,054) | (16,849,781) |
Net increase (decrease) | (1,034,753) | 922,331 | $ (12,870,371) | $ 21,865,058 |
Class B | | | | |
Shares sold | 339,206 | 453,829 | $ 5,035,039 | $ 10,091,104 |
Reinvestment of distributions | 4,471 | 159,890 | 56,194 | 3,612,025 |
Shares redeemed | (686,403) | (518,209) | (9,410,134) | (11,329,079) |
Net increase (decrease) | (342,726) | 95,510 | $ (4,318,901) | $ 2,374,050 |
Class C | | | | |
Shares sold | 638,949 | 947,863 | $ 9,440,300 | $ 21,153,831 |
Reinvestment of distributions | 6,551 | 198,290 | 82,541 | 4,489,229 |
Shares redeemed | (1,047,655) | (754,472) | (14,427,567) | (16,433,752) |
Net increase (decrease) | (402,155) | 391,681 | $ (4,904,726) | $ 9,209,308 |
Institutional Class | | | | |
Shares sold | 291,640 | 1,095,024 | $ 4,730,735 | $ 26,168,229 |
Reinvestment of distributions | 10,868 | 66,827 | 192,321 | 1,640,412 |
Shares redeemed | (1,052,089) | (423,274) | (15,378,162) | (10,027,561) |
Net increase (decrease) | (749,581) | 738,577 | $ (10,455,106) | $ 17,781,080 |
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
Advisor Technology Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) | -11.34% | 1.67% | -3.89% |
Class T (incl. 3.50% sales charge) | -9.48% | 1.89% | -3.89% |
Class B (incl. contingent deferred sales charge) A | -11.35% | 1.74% | -3.83% |
Class C (incl. contingent deferred sales charge) B | -7.58% | 2.12% | -4.02% |
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 Overr 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Technology Fund - Class A on July 31, 1999, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Technology
Advisor Technology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the year, the fund's Class A, Class T, Class B and Class C shares returned -5.93%, -6.20%, -6.68% and -6.65%, respectively (excluding sales charges), topping the -9.83% return of the MSCI® US Investable Market Information Technology Index and the S&P 500®. Versus the MSCI index, favorable stock picking and an overweighting in semiconductors provided a significant boost to fund performance. Stock picking in semiconductor equipment, home entertainment software and systems software also helped, although large overweightings in the first two weak-performing groups of that trio and a single underweighting in the relatively strong third group offset some of those benefits. My picks in Internet software/services further aided results, as did a modest cash position. Moreover, our foreign holdings contributed despite facing currency head winds. Our top relative contributor was Starent Networks, a provider of infrastructure hardware/software products, which posted a strong double-digit gain. Tessera Technologies, a provider of miniaturization solutions, hard-disk drive maker Seagate Technology and Chinese Internet company Tencent Holdings, an out-of-index position, helped as well. An underweighting and unfavorable stock selection in computer hardware held back performance, as did stock picking in communications equipment, electrical components/equipment and advertising. Increasing competition among providers of smartphones sidetracked two holdings: Canada's Research In Motion and Apple, and I sold off the former, an out-of index holding. Another non-index stock, electronic advertising company VisionChina Media, was hurt by a slowing Chinese economy.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the past year, the fund's Institutional Class shares returned -5.71%, topping the -9.83% return of the MSCI® US Investable Market Information Technology Index and the S&P 500®. Versus the MSCI index, favorable stock picking and an overweighting in semiconductors provided a significant boost to fund performance. Stock picking in semiconductor equipment, home entertainment software and systems software also helped, although large overweightings in the first two weak-performing groups of that trio and a sizable underweighting in the relatively strong third group offset some of those benefits. My picks in Internet software/services further aided results, as did a modest cash position. Moreover, our foreign holdings contributed despite facing currency head winds. Our top relative contributor was Starent Networks, a provider of infrastructure hardware/software products, which posted a strong double-digit gain. Tessera Technologies, a provider of miniaturization solutions, hard-disk drive maker Seagate Technology and Chinese Internet company Tencent Holdings, an out-of-index position, helped as well. An underweighting and unfavorable stock selection in computer hardware held back performance, as did stock picking in communications equipment, electrical components/equipment and advertising. Increasing competition among providers of smartphones sidetracked two holdings: Canada's Research In Motion and Apple, and I sold off the former, an out-of index holding. Another non-index stock, electronic advertising company VisionChina Media, was hurt by a slowing Chinese economy.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Technology
Advisor Technology Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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 Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.24% | | | |
Actual | | $ 1,000.00 | $ 1,612.70 | $ 8.03 |
HypotheticalA | | $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.49% | | | |
Actual | | $ 1,000.00 | $ 1,610.50 | $ 9.64 |
HypotheticalA | | $ 1,000.00 | $ 1,017.41 | $ 7.45 |
Class B | 1.98% | | | |
Actual | | $ 1,000.00 | $ 1,606.80 | $ 12.80 |
HypotheticalA | | $ 1,000.00 | $ 1,014.98 | $ 9.89 |
Class C | 1.98% | | | |
Actual | | $ 1,000.00 | $ 1,607.40 | $ 12.80 |
HypotheticalA | | $ 1,000.00 | $ 1,014.98 | $ 9.89 |
Institutional Class | .98% | | | |
Actual | | $ 1,000.00 | $ 1,615.30 | $ 6.35 |
HypotheticalA | | $ 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).
Annual Report
Advisor Technology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Microsoft Corp. | 8.7 | 3.5 |
Apple, Inc. | 7.5 | 2.2 |
Intel Corp. | 5.4 | 2.0 |
Google, Inc. Class A | 4.8 | 3.2 |
Hewlett-Packard Co. | 3.2 | 3.4 |
Oracle Corp. | 3.1 | 0.1 |
QUALCOMM, Inc. | 2.2 | 6.5 |
BMC Software, Inc. | 2.1 | 0.1 |
eBay, Inc. | 1.7 | 0.4 |
Micron Technology, Inc. | 1.5 | 1.6 |
| 40.2 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Software | 26.7% | |
| Semiconductors & Semiconductor Equipment | 25.6% | |
| Computers & Peripherals | 14.4% | |
| Internet Software & Services | 11.9% | |
| Communications Equipment | 9.8% | |
| All Others* | 11.6% | |
As of January 31, 2009 |
| Semiconductors & Semiconductor Equipment | 25.8% | |
| Communications Equipment | 22.2% | |
| Software | 16.1% | |
| Computers & Peripherals | 9.7% | |
| Electronic Equipment & Components | 6.3% | |
| All Others* | 19.9% | |
* Includes short-term investments and net other assets. |
Technology
Advisor Technology Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.0% |
| Shares | | Value |
COMMUNICATIONS EQUIPMENT - 9.6% |
Communications Equipment - 9.6% |
3Com Corp. (a) | 95,600 | | $ 360,412 |
Adtran, Inc. | 33,500 | | 809,360 |
ADVA AG Optical Networking (a) | 442,449 | | 983,737 |
Alcatel-Lucent SA sponsored ADR (a) | 14,300 | | 39,468 |
Aruba Networks, Inc. (a) | 9,800 | | 87,024 |
Brocade Communications Systems, Inc. (a) | 258,000 | | 2,027,880 |
Ciena Corp. (a) | 99,200 | | 1,107,072 |
Cisco Systems, Inc. (a) | 189,900 | | 4,179,699 |
Cogo Group, Inc. (a) | 7,869 | | 51,463 |
CommScope, Inc. (a) | 87,900 | | 2,250,240 |
Comverse Technology, Inc. (a) | 120,800 | | 955,528 |
F5 Networks, Inc. (a) | 89,008 | | 3,303,977 |
Infinera Corp. (a) | 70,900 | | 479,993 |
Juniper Networks, Inc. (a) | 78,600 | | 2,053,818 |
Motorola, Inc. | 73,600 | | 526,976 |
OZ Optics Ltd. unit (a)(f) | 68,000 | | 320,960 |
Palm, Inc. (a) | 120,000 | | 1,887,600 |
Polycom, Inc. (a) | 83,900 | | 1,992,625 |
Powerwave Technologies, Inc. (a) | 166,600 | | 209,916 |
QUALCOMM, Inc. | 246,200 | | 11,376,902 |
Riverbed Technology, Inc. (a) | 102,200 | | 2,045,022 |
Sandvine Corp. (a) | 1,587,300 | | 1,738,538 |
Sandvine Corp. (U.K.) (a) | 1,078,100 | | 1,161,762 |
Sonus Networks, Inc. (a) | 29,060 | | 55,214 |
Starent Networks Corp. (a) | 284,577 | | 6,824,156 |
Tekelec (a) | 123,600 | | 2,273,004 |
Tellabs, Inc. (a) | 134,700 | | 781,260 |
| | 49,883,606 |
COMPUTERS & PERIPHERALS - 14.4% |
Computer Hardware - 11.7% |
3PAR, Inc. (a) | 5,900 | | 56,581 |
Apple, Inc. (a) | 241,255 | | 39,418,654 |
Dell, Inc. (a) | 37,600 | | 503,088 |
Hewlett-Packard Co. | 382,600 | | 16,566,580 |
Stratasys, Inc. (a)(d) | 108,790 | | 1,716,706 |
Teradata Corp. (a) | 20,400 | | 501,228 |
Toshiba Corp. | 439,000 | | 1,948,843 |
Wistron Corp. | 159,000 | | 316,934 |
| | 61,028,614 |
Computer Storage & Peripherals - 2.7% |
Chicony Electronics Co. Ltd. | 189,284 | | 419,990 |
EMC Corp. (a) | 207,900 | | 3,130,974 |
NetApp, Inc. (a) | 2,500 | | 56,150 |
SanDisk Corp. (a) | 296,413 | | 5,282,080 |
Seagate Technology | 251,200 | | 3,024,448 |
SIMPLO Technology Co. Ltd. | 68,200 | | 299,323 |
|
| Shares | | Value |
Synaptics, Inc. (a) | 29,700 | | $ 711,909 |
Western Digital Corp. (a) | 43,200 | | 1,306,800 |
| | 14,231,674 |
TOTAL COMPUTERS & PERIPHERALS | | 75,260,288 |
CONSTRUCTION & ENGINEERING - 0.0% |
Construction & Engineering - 0.0% |
MasTec, Inc. (a) | 14,500 | | 150,075 |
DIVERSIFIED CONSUMER SERVICES - 0.0% |
Education Services - 0.0% |
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 600 | | 44,100 |
ELECTRICAL EQUIPMENT - 1.6% |
Electrical Components & Equipment - 1.6% |
centrotherm photovoltaics AG (a) | 1,273 | | 65,897 |
Energy Conversion Devices, Inc. (a)(d) | 42,900 | | 610,896 |
First Solar, Inc. (a) | 4,514 | | 696,916 |
General Cable Corp. (a) | 13,000 | | 504,010 |
GT Solar International, Inc. (d) | 83,700 | | 518,940 |
JA Solar Holdings Co. Ltd. ADR (a) | 164,200 | | 789,802 |
Q-Cells SE (a) | 1,200 | | 21,601 |
Roth & Rau AG | 1,516 | | 51,186 |
Sunpower Corp.: | | | |
Class A (a) | 62,500 | | 2,012,500 |
Class B (a) | 71,244 | | 1,944,961 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 12,600 | | 231,714 |
Trina Solar Ltd. ADR (a) | 17,300 | | 488,898 |
Yingli Green Energy Holding Co. Ltd. ADR (a) | 33,800 | | 448,526 |
| | 8,385,847 |
ELECTRONIC EQUIPMENT & COMPONENTS - 4.1% |
Electronic Components - 0.5% |
Amphenol Corp. Class A | 1,400 | | 46,690 |
DTS, Inc. (a) | 16,500 | | 453,255 |
Everlight Electronics Co. Ltd. | 433,376 | | 1,208,592 |
Tripod Technology Corp. | 135,339 | | 282,970 |
Unimicron Technology Corp. | 311,000 | | 352,612 |
Vishay Intertechnology, Inc. (a) | 7,000 | | 49,770 |
| | 2,393,889 |
Electronic Equipment & Instruments - 0.7% |
Agilent Technologies, Inc. | 2,300 | | 53,406 |
China Security & Surveillance Technology, Inc. (a)(d) | 105,034 | | 926,400 |
Chroma ATE, Inc. | 1,217,641 | | 1,874,150 |
Comverge, Inc. (a)(d) | 10,189 | | 134,087 |
Coretronic Corp. | 174,300 | | 206,918 |
Itron, Inc. (a) | 11,100 | | 579,087 |
National Instruments Corp. | 2,000 | | 50,440 |
| | 3,824,488 |
Common Stocks - continued |
| Shares | | Value |
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED |
Electronic Manufacturing Services - 1.7% |
Flextronics International Ltd. (a) | 434,100 | | $ 2,309,412 |
Ju Teng International Holdings Ltd. | 608,000 | | 458,166 |
Molex, Inc. | 15,300 | | 271,728 |
Multi-Fineline Electronix, Inc. (a) | 2,289 | | 52,166 |
Trimble Navigation Ltd. (a) | 78,000 | | 1,849,380 |
Tyco Electronics Ltd. | 172,600 | | 3,705,722 |
| | 8,646,574 |
Technology Distributors - 1.2% |
Brightpoint, Inc. (a) | 40,300 | | 239,382 |
Digital China Holdings Ltd. (H Shares) | 3,788,000 | | 2,722,525 |
Ingram Micro, Inc. Class A (a) | 33,000 | | 555,060 |
Inspur International Ltd. | 3,276,000 | | 562,215 |
Synnex Technology International Corp. | 155,000 | | 300,930 |
WPG Holding Co. Ltd. | 1,670,000 | | 2,051,234 |
| | 6,431,346 |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | | 21,296,297 |
HEALTH CARE EQUIPMENT & SUPPLIES - 1.1% |
Health Care Equipment - 0.8% |
China Medical Technologies, Inc. sponsored ADR | 1,900 | | 30,077 |
Golden Meditech Co. Ltd. (a) | 2,168,000 | | 408,431 |
I-Flow Corp. (a) | 77,610 | | 590,612 |
Mindray Medical International Ltd. sponsored ADR | 200 | | 5,944 |
Mingyuan Medicare Development Co. Ltd. (a)(d) | 27,880,000 | | 2,985,916 |
| | 4,020,980 |
Health Care Supplies - 0.3% |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 682,000 | | 1,786,435 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 5,807,415 |
HEALTH CARE TECHNOLOGY - 0.0% |
Health Care Technology - 0.0% |
athenahealth, Inc. (a) | 600 | | 22,164 |
HOTELS, RESTAURANTS & LEISURE - 0.3% |
Hotels, Resorts & Cruise Lines - 0.3% |
Ctrip.com International Ltd. sponsored ADR | 34,400 | | 1,763,000 |
HOUSEHOLD DURABLES - 0.2% |
Consumer Electronics - 0.2% |
Harman International Industries, Inc. | 48,500 | | 1,196,980 |
TomTom Group BV (a) | 160 | | 1,758 |
| | 1,198,738 |
INTERNET & CATALOG RETAIL - 1.0% |
Internet Retail - 1.0% |
Amazon.com, Inc. (a) | 35,100 | | 3,010,176 |
|
| Shares | | Value |
Expedia, Inc. (a) | 3,060 | | $ 63,373 |
Priceline.com, Inc. (a)(d) | 17,612 | | 2,282,867 |
| | 5,356,416 |
INTERNET SOFTWARE & SERVICES - 11.9% |
Internet Software & Services - 11.9% |
Akamai Technologies, Inc. (a) | 19,800 | | 325,512 |
Baidu.com, Inc. sponsored ADR (a) | 20,500 | | 7,136,870 |
comScore, Inc. (a) | 17,300 | | 263,306 |
Constant Contact, Inc. (a) | 8,924 | | 201,772 |
Daum Communications Corp. (a) | 24,270 | | 992,476 |
DealerTrack Holdings, Inc. (a) | 12,300 | | 243,909 |
eBay, Inc. (a) | 424,400 | | 9,018,500 |
Equinix, Inc. (a) | 700 | | 57,211 |
Google, Inc. Class A (a) | 56,200 | | 24,899,410 |
LogMeIn, Inc. | 4,100 | | 79,991 |
NetEase.com, Inc. sponsored ADR (a) | 66,400 | | 2,925,584 |
NHN Corp. (a) | 10,369 | | 1,513,753 |
Omniture, Inc. (a) | 2,900 | | 39,672 |
Open Text Corp. (a) | 13,600 | | 515,420 |
OpenTable, Inc. | 400 | | 11,880 |
SAVVIS, Inc. | 8,900 | | 129,139 |
Sina Corp. (a) | 133,400 | | 4,426,212 |
Sohu.com, Inc. (a) | 30,600 | | 1,871,802 |
Tencent Holdings Ltd. | 469,200 | | 6,332,809 |
VeriSign, Inc. (a) | 2,000 | | 40,880 |
VistaPrint Ltd. (a) | 22,200 | | 915,750 |
Vocus, Inc. (a) | 10,300 | | 173,246 |
Yahoo!, Inc. (a) | 3,100 | | 44,392 |
| | 62,159,496 |
IT SERVICES - 1.3% |
Data Processing & Outsourced Services - 0.6% |
CyberSource Corp. (a) | 31,895 | | 553,059 |
Lender Processing Services, Inc. | 1,500 | | 51,270 |
Visa, Inc. Class A | 37,000 | | 2,422,020 |
| | 3,026,349 |
IT Consulting & Other Services - 0.7% |
Amdocs Ltd. (a) | 20,200 | | 483,184 |
CACI International, Inc. Class A (a) | 3,600 | | 166,320 |
China Information Security Technology, Inc. (a)(d) | 8,917 | | 33,528 |
Cognizant Technology Solutions Corp. Class A (a) | 69,800 | | 2,065,382 |
Satyam Computer Services Ltd. sponsored ADR (d) | 11,600 | | 58,464 |
Yucheng Technologies Ltd. (a) | 135,000 | | 1,124,550 |
| | 3,931,428 |
TOTAL IT SERVICES | | 6,957,777 |
MACHINERY - 0.6% |
Industrial Machinery - 0.6% |
China Fire & Security Group, Inc. (a) | 24,900 | | 391,926 |
Common Stocks - continued |
| Shares | | Value |
MACHINERY - CONTINUED |
Industrial Machinery - continued |
Meyer Burger Technology AG (a) | 270 | | $ 44,467 |
Shin Zu Shing Co. Ltd. | 479,732 | | 2,573,387 |
| | 3,009,780 |
MEDIA - 0.8% |
Advertising - 0.5% |
AirMedia Group, Inc. ADR (a) | 111,900 | | 666,924 |
VisionChina Media, Inc. ADR (a) | 307,700 | | 2,021,589 |
| | 2,688,513 |
Cable & Satellite - 0.3% |
Sirius XM Radio, Inc. (a) | 719,500 | | 323,775 |
Virgin Media, Inc. | 98,600 | | 1,030,370 |
| | 1,354,145 |
TOTAL MEDIA | | 4,042,658 |
METALS & MINING - 0.0% |
Diversified Metals & Mining - 0.0% |
Timminco Ltd. (a) | 5,600 | | 5,458 |
PROFESSIONAL SERVICES - 0.0% |
Research & Consulting Services - 0.0% |
IHS, Inc. Class A (a) | 1,100 | | 54,934 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 24.6% |
Semiconductor Equipment - 6.7% |
Aixtron AG | 98,400 | | 1,612,813 |
Amkor Technology, Inc. (a)(d) | 690,700 | | 4,323,782 |
ASM Pacific Technology Ltd. | 17,200 | | 116,740 |
ASML Holding NV (NY Shares) | 266,500 | | 6,931,665 |
Cymer, Inc. (a) | 82,100 | | 2,808,641 |
FormFactor, Inc. (a) | 53,200 | | 1,226,260 |
Globe Specialty Metals, Inc. | 22,200 | | 159,840 |
KLA-Tencor Corp. | 18,600 | | 592,968 |
Lam Research Corp. (a) | 90,400 | | 2,717,424 |
LTX-Credence Corp. (a) | 497,102 | | 447,392 |
MEMC Electronic Materials, Inc. (a) | 80,900 | | 1,425,458 |
Photronics, Inc. (a) | 82,700 | | 422,597 |
Tessera Technologies, Inc. (a) | 239,300 | | 6,721,937 |
Varian Semiconductor Equipment Associates, Inc. (a) | 107,800 | | 3,453,912 |
Verigy Ltd. (a) | 137,300 | | 1,824,717 |
| | 34,786,146 |
Semiconductors - 17.9% |
Advanced Micro Devices, Inc. (a)(d) | 121,400 | | 444,324 |
Altera Corp. | 41,700 | | 779,373 |
ANADIGICS, Inc. (a) | 10,400 | | 43,056 |
Analog Devices, Inc. | 1,800 | | 49,266 |
Applied Micro Circuits Corp. (a) | 8,650 | | 74,823 |
ARM Holdings PLC sponsored ADR | 238,400 | | 1,523,376 |
Atmel Corp. (a) | 170,900 | | 712,653 |
Broadcom Corp. Class A (a) | 44,700 | | 1,261,881 |
|
| Shares | | Value |
Cavium Networks, Inc. (a) | 407,831 | | $ 7,695,771 |
Cree, Inc. (a) | 54,040 | | 1,732,522 |
CSR PLC (a) | 712,385 | | 5,082,075 |
Cypress Semiconductor Corp. (a) | 252,600 | | 2,682,612 |
Diodes, Inc. (a) | 15,100 | | 278,746 |
Elan Microelectronics Corp. | 155,000 | | 252,743 |
Elpida Memory, Inc. (a) | 30,600 | | 349,308 |
Epistar Corp. | 565,000 | | 1,542,944 |
Fairchild Semiconductor International, Inc. (a) | 212,000 | | 1,871,960 |
Global Unichip Corp. | 152,291 | | 835,489 |
Hynix Semiconductor, Inc. (a) | 137,540 | | 1,979,802 |
Infineon Technologies AG (a)(d) | 1,644,500 | | 6,643,596 |
Infineon Technologies AG rights 8/3/09 (a)(d) | 2,322,900 | | 1,088,857 |
Inotera Memories, Inc. (a) | 927,000 | | 483,136 |
Inotera Memories, Inc. sponsored ADR (a)(e) | 212,100 | | 1,105,428 |
Intel Corp. | 1,461,600 | | 28,135,800 |
International Rectifier Corp. (a) | 152,200 | | 2,520,432 |
Intersil Corp. Class A | 39,700 | | 570,489 |
Kinsus Interconnect Technology Corp. | 142,000 | | 303,822 |
LSI Corp. (a) | 10,300 | | 53,354 |
Marvell Technology Group Ltd. (a) | 329,400 | | 4,394,196 |
MediaTek, Inc. | 19,038 | | 273,588 |
Micron Technology, Inc. (a) | 1,230,200 | | 7,860,978 |
Monolithic Power Systems, Inc. (a) | 62,900 | | 1,395,751 |
MoSys, Inc. (a) | 32,100 | | 52,002 |
Netlogic Microsystems, Inc. (a) | 1,300 | | 51,662 |
NVIDIA Corp. (a) | 80,300 | | 1,038,279 |
O2Micro International Ltd. sponsored ADR (a) | 17,800 | | 92,204 |
Omnivision Technologies, Inc. (a) | 151,599 | | 2,005,655 |
PMC-Sierra, Inc. (a) | 65,300 | | 597,495 |
Power Integrations, Inc. | 2,100 | | 61,509 |
Powertech Technology, Inc. | 320,000 | | 858,275 |
Radiant Opto-Electronics Corp. | 334,750 | | 485,138 |
Silicon Laboratories, Inc. (a) | 13,900 | | 595,337 |
Skyworks Solutions, Inc. (a) | 4,700 | | 56,776 |
Standard Microsystems Corp. (a) | 90,500 | | 2,099,600 |
Supertex, Inc. (a) | 7,300 | | 168,265 |
TriQuint Semiconductor, Inc. (a) | 9,300 | | 66,774 |
Volterra Semiconductor Corp. (a) | 15,500 | | 257,145 |
Xilinx, Inc. | 44,400 | | 963,036 |
| | 93,471,303 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 128,257,449 |
SOFTWARE - 26.7% |
Application Software - 9.0% |
Adobe Systems, Inc. (a) | 169,800 | | 5,504,916 |
ANSYS, Inc. (a) | 5,900 | | 184,434 |
Autodesk, Inc. (a) | 1,800 | | 39,258 |
Common Stocks - continued |
| Shares | | Value |
SOFTWARE - CONTINUED |
Application Software - continued |
Blackboard, Inc. (a) | 19,900 | | $ 676,003 |
Cadence Design Systems, Inc. (a) | 293,700 | | 1,732,830 |
Callidus Software, Inc. (a) | 107,291 | | 273,592 |
Citrix Systems, Inc. (a) | 182,000 | | 6,479,200 |
Concur Technologies, Inc. (a) | 46,800 | | 1,614,132 |
Epicor Software Corp. (a) | 31,500 | | 191,520 |
Informatica Corp. (a) | 137,900 | | 2,535,981 |
Intuit, Inc. (a) | 141,500 | | 4,202,550 |
JDA Software Group, Inc. (a) | 50,000 | | 1,030,500 |
Kingdee International Software Group Co. Ltd. | 10,918,000 | | 2,042,762 |
Longtop Financial Technologies Ltd. ADR (a) | 33,800 | | 944,034 |
Mentor Graphics Corp. (a) | 205,200 | | 1,424,088 |
Nice Systems Ltd. sponsored ADR (a) | 8,265 | | 226,296 |
Nuance Communications, Inc. (a) | 17,300 | | 228,360 |
Parametric Technology Corp. (a) | 62,200 | | 803,002 |
Pegasystems, Inc. | 9,100 | | 257,530 |
Salesforce.com, Inc. (a) | 133,100 | | 5,768,554 |
Smith Micro Software, Inc. (a) | 230,200 | | 2,631,186 |
SolarWinds, Inc. | 2,700 | | 54,000 |
SuccessFactors, Inc. (a)(d) | 212,200 | | 2,238,710 |
Synchronoss Technologies, Inc. (a) | 121,348 | | 1,441,614 |
Synopsys, Inc. (a) | 57,600 | | 1,150,848 |
Taleo Corp. Class A (a) | 112,788 | | 1,973,790 |
TIBCO Software, Inc. (a) | 71,100 | | 620,703 |
Ulticom, Inc. | 318,926 | | 574,067 |
VanceInfo Technologies, Inc. ADR (a) | 22,000 | | 333,300 |
| | 47,177,760 |
Home Entertainment Software - 1.7% |
Activision Blizzard, Inc. (a) | 128,700 | | 1,473,615 |
Changyou.com Ltd. (A Shares) ADR | 800 | | 29,400 |
Electronic Arts, Inc. (a) | 146,900 | | 3,153,943 |
Kingsoft Corp. Ltd. | 323,000 | | 326,341 |
Perfect World Co. Ltd. sponsored ADR Class B (a) | 45,500 | | 1,627,990 |
Shanda Interactive Entertainment Ltd. sponsored ADR (a) | 18,700 | | 927,146 |
Take-Two Interactive Software, Inc. | 85,300 | | 812,056 |
THQ, Inc. (a) | 49,400 | | 331,474 |
| | 8,681,965 |
Systems Software - 16.0% |
Ariba, Inc. (a) | 18,908 | | 198,723 |
BMC Software, Inc. (a) | 324,500 | | 11,042,735 |
CA, Inc. | 2,200 | | 46,508 |
Check Point Software Technologies Ltd. (a) | 1,700 | | 45,373 |
CommVault Systems, Inc. (a) | 43,100 | | 750,371 |
Insyde Software Corp. | 344,239 | | 1,757,392 |
McAfee, Inc. (a) | 23,200 | | 1,034,256 |
Microsoft Corp. | 1,936,800 | | 45,553,539 |
|
| Shares | | Value |
Oracle Corp. | 737,400 | | $ 16,318,662 |
Phoenix Technologies Ltd. (a) | 31,000 | | 102,610 |
Red Hat, Inc. (a) | 258,300 | | 5,896,989 |
Symantec Corp. (a) | 14,300 | | 213,499 |
VMware, Inc. Class A (a) | 24,600 | | 792,858 |
| | 83,753,515 |
TOTAL SOFTWARE | | 139,613,240 |
WIRELESS TELECOMMUNICATION SERVICES - 0.8% |
Wireless Telecommunication Services - 0.8% |
Crown Castle International Corp. (a) | 8,000 | | 229,920 |
Sprint Nextel Corp. (a) | 132,200 | | 528,800 |
Syniverse Holdings, Inc. (a) | 178,257 | | 3,124,845 |
| | 3,883,565 |
TOTAL COMMON STOCKS (Cost $460,607,819) | 517,152,303 |
Convertible Bonds - 1.2% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.2% |
Communications Equipment - 0.2% |
Ciena Corp. 0.25% 5/1/13 | | $ 1,270,000 | | 888,873 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.0% |
Semiconductors - 1.0% |
Advanced Micro Devices, Inc. 5.75% 8/15/12 | | 6,960,000 | | 5,124,300 |
TOTAL CONVERTIBLE BONDS (Cost $6,830,428) | 6,013,173 |
Money Market Funds - 2.6% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b) | 1,125,412 | | 1,125,412 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 12,628,183 | | 12,628,183 |
TOTAL MONEY MARKET FUNDS (Cost $13,753,595) | 13,753,595 |
TOTAL INVESTMENT PORTFOLIO - 102.8% (Cost $481,191,842) | | 536,919,071 |
NET OTHER ASSETS - (2.8)% | | (14,806,416) |
NET ASSETS - 100% | $ 522,112,655 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,105,428 or 0.2% of net assets. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $320,960 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
OZ Optics Ltd. unit | 8/18/00 | $ 1,003,680 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 93,254 |
Fidelity Securities Lending Cash Central Fund | 849,077 |
Total | $ 942,331 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 12,404,912 | $ 12,404,912 | $ - | $ - |
Health Care | 5,829,579 | 5,829,579 | - | - |
Industrials | 11,600,636 | 11,600,636 | - | - |
Information Technology | 483,428,153 | 474,269,312 | 8,837,881 | 320,960 |
Materials | 5,458 | 5,458 | - | - |
Telecommunication Services | 3,883,565 | 3,883,565 | - | - |
Corporate Bonds | 6,013,173 | - | 6,013,173 | - |
Money Market Funds | 13,753,595 | 13,753,595 | - | - |
Total Investments in Securities | $ 536,919,071 | $ 521,747,057 | $ 14,851,054 | $ 320,960 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ 821,100 |
Total Realized Gain (Loss) | 0 |
Total Unrealized Gain (Loss) | (500,140) |
Cost of Purchases | 0 |
Proceeds of Sales | 0 |
Amortization/Accretion | 0 |
Transfers in/out of Level 3 | 0 |
Ending Balance | $ 320,960 |
The change in unrealized gain (loss) attributable to Level 3 securities at July 31, 2009 | $ (500,140) |
The information used in the above reconciliation represents fiscal year to date activity for any Investment 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 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. 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 | 78.0% |
China | 5.0% |
Taiwan | 3.7% |
Cayman Islands | 3.0% |
Germany | 2.0% |
Bermuda | 1.6% |
United Kingdom | 1.4% |
Netherlands | 1.3% |
Others (individually less than 1%) | 4.0% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $1,522,364,216 of which $889,719,837, $499,806,783 and $132,837,596 will expire on July 31, 2010, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $110,337,017 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Technology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $12,319,717) - See accompanying schedule: Unaffiliated issuers (cost $467,438,247) | $ 523,165,476 | |
Fidelity Central Funds (cost $13,753,595) | 13,753,595 | |
Total Investments (cost $481,191,842) | | $ 536,919,071 |
Foreign currency held at value (cost $22) | | 22 |
Receivable for investments sold | | 3,737,478 |
Receivable for fund shares sold | | 831,090 |
Dividends receivable | | 201,841 |
Interest receivable | | 184,210 |
Distributions receivable from Fidelity Central Funds | | 22,443 |
Prepaid expenses | | 1,680 |
Other receivables | | 29,910 |
Total assets | | 541,927,745 |
| | |
Liabilities | | |
Payable for investments purchased | $ 5,864,821 | |
Payable for fund shares redeemed | 720,913 | |
Accrued management fee | 229,086 | |
Distribution fees payable | 177,255 | |
Other affiliated payables | 149,450 | |
Other payables and accrued expenses | 45,382 | |
Collateral on securities loaned, at value | 12,628,183 | |
Total liabilities | | 19,815,090 |
| | |
Net Assets | | $ 522,112,655 |
Net Assets consist of: | | |
Paid in capital | | $ 2,108,046,834 |
Undistributed net investment income | | 425,528 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (1,642,087,988) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 55,728,281 |
Net Assets | | $ 522,112,655 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($258,432,921 ÷ 16,122,667 shares) | | $ 16.03 |
| | |
Maximum offering price per share (100/94.25 of $16.03) | | $ 17.01 |
Class T:
Net Asset Value and redemption price per share ($151,170,025 ÷ 9,695,772 shares) | | $ 15.59 |
| | |
Maximum offering price per share (100/96.50 of $15.59) | | $ 16.16 |
Class B:
Net Asset Value and offering price per share ($30,579,781 ÷ 2,083,958 shares)A | | $ 14.67 |
| | |
Class C:
Net Asset Value and offering price per share ($55,644,814 ÷ 3,775,585 shares)A | | $ 14.74 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($26,285,114 ÷ 1,576,903 shares) | | $ 16.67 |
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, 2009 |
| | |
Investment Income | | |
Dividends | | $ 2,411,843 |
Special dividends | | 1,460,681 |
Interest | | 878,076 |
Income from Fidelity Central Funds (including $849,077 from security lending) | | 942,331 |
Total income | | 5,692,931 |
| | |
Expenses | | |
Management fee | $ 2,300,137 | |
Transfer agent fees | 1,298,511 | |
Distribution fees | 1,821,572 | |
Accounting and security lending fees | 162,757 | |
Custodian fees and expenses | 76,790 | |
Independent trustees' compensation | 2,809 | |
Registration fees | 71,020 | |
Audit | 53,960 | |
Legal | 5,003 | |
Interest | 287 | |
Miscellaneous | 52,042 | |
Total expenses before reductions | 5,844,888 | |
Expense reductions | (39,826) | 5,805,062 |
Net investment income (loss) | | (112,131) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (206,812,537) | |
Foreign currency transactions | (8,769) | |
Total net realized gain (loss) | | (206,821,306) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 162,023,169 | |
Assets and liabilities in foreign currencies | 16,092 | |
Total change in net unrealized appreciation (depreciation) | | 162,039,261 |
Net gain (loss) | | (44,782,045) |
Net increase (decrease) in net assets resulting from operations | | $ (44,894,176) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (112,131) | $ (5,177,940) |
Net realized gain (loss) | (206,821,306) | (11,273,810) |
Change in net unrealized appreciation (depreciation) | 162,039,261 | (114,740,676) |
Net increase (decrease) in net assets resulting from operations | (44,894,176) | (131,192,426) |
Share transactions - net increase (decrease) | (14,948,367) | (67,084,453) |
Redemption fees | 15,958 | 32,772 |
Total increase (decrease) in net assets | (59,826,585) | (198,244,107) |
| | |
Net Assets | | |
Beginning of period | 581,939,240 | 780,183,347 |
End of period (including undistributed net investment income of $425,528 and undistributed net investment income of $77,762, respectively) | $ 522,112,655 | $ 581,939,240 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 F | (.10) | (.17) | (.15) | .02 G |
Net realized and unrealized gain (loss) | (1.03) | (3.41) | 5.13 | (.42) | 2.24 |
Total from investment operations | (1.01) | (3.51) | 4.96 | (.57) | 2.26 |
Distributions from net investment income | - | - | - | - | (.08) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 16.03 | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 |
Total Return A, B | (5.93)% | (17.08)% | 31.82% | (3.53)% | 16.20% |
Ratios to Average Net Assets D, H | | | | | |
Expenses before reductions | 1.23% | 1.21% | 1.25% | 1.30% | 1.37% |
Expenses net of fee waivers, if any | 1.23% | 1.21% | 1.25% | 1.30% | 1.37% |
Expenses net of all reductions | 1.22% | 1.19% | 1.24% | 1.20% | 1.26% |
Net investment income (loss) | .17% F | (.49)% | (.91)% | (.88)% | .12% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 258,433 | $ 275,117 | $ 309,105 | $ 189,054 | $ 144,970 |
Portfolio turnover rate E | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.87)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 |
Income from Investment Operations | | | | | |
Net investment income (loss)C | (.01)F | (.14) | (.21) | (.19) | (.02)G |
Net realized and unrealized gain (loss) | (1.02) | (3.33) | 5.02 | (.41) | 2.21 |
Total from investment operations | (1.03) | (3.47) | 4.81 | (.60) | 2.19 |
Distributions from net investment income | - | - | - | - | (.07) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 15.59 | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 |
Total ReturnA, B | (6.20)% | (17.27)% | 31.48% | (3.78)% | 15.94% |
Ratios to Average Net Assets D, H | | | | | |
Expenses before reductions | 1.49% | 1.46% | 1.51% | 1.55% | 1.60% |
Expenses net of fee waivers, if any | 1.49% | 1.46% | 1.51% | 1.55% | 1.60% |
Expenses net of all reductions | 1.48% | 1.45% | 1.49% | 1.44% | 1.48% |
Net investment income (loss) | (.09)% F | (.74)% | (1.16)% | (1.13)% | (.11)%G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 151,170 | $ 173,917 | $ 260,339 | $ 260,966 | $ 315,930 |
Portfolio turnover rate E | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.10)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) F | (.23) | (.28) | (.27) | (.09) G |
Net realized and unrealized gain (loss) | (.98) | (3.15) | 4.79 | (.38) | 2.12 |
Total from investment operations | (1.05) | (3.38) | 4.51 | (.65) | 2.03 |
Distributions from net investment income | - | - | - | - | (.04) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 14.67 | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 |
Total Return A, B | (6.68)% | (17.70)% | 30.91% | (4.27)% | 15.33% |
Ratios to Average Net Assets D, H | | | | | |
Expenses before reductions | 1.98% | 1.96% | 2.01% | 2.05% | 2.13% |
Expenses net of fee waivers, if any | 1.98% | 1.96% | 2.01% | 2.05% | 2.13% |
Expenses net of all reductions | 1.97% | 1.94% | 2.00% | 1.94% | 2.02% |
Net investment income (loss) | (.58)% F | (1.24)% | (1.67)% | (1.63)% | (.65)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 30,580 | $ 47,294 | $ 102,655 | $ 192,790 | $ 309,020 |
Portfolio turnover rate E | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.64)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07)F | (.23) | (.29) | (.27) | (.08)G |
Net realized and unrealized gain (loss) | (.98) | (3.16) | 4.81 | (.38) | 2.12 |
Total from investment operations | (1.05) | (3.39) | 4.52 | (.65) | 2.04 |
Distributions from net investment income | - | - | - | - | (.04) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 14.74 | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 |
Total ReturnA, B | (6.65)% | (17.67)% | 30.83% | (4.25)% | 15.34% |
Ratios to Average Net AssetsD, H | | | | | |
Expenses before reductions | 1.98% | 1.96% | 2.01% | 2.05% | 2.10% |
Expenses net of fee waivers, if any | 1.98% | 1.96% | 2.01% | 2.05% | 2.10% |
Expenses net of all reductions | 1.97% | 1.94% | 1.99% | 1.94% | 1.99% |
Net investment income (loss) | (.58)%F | (1.24)% | (1.66)% | (1.63)% | (.61)%G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 55,645 | $ 63,590 | $ 86,974 | $ 82,835 | $ 108,287 |
Portfolio turnover rateE | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 |
Income from Investment Operations | | | | | |
Net investment income (loss)B | .06E | (.04) | (.11) | (.09) | .09 F |
Net realized and unrealized gain (loss) | (1.07) | (3.54) | 5.30 | (.44) | 2.30 |
Total from investment operations | (1.01) | (3.58) | 5.19 | (.53) | 2.39 |
Distributions from net investment income | - | - | - | - | (.11) |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 16.67 | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 |
Total ReturnA | (5.71)% | (16.84)% | 32.30% | (3.19)% | 16.73% |
Ratios to Average Net AssetsC, G | | | | | |
Expenses before reductions | .98% | .94% | .93% | .90% | .92% |
Expenses net of fee waivers, if any | .98% | .94% | .93% | .90% | .92% |
Expenses net of all reductions | .97% | .92% | .92% | .80% | .81% |
Net investment income (loss) | .42% E | (.22)% | (.59)% | (.49)% | .57% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 26,285 | $ 22,021 | $ 21,111 | $ 11,681 | $ 11,640 |
Portfolio turnover rateD | 225% | 214% | 208% | 258% | 180% |
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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.42)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Technology
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares 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 distribution and service plan fees incurred. 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments, as well as a reconciliation of assets and liabilities for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, net operating losses, market discount, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 94,604,678 | |
Unrealized depreciation | (47,837,594) | |
Net unrealized appreciation (depreciation) | $ 46,767,084 | |
Capital loss carryforward | $ (1,522,364,216) | |
Cost for federal income tax purposes | $ 490,151,987 | |
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.
Technology
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 $934,652,967 and $941,531,686, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 496,944 | $ 13,331 |
Class T | .25% | .25% | 604,768 | 2,448 |
Class B | .75% | .25% | 285,215 | 214,016 |
Class C | .75% | .25% | 434,645 | 22,306 |
| | | $ 1,821,572 | $ 252,101 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 38,659 |
Class T | 17,834 |
Class B* | 50,776 |
Class C* | 2,321 |
| $ 109,590 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 628,615 | .32 |
Class T | 391,403 | .32 |
Class B | 89,852 | .31 |
Class C | 137,317 | .31 |
Institutional Class | 51,324 | .31 |
| $ 1,298,511 | |
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 $25,249 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 5,267,500 | .49% | $ 287 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $1,803 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $39,084 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 $742.
Technology
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 3,881,770 | 5,381,278 | $ 49,340,225 | $ 105,720,351 |
Shares redeemed | (3,900,491) | (4,279,571) | (47,190,702) | (82,236,119) |
Net increase (decrease) | (18,721) | 1,101,707 | $ 2,149,523 | $ 23,484,232 |
Class T | | | | |
Shares sold | 2,072,898 | 2,146,310 | $ 24,512,394 | $ 41,674,472 |
Shares redeemed | (2,840,598) | (4,638,425) | (33,936,510) | (86,554,961) |
Net increase (decrease) | (767,700) | (2,492,115) | $ (9,424,116) | $ (44,880,489) |
Class B | | | | |
Shares sold | 327,585 | 406,127 | $ 3,794,593 | $ 7,558,898 |
Shares redeemed | (1,251,978) | (2,773,060) | (14,128,827) | (50,298,253) |
Net increase (decrease) | (924,393) | (2,366,933) | $ (10,334,234) | $ (42,739,355) |
Class C | | | | |
Shares sold | 654,688 | 550,177 | $ 7,947,929 | $ 10,400,107 |
Shares redeemed | (906,545) | (1,056,703) | (10,144,084) | (18,857,821) |
Net increase (decrease) | (251,857) | (506,526) | $ (2,196,155) | $ (8,457,714) |
Institutional Class | | | | |
Shares sold | 753,599 | 628,983 | $ 10,483,415 | $ 12,989,931 |
Shares redeemed | (422,236) | (376,415) | (5,626,800) | (7,481,058) |
Net increase (decrease) | 331,363 | 252,568 | $ 4,856,615 | $ 5,508,873 |
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
Advisor Utilities Fund - Class A, T, B, and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Class A (incl. 5.75% sales charge) C | -27.84% | 5.15% | -1.55% |
Class T (incl. 3.50% sales charge) C | -26.29% | 5.37% | -1.56% |
Class B (incl. contingent deferred sales charge) A,C | -27.74% | 5.29% | -1.47% |
Class C (incl. contingent deferred sales charge) B,C | -24.71% | 5.65% | -1.64% |
A Class B shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 5%, 2%, and 0%, respectively.
B Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0%, and 0%, respectively.
C Prior to October 1, 2006, Advisor Utilities operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Utilities Fund - Class A on July 31, 1999, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Utilities Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -23.44%, -23.61%, -23.97% and -23.96%, respectively (excluding sales charges), underperforming the S&P 500® and the MSCI® US Investable Market Utilities Index, which returned -19.26%. Unfavorable stock selection among electric and gas utilities hurt performance versus the sector benchmark. An underweighting in multi-utilities also detracted, although that loss was nearly offset by strong stock picking in the group. Overweighting independent power/energy traders also helped, as did the fund's modest cash position, which held its value during a down period for the index. Detractors included two Pennsylvania-based electric utilities, PPL and Allegheny Energy; underweighting major index component Southern Company, an electric utility in Atlanta; independent power producer Constellation Energy, located in Maryland; and Ohio electric utility FirstEnergy. Among the top contributors to relative performance were San Diego-based multi-utility Sempra Energy, Wisconsin Energy and timely ownership of independent power producers AES and Calpine. Some of the stocks mentioned here were not held at period end.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2009, the fund's Institutional Class shares returned -23.24%, underperforming the S&P 500® and the MSCI® US Investable Market Utilities Index, which returned - -19.26%. Unfavorable stock selection among electric and gas utilities hurt performance versus the sector benchmark. An underweighting in multi-utilities also detracted, although that loss was nearly offset by strong stock picking in the group. Overweighting independent power/energy traders also helped, as did the fund's modest cash position, which held its value during a down period for the index. Detractors included two Pennsylvania-based electric utilities, PPL and Allegheny Energy; underweighting major index component Southern Company, an electric utility in Atlanta; independent power producer Constellation Energy, located in Maryland; and Ohio electric utility FirstEnergy. Among the top contributors to relative performance were San Diego-based multi-utility Sempra Energy, Wisconsin Energy and timely ownership of independent power producers AES and Calpine. Some stocks mentioned here were not held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Utilities
Advisor Utilities Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.28% | | | |
Actual | | $ 1,000.00 | $ 1,054.60 | $ 6.52 |
Hypothetical A | | $ 1,000.00 | $ 1,018.45 | $ 6.41 |
Class T | 1.55% | | | |
Actual | | $ 1,000.00 | $ 1,052.40 | $ 7.89 |
Hypothetical A | | $ 1,000.00 | $ 1,017.11 | $ 7.75 |
Class B | 2.03% | | | |
Actual | | $ 1,000.00 | $ 1,050.10 | $ 10.32 |
Hypothetical A | | $ 1,000.00 | $ 1,014.73 | $ 10.14 |
Class C | 2.03% | | | |
Actual | | $ 1,000.00 | $ 1,050.30 | $ 10.32 |
Hypothetical A | | $ 1,000.00 | $ 1,014.73 | $ 10.14 |
Institutional Class | 1.02% | | | |
Actual | | $ 1,000.00 | $ 1,055.10 | $ 5.20 |
Hypothetical A | | $ 1,000.00 | $ 1,019.74 | $ 5.11 |
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
Advisor Utilities Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
American Electric Power Co., Inc. | 13.3 | 4.9 |
FirstEnergy Corp. | 9.6 | 6.6 |
Sempra Energy | 6.9 | 4.9 |
FPL Group, Inc. | 6.8 | 3.2 |
Constellation Energy Group, Inc. | 6.4 | 2.5 |
CenterPoint Energy, Inc. | 6.2 | 0.0 |
TECO Energy, Inc. | 5.0 | 0.0 |
PG&E Corp. | 4.9 | 4.0 |
Pinnacle West Capital Corp. | 4.9 | 1.5 |
Entergy Corp. | 4.8 | 5.7 |
| 68.8 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Electric Utilities | 51.3% | |
| Multi-utilities | 29.9% | |
| Independent Power Producers & Energy Traders | 17.1% | |
| Commercial Services & Supplies | 0.9% | |
| Electrical Equipment | 0.5% | |
| All Others* | 0.3% | |
|
As of January 31, 2009 |
| Electric Utilities | 58.9% | |
| Multi-utilities | 26.5% | |
| Independent Power Producers & Energy Traders | 9.0% | |
| Gas Utilities | 4.7% | |
| Diversified Financial Services | 0.3% | |
| All Others* | 0.6% | |
* Includes short-term investments and net other assets. |
Utilities
Advisor Utilities Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.7% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 0.9% |
Environmental & Facility Services - 0.9% |
Covanta Holding Corp. (a) | 75,500 | | $ 1,275,195 |
ELECTRIC UTILITIES - 51.3% |
Electric Utilities - 51.3% |
American Electric Power Co., Inc. | 591,400 | | 18,309,744 |
Entergy Corp. | 82,800 | | 6,651,324 |
Exelon Corp. | 123,500 | | 6,281,210 |
FirstEnergy Corp. | 318,700 | | 13,130,440 |
FPL Group, Inc. | 164,900 | | 9,344,883 |
NV Energy, Inc. | 535,400 | | 6,157,100 |
Pinnacle West Capital Corp. | 208,500 | | 6,663,660 |
Southern Co. | 124,600 | | 3,912,440 |
| | 70,450,801 |
ELECTRICAL EQUIPMENT - 0.5% |
Electrical Components & Equipment - 0.5% |
First Solar, Inc. (a) | 2,000 | | 308,780 |
Yingli Green Energy Holding Co. Ltd. ADR (a)(d) | 26,000 | | 345,020 |
| | 653,800 |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 17.1% |
Independent Power Producers & Energy Traders - 17.1% |
AES Corp. | 324,700 | | 4,152,913 |
Black Hills Corp. | 13,467 | | 350,277 |
Calpine Corp. (a) | 139,700 | | 1,799,336 |
Constellation Energy Group, Inc. | 306,700 | | 8,802,290 |
NRG Energy, Inc. (a) | 206,669 | | 5,623,463 |
RRI Energy, Inc. (a) | 512,000 | | 2,739,200 |
| | 23,467,479 |
MULTI-UTILITIES - 29.9% |
Multi-Utilities - 29.9% |
CenterPoint Energy, Inc. | 708,200 | | 8,533,810 |
|
| Shares | | Value |
CMS Energy Corp. | 355,600 | | $ 4,601,464 |
PG&E Corp. | 167,104 | | 6,745,988 |
Sempra Energy | 181,000 | | 9,489,830 |
TECO Energy, Inc. | 508,200 | | 6,855,618 |
Xcel Energy, Inc. | 242,000 | | 4,825,480 |
| | 41,052,190 |
TOTAL COMMON STOCKS (Cost $137,004,603) | 136,899,465 |
Money Market Funds - 1.5% |
| | | |
Fidelity Cash Central Fund, 0.37% (b) | 1,738,662 | | 1,738,662 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 356,250 | | 356,250 |
TOTAL MONEY MARKET FUNDS (Cost $2,094,912) | 2,094,912 |
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $139,099,515) | | 138,994,377 |
NET OTHER ASSETS - (1.2)% | | (1,581,198) |
NET ASSETS - 100% | $ 137,413,179 |
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 | $ 82,879 |
Fidelity Securities Lending Cash Central Fund | 21,598 |
Total | $ 104,477 |
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, 2009, the fund had a capital loss carryforward of approximately $246,849,971 of which $78,569,521, $154,412,532 and $13,867,918 will expire on July 31, 2010, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $34,108,371 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Utilities Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $331,750) - See accompanying schedule: Unaffiliated issuers (cost $137,004,603) | $ 136,899,465 | |
Fidelity Central Funds (cost $2,094,912) | 2,094,912 | |
Total Investments (cost $139,099,515) | | $ 138,994,377 |
Receivable for investments sold | | 2,254,489 |
Receivable for fund shares sold | | 63,781 |
Dividends receivable | | 163,975 |
Distributions receivable from Fidelity Central Funds | | 551 |
Prepaid expenses | | 654 |
Total assets | | 141,477,827 |
| | |
Liabilities | | |
Payable for investments purchased | $ 3,258,664 | |
Payable for fund shares redeemed | 255,939 | |
Accrued management fee | 62,313 | |
Distribution fees payable | 53,712 | |
Other affiliated payables | 41,311 | |
Other payables and accrued expenses | 36,459 | |
Collateral on securities loaned, at value | 356,250 | |
Total liabilities | | 4,064,648 |
| | |
Net Assets | | $ 137,413,179 |
Net Assets consist of: | | |
Paid in capital | | $ 424,993,058 |
Undistributed net investment income | | 1,435,445 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (288,910,370) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (104,954) |
Net Assets | | $ 137,413,179 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($66,063,856 ÷ 4,325,542 shares) | | $ 15.27 |
| | |
Maximum offering price per share (100/94.25 of $15.27) | | $ 16.20 |
Class T:
Net Asset Value and redemption price per share ($33,989,054 ÷ 2,225,277 shares) | | $ 15.27 |
| | |
Maximum offering price per share (100/96.50 of $15.27) | | $ 15.82 |
Class B:
Net Asset Value and offering price per share ($10,634,495 ÷ 705,150 shares)A | | $ 15.08 |
| | |
Class C:
Net Asset Value and offering price per share ($22,352,377 ÷ 1,488,508 shares)A | | $ 15.02 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($4,373,397 ÷ 281,886 shares) | | $ 15.51 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Utilities Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
Investment Income | | |
Dividends | | $ 5,211,612 |
Interest | | 6,826 |
Income from Fidelity Central Funds | | 104,477 |
Total income | | 5,322,915 |
| | |
Expenses | | |
Management fee | $ 826,728 | |
Transfer agent fees | 471,069 | |
Distribution fees | 720,262 | |
Accounting and security lending fees | 58,076 | |
Custodian fees and expenses | 7,483 | |
Independent trustees' compensation | 1,032 | |
Registration fees | 57,744 | |
Audit | 46,603 | |
Legal | 2,732 | |
Miscellaneous | 11,919 | |
Total expenses before reductions | 2,203,648 | |
Expense reductions | (1,577) | 2,202,071 |
Net investment income (loss) | | 3,120,844 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (55,797,413) | |
Foreign currency transactions | 14,961 | |
Total net realized gain (loss) | | (55,782,452) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,797,090) | |
Assets and liabilities in foreign currencies | 184 | |
Total change in net unrealized appreciation (depreciation) | | (1,796,906) |
Net gain (loss) | | (57,579,358) |
Net increase (decrease) in net assets resulting from operations | | $ (54,458,514) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 3,120,844 | $ 2,259,007 |
Net realized gain (loss) | (55,782,452) | 15,062,436 |
Change in net unrealized appreciation (depreciation) | (1,796,906) | (20,022,346) |
Net increase (decrease) in net assets resulting from operations | (54,458,514) | (2,700,903) |
Distributions to shareholders from net investment income | (2,162,549) | (2,837,541) |
Share transactions - net increase (decrease) | (29,372,654) | (28,461,258) |
Redemption fees | 4,076 | 9,517 |
Total increase (decrease) in net assets | (85,989,641) | (33,990,185) |
| | |
Net Assets | | |
Beginning of period | 223,402,820 | 257,393,005 |
End of period (including undistributed net investment income of $1,435,445 and undistributed net investment income of $494,309, respectively) | $ 137,413,179 | $ 223,402,820 |
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .35 | .24 | .21 | .24 | .28 F |
Net realized and unrealized gain (loss) | (5.10) | (.38) | 3.56 | 2.06 | 3.01 |
Total from investment operations | (4.75) | (.14) | 3.77 | 2.30 | 3.29 |
Distributions from net investment income | (.26) | (.32) | (.23) | (.27) | (.21) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.27 | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 |
Total Return A,B | (23.44)% | (.82)% | 22.14% | 15.38% | 27.48% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.26% | 1.21% | 1.27% | 1.34% | 1.39% |
Expenses net of fee waivers, if any | 1.26% | 1.21% | 1.27% | 1.34% | 1.39% |
Expenses net of all reductions | 1.26% | 1.21% | 1.26% | 1.32% | 1.36% |
Net investment income (loss) | 2.37% | 1.11% | 1.04% | 1.51% | 2.03% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 66,064 | $ 105,219 | $ 94,842 | $ 40,599 | $ 29,150 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.39%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .31 | .18 | .15 | .19 | .24 F |
Net realized and unrealized gain (loss) | (5.10) | (.39) | 3.56 | 2.08 | 2.99 |
Total from investment operations | (4.79) | (.21) | 3.71 | 2.27 | 3.23 |
Distributions from net investment income | (.20) | (.24) | (.18) | (.19) | (.17) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.27 | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 |
Total Return A,B | (23.61)% | (1.11)% | 21.74% | 15.20% | 27.03% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.52% | 1.47% | 1.54% | 1.60% | 1.67% |
Expenses net of fee waivers, if any | 1.52% | 1.47% | 1.54% | 1.60% | 1.67% |
Expenses net of all reductions | 1.52% | 1.47% | 1.54% | 1.58% | 1.64% |
Net investment income (loss) | 2.11% | .84% | .76% | 1.25% | 1.76% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 33,989 | $ 54,346 | $ 62,592 | $ 52,128 | $ 55,683 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.12%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .24 | .08 | .05 | .12 | .17 F |
Net realized and unrealized gain (loss) | (5.04) | (.39) | 3.52 | 2.03 | 2.95 |
Total from investment operations | (4.80) | (.31) | 3.57 | 2.15 | 3.12 |
Distributions from net investment income | (.13) | (.08) | (.07) | (.08) | (.11) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.08 | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 |
Total Return A,B | (23.97)% | (1.59)% | 21.18% | 14.57% | 26.51% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.01% | 1.96% | 2.04% | 2.09% | 2.14% |
Expenses net of fee waivers, if any | 2.01% | 1.96% | 2.04% | 2.09% | 2.14% |
Expenses net of all reductions | 2.01% | 1.95% | 2.03% | 2.06% | 2.11% |
Net investment income (loss) | 1.62% | .36% | .27% | .76% | 1.28% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 10,634 | $ 20,747 | $ 43,845 | $ 65,959 | $ 82,577 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .64%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .24 | .08 | .06 | .13 | .18 F |
Net realized and unrealized gain (loss) | (5.02) | (.39) | 3.51 | 2.04 | 2.94 |
Total from investment operations | (4.78) | (.31) | 3.57 | 2.17 | 3.12 |
Distributions from net investment income | (.13) | (.14) | (.10) | (.10) | (.12) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.02 | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 |
Total Return A,B | (23.96)% | (1.58)% | 21.23% | 14.72% | 26.48% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.01% | 1.95% | 1.99% | 2.02% | 2.07% |
Expenses net of fee waivers, if any | 2.01% | 1.95% | 1.99% | 2.02% | 2.07% |
Expenses net of all reductions | 2.01% | 1.95% | 1.99% | 2.00% | 2.04% |
Net investment income (loss) | 1.62% | .36% | .32% | .83% | 1.36% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 22,352 | $ 37,387 | $ 43,292 | $ 32,823 | $ 34,827 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .39 | .31 | .29 | .30 | .33 E |
Net realized and unrealized gain (loss) | (5.17) | (.38) | 3.58 | 2.10 | 3.03 |
Total from investment operations | (4.78) | (.07) | 3.87 | 2.40 | 3.36 |
Distributions from net investment income | (.23) | (.36) | (.30) | (.33) | (.25) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 15.51 | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 |
Total Return A | (23.24)% | (.49)% | 22.54% | 15.95% | 27.88% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | 1.00% | .91% | .92% | .94% | .99% |
Expenses net of fee waivers, if any | 1.00% | .91% | .92% | .94% | .99% |
Expenses net of all reductions | 1.00% | .90% | .92% | .92% | .96% |
Net investment income (loss) | 2.63% | 1.41% | 1.39% | 1.91% | 2.44% E |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 4,373 | $ 5,704 | $ 12,822 | $ 6,479 | $ 1,766 |
Portfolio turnover rate D | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.80%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Utilities
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Utilities Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, market discount, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 10,430,514 | |
Unrealized depreciation | (18,502,661) | |
Net unrealized appreciation (depreciation) | $ (8,072,147) | |
Undistributed ordinary income | $ 1,450,407 | |
Capital loss carryforward | $ (246,849,971) | |
Cost for federal income tax purposes | $ 147,066,524 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 2,162,549 | $ 2,837,541 |
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.
Utilities
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $362,557,553 and $371,360,376, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 175,548 | $ 7,291 |
Class T | .25% | .25% | 181,630 | 1,216 |
Class B | .75% | .25% | 123,698 | 92,816 |
Class C | .75% | .25% | 239,386 | 21,345 |
| | | $ 720,262 | $ 122,668 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares. For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 40,987 |
Class T | 6,617 |
Class B* | 31,601 |
Class C* | 3,207 |
| $ 82,412 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 222,951 | .32 |
Class T | 120,957 | .33 |
Class B | 39,435 | .32 |
Class C | 76,166 | .32 |
Institutional Class | 11,560 | .31 |
| $ 471,069 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8,767 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $687 and is reflected in Miscellaneous Expense 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 $21,598.
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 $1,539 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 $38.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 1,279,763 | $ 1,513,480 |
Class T | 508,856 | 697,662 |
Class B | 107,816 | 116,029 |
Class C | 209,682 | 289,510 |
Institutional Class | 56,432 | 220,860 |
Total | $ 2,162,549 | $ 2,837,541 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 856,135 | 2,354,893 | $ 12,539,810 | $ 52,162,968 |
Reinvestment of distributions | 73,926 | 60,065 | 1,138,401 | 1,341,196 |
Shares redeemed | (1,794,060) | (1,798,285) | (25,956,960) | (38,893,897) |
Net increase (decrease) | (863,999) | 616,673 | $ (12,278,749) | $ 14,610,267 |
Class T | | | | |
Shares sold | 257,339 | 607,632 | $ 3,753,639 | $ 13,411,231 |
Reinvestment of distributions | 31,967 | 29,500 | 480,828 | 659,942 |
Shares redeemed | (746,038) | (977,155) | (10,889,452) | (21,255,306) |
Net increase (decrease) | (456,732) | (340,023) | $ (6,654,985) | $ (7,184,133) |
Utilities
10. Share Transactions - continued
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class B | | | | |
Shares sold | 154,111 | 265,082 | $ 2,249,187 | $ 5,789,226 |
Reinvestment of distributions | 6,919 | 4,528 | 98,250 | 103,786 |
Shares redeemed | (492,642) | (1,382,108) | (7,223,742) | (29,771,682) |
Net increase (decrease) | (331,612) | (1,112,498) | $ (4,876,305) | $ (23,878,670) |
Class C | | | | |
Shares sold | 216,794 | 413,208 | $ 3,077,077 | $ 8,976,142 |
Reinvestment of distributions | 11,490 | 10,061 | 162,462 | 223,730 |
Shares redeemed | (615,787) | (671,632) | (8,815,385) | (14,302,911) |
Net increase (decrease) | (387,503) | (248,363) | $ (5,575,846) | $ (5,103,039) |
Institutional Class | | | | |
Shares sold | 137,801 | 1,285,993 | $ 1,988,698 | $ 28,765,131 |
Reinvestment of distributions | 2,995 | 7,559 | 45,330 | 173,189 |
Shares redeemed | (136,905) | (1,627,489) | (2,020,797) | (35,844,003) |
Net increase (decrease) | 3,891 | (333,937) | $ 13,231 | $ (6,905,683) |
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 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, and Fidelity Advisor Utilities Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Consumer Discretionary Fund, Fidelity 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, and Fidelity Advisor Utilities Fund (collectively, the "Funds"), including the schedules of investments, as of July 31, 2009, 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, 2009, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Consumer Discretionary Fund, Fidelity 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, and Fidelity Advisor Utilities Fund as of July 31, 2009, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 28, 2009
Annual Report
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review the fund's performance. Except for Mr. Edward C. Johnson 3rd and Mr. James C. Curvey, each of the Trustees oversees 220 funds advised by FMR or an affiliate. Mr. Johnson oversees 262 funds advised by FMR or an affiliate. Mr. Curvey oversees 392 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Edward C. Johnson 3d (79) |
| 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 (74) |
| 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.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation |
Dennis J. Dirks (61) |
| 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 (55) |
| 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 (65) |
| 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). 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 (64) |
| 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 (65) |
| 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 (70) |
| Year of Election or Appointment: 2001 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 (60) |
| 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 (58) |
| 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). |
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Peter S. Lynch (65) |
| 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 (39) |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2009-present) and is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (44) |
| 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 (37) |
| 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 (41) |
| 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 (40) |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Vice President and Associate General Counsel of FMR LLC (2005-present), and is an employee of Fidelity Investments. |
Holly C. Laurent (55) |
| 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 (50) |
| 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 (62) |
| 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 (47) |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian also serves as Chief Financial Officer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. Previously, Mr. Christian served as Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009) and as Vice President of Business Analysis (2003-2004). |
Bryan A. Mehrmann (48) |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes 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). |
John R. Hebble (51) |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (50) |
| 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
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| September 2008 | December 2008 |
Fidelity Advisor Consumer Discretionary Fund | | |
Class A | - | 100% |
Class T | - | 100% |
Fidelity Advisor Financial Services Fund | | |
Class A | 95% | 74% |
Class T | 100% | 85% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Fidelity Advisor Industrials Fund | | |
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Fidelity Advisor Utilities Fund | | |
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | - | 100% |
Class C | - | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| September 2008 | December 2008 |
Fidelity Advisor Consumer Discretionary Fund | | |
Class A | - | 100% |
Class T | - | 100% |
Fidelity Advisor Financial Services Fund | | |
Class A | 99% | 90% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Fidelity Advisor Industrials Fund | | |
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Fidelity Advisor Utilities Fund | | |
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | - | 100% |
Class C | - | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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 throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. 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. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2009 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 ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' investment personnel and the funds' investment objectives and disciplines. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. In response to last year's financial crisis, FMR took a number of actions intended to cut costs and improve efficiency without weakening the investment teams or resources. 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.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of a fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure and broaden the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) contractually agreeing to reduce the management fee on Fidelity U.S. Bond Index Fund; and (iv) expanding Class A and Class T load waiver categories to increase rollover retention opportunities and create consistent policies across the classes.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Investment Performance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance for each class, as well as each fund's relative investment performance for each class measured against a third-party-sponsored index that reflects the market sector in which the fund invests over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare any of the funds' performance.
For each of Advisor Biotechnology, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2008, 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 Advisor Communications Equipment, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2008, 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 stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Communications Equipment
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Consumer Discretionary
The Board stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Electronics
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Energy
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Financial Services
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Health Care
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Industrials
The Board stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Technology
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Utilities
The Board stated that the investment performance of the fund was lower than its benchmark for the one- and three- year periods, although the five-year cumulative total return of Institutional Class (Class I) compared favorably to its benchmark. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. For each of Advisor Biotechnology, Advisor Communications Equipment, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities, the Board reviewed the year-to-date performance of Class A through May 31, 2009 and stated that it exceeded the fund's benchmark. For Advisor Consumer Discretionary, the Board reviewed the year-to-date performance of Class A through May 31, 2009 and stated that it was lower than the fund's benchmark.
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 2008, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee ranked, is also included in the charts and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Biotechnology
Advisor Communications Equipment
Annual Report
Advisor Consumer Discretionary
Advisor Electronics
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Energy
Advisor Financial Services
Annual Report
Advisor Health Care
Advisor Industrials
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Technology
Advisor Utilities
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2008.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the total expenses of each class of each fund, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of each fund compared to competitive fund median expenses. Each class of each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expenses of the classes of each fund vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
The Board noted that the total expenses of each of Class A and Class C of Advisor Biotechnology ranked below its competitive median for 2008, the total expenses of Institutional Class ranked equal to its competitive median for 2008, and the total expenses of each of Class T and Class B ranked above its competitive median for 2008. 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.
Annual Report
The Board noted that the total expenses of each of Class A and Class C of Advisor Communications Equipment ranked below its competitive median for 2008 and the total expenses of each of Class T, Class B, and Institutional Class ranked above its competitive median for 2008. 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 and Class C of Advisor Consumer Discretionary ranked below its competitive median for 2008 and the total expenses of each of Class T, Class B, and Institutional Class ranked above its competitive median for 2008. 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 and Class C of Advisor Electronics ranked below its competitive median for 2008 and the total expenses of each of Class T, Class B, and Institutional Class ranked above its competitive median for 2008. 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 2008.
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 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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 Industrials ranked below its competitive median for 2008.
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 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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 Utilities ranked below its competitive median for 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of each fund were reasonable, although in some cases above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
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 created an Ad Hoc Committee (the "Committee") to analyze economies of scale. The Committee was formed to consider 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 determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, considering the findings of the Committee, that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends, 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; (iii) Fidelity's compensation structure for portfolio managers and key personnel, including performance benchmarks used by Fidelity in evaluating incentive compensation for portfolio managers and research analysts; (iv) the structure and process of equity research and actions taken by FMR to improve the quality of research; (v) the selection of and compensation paid by FMR to fund sub-advisers; (vi) Fidelity's fee structures and rationale for recommending different fees among categories of funds; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; (viii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; and (ix) explanations for 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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors (U.K.) Ltd.
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-0909
1.789241.105
Fidelity Advisor
Focus Funds®
Institutional Class
Biotechnology
Communications Equipment
Consumer Discretionary
Electronics
Energy
Financial Services
Health Care
Industrials
Technology
Utilities
Annual Report
July 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/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 fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Dear Shareholder:
We've seen a welcome uptick in the global equity markets this spring and summer, as signs of stabilization in some economic indicators have brought many investors back into the marketplace. But there remain other key measures - notably high unemployment and slack consumer spending - that suggest the road back to economic health could still be a bumpy ride. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There 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,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Advisor Biotechnology Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Life of
fundA |
Institutional Class | -11.00% | 4.72% | -3.10% |
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.
Biotechnology
Advisor Biotechnology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -11.14%, -11.37%, -11.85% and -11.85%, respectively (excluding sales charges), trailing the -8.74% mark of the MSCI ® US Investable Market Biotechnology Index but beating the S&P 500®. Versus the MSCI index, weak stock picking in pharmaceuticals - including Ireland-based Elan, Biodel and XenoPort - hurt performance. Elan's stock was hampered early in the period by renewed concerns about product safety. While biotechnology holding Dendreon delivered an extremely strong gain and was one of our best absolute contributors, it detracted in relative terms, as I missed part of the stock's huge advance. Elan, Biodel and XenoPort were out-of-index positions. Underweighting outperforming index heavyweights Amgen - by far the fund's largest holding - and Genentech, which was acquired during the period, detracted as well. Conversely, the single most positive factor versus our industry benchmark was a small cash position, which helped stabilize the portfolio when share prices were declining. Stock picking in the fund's core biotechnology segment also added modestly to performance. The fund's out-of-index holding in Antigenics roughly doubled in price during the period, fueled by positive news on survival rates of kidney cancer patients treated with the company's Oncophage vaccine. Underweightings in Celgene, Genzyme and Gilead Sciences - all major index components that underperformed - further aided results. Our positioning in Biogen Idec was beneficial as well.
Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Advisor Biotechnology Fund: During the past year, the fund's Institutional Class shares returned -11.00%, trailing the -8.74% mark of the MSCI® US Investable Market Biotechnology Index but beating the S&P 500®. Versus the MSCI index, weak stock picking in pharmaceuticals - including Ireland-based Elan, Biodel and XenoPort - hurt performance. Elan's stock was hampered early in the period by renewed concerns about product safety. While biotechnology holding Dendreon delivered an extremely strong gain and was one of our best absolute contributors, it detracted in relative terms, as I missed part of the stock's huge advance. Elan, Biodel and XenoPort were out-of-index positions. Underweighting outperforming index heavyweights Amgen - by far the fund's largest holding - and Genentech, which was acquired during the period, detracted as well. Conversely, the single most positive factor versus our industry benchmark was a small cash position, which helped stabilize the portfolio when share prices were declining. Stock picking in the fund's core biotechnology segment also added modestly to performance. The fund's out-of-index holding in Antigenics roughly doubled in price during the period, fueled by positive news on survival rates of kidney cancer patients treated with the company's Oncophage vaccine. Underweightings in Celgene, Genzyme and Gilead Sciences - all major index components that underperformed - further aided results. Our positioning in Biogen Idec was beneficial as well.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Biotechnology Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,123.00 | $ 7.37 |
HypotheticalA | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,120.70 | $ 8.68 |
HypotheticalA | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.14% | | | |
Actual | | $ 1,000.00 | $ 1,117.40 | $ 11.23 |
HypotheticalA | | $ 1,000.00 | $ 1,014.18 | $ 10.69 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,117.40 | $ 11.29 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.07% | | | |
Actual | | $ 1,000.00 | $ 1,123.00 | $ 5.63 |
Hypothetical A | | $ 1,000.00 | $ 1,019.49 | $ 5.36 |
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).
Biotechnology
Advisor Biotechnology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Amgen, Inc. | 21.5 | 18.3 |
Biogen Idec, Inc. | 8.5 | 5.3 |
Alexion Pharmaceuticals, Inc. | 6.8 | 4.6 |
Gilead Sciences, Inc. | 5.5 | 9.3 |
United Therapeutics Corp. | 5.0 | 2.1 |
Vertex Pharmaceuticals, Inc. | 4.7 | 3.6 |
Celgene Corp. | 4.5 | 5.0 |
Genzyme Corp. | 3.7 | 4.9 |
Cephalon, Inc. | 3.5 | 4.5 |
Acorda Therapeutics, Inc. | 3.3 | 3.4 |
| 67.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
 | Biotechnology | 92.5% | |
 | Pharmaceuticals | 6.7% | |
 | Life Sciences
Tools & Services | 0.5% | |
 | Health Care
Equipment & Supplies | 0.3% | |
 | All Others* | 0.0% | |
As of January 31, 2009 |
| Biotechnology | 88.6% | |
| Pharmaceuticals | 7.4% | |
| Health Care
Equipment & Supplies | 0.8% | |
| Life Sciences
Tools & Services | 0.6% | |
| All Others* | 2.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Biotechnology Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.8% |
| Shares | | Value |
BIOTECHNOLOGY - 92.3% |
Biotechnology - 92.3% |
Acadia Pharmaceuticals, Inc. (a) | 28,874 | | $ 117,517 |
Acorda Therapeutics, Inc. (a) | 71,716 | | 1,811,546 |
Affymax, Inc. (a) | 7,300 | | 139,503 |
Alexion Pharmaceuticals, Inc. (a) | 85,088 | | 3,748,126 |
Alkermes, Inc. (a) | 24,461 | | 252,438 |
Allos Therapeutics, Inc. (a) | 21,930 | | 176,975 |
Alnylam Pharmaceuticals, Inc. (a) | 7,000 | | 162,890 |
Amgen, Inc. (a) | 189,873 | | 11,830,988 |
Amylin Pharmaceuticals, Inc. (a)(d) | 32,000 | | 470,720 |
Anadys Pharmaceuticals, Inc. (a) | 23,355 | | 60,723 |
Antigenics, Inc. (a)(d) | 68,000 | | 148,920 |
Antigenics, Inc.: | | | |
warrants 1/9/10 (a)(e) | 452,000 | | 619,877 |
warrants 1/9/18 (a)(e) | 452,000 | | 984,826 |
Arena Pharmaceuticals, Inc. (a) | 22,400 | | 114,240 |
Biogen Idec, Inc. (a) | 98,026 | | 4,661,136 |
BioMarin Pharmaceutical, Inc. (a) | 85,326 | | 1,400,200 |
Celera Corp. (a) | 17,200 | | 103,200 |
Celgene Corp. (a) | 43,315 | | 2,467,222 |
Cephalon, Inc. (a) | 32,394 | | 1,899,908 |
Cepheid, Inc. (a) | 6,800 | | 71,876 |
Cubist Pharmaceuticals, Inc. (a) | 4,892 | | 97,204 |
Dendreon Corp. (a) | 67,700 | | 1,639,017 |
Enzon Pharmaceuticals, Inc. (a)(d) | 5,400 | | 43,902 |
Facet Biotech Corp. (a) | 4,500 | | 39,690 |
Genomic Health, Inc. (a) | 2,100 | | 35,406 |
Genzyme Corp. (a) | 38,832 | | 2,014,992 |
Gilead Sciences, Inc. (a) | 62,062 | | 3,036,694 |
GTx, Inc. (a) | 2,670 | | 28,088 |
Halozyme Therapeutics, Inc. (a) | 12,910 | | 91,145 |
Human Genome Sciences, Inc. (a)(d) | 72,308 | | 1,034,004 |
ImmunoGen, Inc. (a) | 900 | | 7,821 |
Incyte Corp. (a) | 13,195 | | 68,614 |
InterMune, Inc. | 24,417 | | 373,092 |
Isis Pharmaceuticals, Inc. (a) | 37,900 | | 692,812 |
Ligand Pharmaceuticals, Inc. Class B (a) | 26,500 | | 74,995 |
Martek Biosciences | 2,900 | | 67,454 |
Medivation, Inc. (a) | 7,880 | | 195,030 |
Micromet, Inc. (a) | 4,700 | | 30,221 |
Momenta Pharmaceuticals, Inc. (a)(d) | 19,760 | | 214,396 |
Myriad Genetics, Inc. (a) | 15,224 | | 417,442 |
Myriad Pharmaceuticals, Inc. (a) | 302 | | 1,471 |
OncoGenex Pharmaceuticals, Inc. (a)(d) | 12,692 | | 370,353 |
ONYX Pharmaceuticals, Inc. (a) | 14,948 | | 536,932 |
OREXIGEN Therapeutics, Inc. (a)(d) | 13,588 | | 111,150 |
OSI Pharmaceuticals, Inc. (a) | 26,003 | | 878,641 |
PDL BioPharma, Inc. | 41,900 | | 344,837 |
Poniard Pharmaceuticals, Inc. (a)(d) | 7,700 | | 55,517 |
Progenics Pharmaceuticals, Inc. (a) | 4,500 | | 25,560 |
|
| Shares | | Value |
Regeneron Pharmaceuticals, Inc. (a) | 13,649 | | $ 292,635 |
Rigel Pharmaceuticals, Inc. (a) | 7,635 | | 63,600 |
Sangamo Biosciences, Inc. (a)(d) | 7,098 | | 40,459 |
Savient Pharmaceuticals, Inc. (a)(d) | 15,855 | | 247,179 |
Targacept, Inc. (a) | 500 | | 5,365 |
Theratechnologies, Inc. (a) | 1,900 | | 3,968 |
Theravance, Inc. (a)(d) | 21,385 | | 322,914 |
United Therapeutics Corp. (a) | 29,660 | | 2,747,109 |
Vanda Pharmaceuticals, Inc. (a) | 33,500 | | 509,200 |
Vertex Pharmaceuticals, Inc. (a) | 72,204 | | 2,600,066 |
Zymogenetics, Inc. (a)(d) | 10,295 | | 57,652 |
| | 50,659,458 |
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3% |
Health Care Equipment - 0.0% |
Alsius Corp. (a) | 14,200 | | 852 |
Aradigm Corp. (a) | 21,800 | | 4,447 |
| | 5,299 |
Health Care Supplies - 0.3% |
Quidel Corp. (a) | 11,770 | | 175,726 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 181,025 |
LIFE SCIENCES TOOLS & SERVICES - 0.5% |
Life Sciences Tools & Services - 0.5% |
Clinical Data, Inc. (a)(d) | 7,925 | | 117,369 |
Exelixis, Inc. (a) | 32,900 | | 176,015 |
| | 293,384 |
PHARMACEUTICALS - 6.7% |
Pharmaceuticals - 6.7% |
Adolor Corp. (a) | 45,299 | | 80,632 |
Akorn, Inc. (a) | 112,579 | | 151,982 |
Alexza Pharmaceuticals, Inc. (a)(d) | 6,581 | | 17,374 |
Auxilium Pharmaceuticals, Inc. (a)(d) | 47,658 | | 1,474,062 |
Biodel, Inc. (a) | 100,769 | | 496,791 |
Cadence Pharmaceuticals, Inc. (a)(d) | 13,600 | | 164,560 |
Elan Corp. PLC sponsored ADR (a) | 72,250 | | 569,330 |
Inspire Pharmaceuticals, Inc. (a) | 1,370 | | 6,658 |
Jazz Pharmaceuticals, Inc. (a)(d) | 8,735 | | 51,362 |
Optimer Pharmaceuticals, Inc. (a) | 12,437 | | 175,237 |
ViroPharma, Inc. (a) | 4,100 | | 30,217 |
Vivus, Inc. (a) | 12,468 | | 92,388 |
Wyeth | 5,800 | | 269,990 |
XenoPort, Inc. (a) | 4,833 | | 98,158 |
| | 3,678,741 |
TOTAL COMMON STOCKS (Cost $51,054,720) | 54,812,608 |
Convertible Bonds - 0.2% |
| Principal Amount | | Value |
BIOTECHNOLOGY - 0.2% |
Biotechnology - 0.2% |
OSI Pharmaceuticals, Inc. 3.25% 9/8/23
(Cost $106,858) | | $ 130,000 | | $ 120,169 |
Money Market Funds - 4.0% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b) | 121,707 | | 121,707 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 2,073,900 | | 2,073,900 |
TOTAL MONEY MARKET FUNDS (Cost $2,195,607) | 2,195,607 |
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $53,357,185) | | 57,128,384 |
NET OTHER ASSETS - (4.0)% | | (2,210,643) |
NET ASSETS - 100% | $ 54,917,741 |
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 $1,604,703 or 2.9% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Antigenics, Inc. warrants 1/9/10 | 1/9/08 | $ 3 |
Antigenics, Inc. warrants 1/9/18 | 1/9/08 | $ 563,722 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 23,996 |
Fidelity Securities Lending Cash Central Fund | 16,666 |
Total | $ 40,662 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Health Care | $ 54,812,608 | $ 53,207,905 | $ 1,604,703 | $ - |
Corporate Bonds | 120,169 | - | 120,169 | - |
Money Market Funds | 2,195,607 | 2,195,607 | - | - |
Total Investments in Securities | $ 57,128,384 | $ 55,403,512 | $ 1,724,872 | $ - |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $4,539,063 all of which will expire on July 31, 2017. |
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Advisor Biotechnology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $1,996,287) - See accompanying schedule: Unaffiliated issuers (cost $51,161,578) | $ 54,932,777 | |
Fidelity Central Funds (cost $2,195,607) | 2,195,607 | |
Total Investments (cost $53,357,185) | | $ 57,128,384 |
Receivable for investments sold | | 824,559 |
Receivable for fund shares sold | | 112,289 |
Interest receivable | | 1,667 |
Distributions receivable from Fidelity Central Funds | | 3,280 |
Prepaid expenses | | 224 |
Total assets | | 58,070,403 |
| | |
Liabilities | | |
Payable for investments purchased | $ 774,912 | |
Payable for fund shares redeemed | 200,915 | |
Accrued management fee | 24,972 | |
Distribution fees payable | 24,630 | |
Other affiliated payables | 16,122 | |
Other payables and accrued expenses | 37,211 | |
Collateral on securities loaned, at value | 2,073,900 | |
Total liabilities | | 3,152,662 |
| | |
Net Assets | | $ 54,917,741 |
Net Assets consist of: | | |
Paid in capital | | $ 56,459,376 |
Undistributed net investment income | | 95 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (5,312,929) |
Net unrealized appreciation (depreciation) on investments | | 3,771,199 |
Net Assets | | $ 54,917,741 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($19,857,624 ÷ 2,862,510 shares) | | $ 6.94 |
| | |
Maximum offering price per share (100/94.25 of $6.94) | | $ 7.36 |
Class T:
Net Asset Value and redemption price per share ($13,356,033 ÷ 1,971,055 shares) | | $ 6.78 |
| | |
Maximum offering price per share (100/96.50 of $6.78) | | $ 7.03 |
Class B:
Net Asset Value and offering price per share ($7,376,850 ÷ 1,139,962 shares) A | | $ 6.47 |
| | |
Class C:
Net Asset Value and offering price per share ($12,425,872 ÷ 1,919,725 shares) A | | $ 6.47 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($1,901,362 ÷ 266,947 shares) | | $ 7.12 |
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, 2009 |
| | |
Investment Income | | |
Dividends | | $ 26,491 |
Interest | | 466 |
Income from Fidelity Central Funds (including $16,666 from security lending) | | 40,662 |
Total income | | 67,619 |
| | |
Expenses | | |
Management fee | $ 294,316 | |
Transfer agent fees | 176,074 | |
Distribution fees | 306,361 | |
Accounting and security lending fees | 21,988 | |
Custodian fees and expenses | 9,828 | |
Independent trustees' compensation | 351 | |
Registration fees | 53,205 | |
Audit | 46,604 | |
Legal | 275 | |
Miscellaneous | 3,757 | |
Total expenses before reductions | 912,759 | |
Expense reductions | (7,893) | 904,866 |
Net investment income (loss) | | (837,247) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (282,142) | |
Foreign currency transactions | (38) | |
Total net realized gain (loss) | | (282,180) |
Change in net unrealized appreciation (depreciation) on investment securities | | (7,383,033) |
Net gain (loss) | | (7,665,213) |
Net increase (decrease) in net assets resulting from operations | | $ (8,502,460) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (837,247) | $ (852,978) |
Net realized gain (loss) | (282,180) | (1,921,856) |
Change in net unrealized appreciation (depreciation) | (7,383,033) | 10,243,107 |
Net increase (decrease) in net assets resulting from operations | (8,502,460) | 7,468,273 |
Distributions to shareholders from net realized gain | - | (3,898,928) |
Share transactions - net increase (decrease) | 4,533,971 | 3,736,181 |
Redemption fees | 29,559 | 1,940 |
Total increase (decrease) in net assets | (3,938,930) | 7,307,466 |
| | |
Net Assets | | |
Beginning of period | 58,856,671 | 51,549,205 |
End of period (including undistributed net investment income of $95 and $0, respectively) | $ 54,917,741 | $ 58,856,671 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 | $ 6.00 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.08) | (.09) F | (.09) | (.09) | (.08) G |
Net realized and unrealized gain (loss) | (.79) | 1.20 | .51 | .10 | .88 |
Total from investment operations | (.87) | 1.11 | .42 | .01 | .80 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.94 | $ 7.81 | $ 7.23 | $ 6.81 | $ 6.80 |
Total Return A,B | (11.14)% | 15.95% | 6.17% | .15% | 13.33% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.40% | 1.37% | 1.42% | 1.48% | 1.56% |
Expenses net of fee waivers, if any | 1.40% | 1.37% | 1.40% | 1.40% | 1.45% |
Expenses net of all reductions | 1.40% | 1.37% | 1.40% | 1.37% | 1.43% |
Net investment income (loss) | (1.27)% | (1.24)% F | (1.25)% | (1.29)% | (1.36)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 19,858 | $ 18,249 | $ 13,081 | $ 12,539 | $ 11,022 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.33)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.37)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 | $ 5.95 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) | (.11) F | (.11) | (.11) | (.10) G |
Net realized and unrealized gain (loss) | (.78) | 1.18 | .51 | .10 | .87 |
Total from investment operations | (.87) | 1.07 | .40 | (.01) | .77 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.78 | $ 7.65 | $ 7.11 | $ 6.71 | $ 6.72 |
Total Return A,B | (11.37)% | 15.64% | 5.96% | (.15)% | 12.94% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 1.71% | 1.69% | 1.75% | 1.79% | 1.93% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.70% |
Expenses net of all reductions | 1.65% | 1.65% | 1.65% | 1.62% | 1.68% |
Net investment income (loss) | (1.52)% | (1.53)% F | (1.49)% | (1.54)% | (1.61)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,356 | $ 15,123 | $ 13,008 | $ 13,808 | $ 14,177 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.61)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 | $ 5.84 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.12) | (.14) F | (.14) | (.14) | (.13) G |
Net realized and unrealized gain (loss) | (.75) | 1.13 | .50 | .10 | .85 |
Total from investment operations | (.87) | .99 | .36 | (.04) | .72 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.56 |
Total Return A,B | (11.85)% | 14.96% | 5.52% | (.61)% | 12.33% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.15% | 2.12% | 2.17% | 2.23% | 2.33% |
Expenses net of fee waivers, if any | 2.15% | 2.12% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.12% | 2.15% | 2.12% | 2.18% |
Net investment income (loss) | (2.02)% | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 7,377 | $ 11,044 | $ 12,656 | $ 14,938 | $ 16,921 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 | $ 5.84 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.12) | (.13) F | (.14) | (.14) | (.13) G |
Net realized and unrealized gain (loss) | (.75) | 1.12 | .50 | .09 | .86 |
Total from investment operations | (.87) | .99 | .36 | (.05) | .73 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 6.47 | $ 7.34 | $ 6.88 | $ 6.52 | $ 6.57 |
Total Return A,B | (11.85)% | 14.96% | 5.52% | (.76)% | 12.50% |
Ratios to Average Net Assets D,H | | | | | |
Expenses before reductions | 2.15% | 2.12% | 2.16% | 2.17% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.12% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.12% | 2.15% | 2.12% | 2.18% |
Net investment income (loss) | (2.02)% | (2.00)% F | (1.99)% | (2.04)% | (2.11)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 12,426 | $ 13,323 | $ 11,813 | $ 13,787 | $ 12,538 |
Portfolio turnover rate E | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.08)%.
G Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (2.11)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 | $ 6.06 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | (.06) | (.07) E | (.07) | (.07) | (.06) F |
Net realized and unrealized gain (loss) | (.82) | 1.23 | .53 | .09 | .89 |
Total from investment operations | (.88) | 1.16 | .46 | .02 | .83 |
Distributions from net realized gain | - | (.53) | - | - | - |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 7.12 | $ 8.00 | $ 7.37 | $ 6.91 | $ 6.89 |
Total Return A | (11.00)% | 16.35% | 6.66% | .29% | 13.70% |
Ratios to Average Net Assets C,G | | | | | |
Expenses before reductions | 1.11% | 1.06% | 1.06% | 1.05% | 1.10% |
Expenses net of fee waivers, if any | 1.11% | 1.06% | 1.06% | 1.05% | 1.10% |
Expenses net of all reductions | 1.11% | 1.06% | 1.06% | 1.03% | 1.09% |
Net investment income (loss) | (.98)% | (.94)% E | (.91)% | (.94)% | (1.02)% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,901 | $ 1,117 | $ 991 | $ 1,268 | $ 1,243 |
Portfolio turnover rate D | 73% | 132% | 120% | 62% | 30% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
F Investment income per share reflects a special dividend which amounted to $.0004 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.02)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Biotechnology
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Biotechnology Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded 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, 2008, dividend income has been reduced $20,082 with a corresponding increase to net unrealized appreciation (depreciation). The change in estimate has no impact on total net assets or total return of the Fund. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, net operating losses, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 9,091,862 | |
Unrealized depreciation | (6,094,438) | |
Net unrealized appreciation (depreciation) | $ 2,997,424 | |
Capital loss carryforward | $ (4,539,063) | |
Cost for federal income tax purposes | $ 54,130,960 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Long-term Capital Gains | $ - | $ 3,898,928 |
Biotechnology
3. Significant Accounting Policies - continued
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 $42,678,225 and $37,357,661, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 44,439 | $ 727 |
Class T | .25% | .25% | 64,334 | 330 |
Class B | .75% | .25% | 79,206 | 59,780 |
Class C | .75% | .25% | 118,382 | 24,881 |
| | | $ 306,361 | $ 85,718 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 19,529 |
Class T | 7,568 |
Class B* | 19,140 |
Class C* | 5,479 |
| $ 51,716 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 58,066 | .33 |
Class T | 48,815 | .38 |
Class B | 25,711 | .32 |
Class C | 38,525 | .33 |
Institutional Class | 4,957 | .28 |
| $ 176,074 | |
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 $737 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $241 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 366 |
Class T | 1.65% | 6,995 |
Class B | 2.15% | 350 |
Class C | 2.15% | 182 |
| | $ 7,893 |
Biotechnology
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ - | $ 958,767 |
Class T | - | 975,566 |
Class B | - | 968,071 |
Class C | - | 911,566 |
Institutional Class | - | 84,958 |
Total | $ - | $ 3,898,928 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,341,295 | 968,364 | $ 15,410,062 | $ 6,960,029 |
Reinvestment of distributions | - | 116,475 | - | 854,207 |
Shares redeemed | (1,815,151) | (556,578) | (11,129,933) | (3,954,261) |
Net increase (decrease) | 526,144 | 528,261 | $ 4,280,129 | $ 3,859,975 |
Class T | | | | |
Shares sold | 826,391 | 558,497 | $ 5,258,554 | $ 3,914,836 |
Reinvestment of distributions | - | 133,154 | - | 959,165 |
Shares redeemed | (832,503) | (543,030) | (5,110,823) | (3,782,531) |
Net increase (decrease) | (6,112) | 148,621 | $ 147,731 | $ 1,091,470 |
Class B | | | | |
Shares sold | 365,766 | 270,835 | $ 2,311,576 | $ 1,836,564 |
Reinvestment of distributions | - | 123,818 | - | 860,151 |
Shares redeemed | (730,232) | (730,418) | (4,256,288) | (4,825,895) |
Net increase (decrease) | (364,466) | (335,765) | $ (1,944,712) | $ (2,129,180) |
Class C | | | | |
Shares sold | 793,743 | 452,084 | $ 5,016,886 | $ 3,145,989 |
Reinvestment of distributions | - | 110,151 | - | 765,068 |
Shares redeemed | (688,414) | (465,047) | (3,988,392) | (3,112,018) |
Net increase (decrease) | 105,329 | 97,188 | $ 1,028,494 | $ 799,039 |
Institutional Class | | | | |
Shares sold | 390,521 | 190,433 | $ 2,696,069 | $ 1,427,209 |
Reinvestment of distributions | - | 6,538 | - | 48,898 |
Shares redeemed | (263,268) | (191,649) | (1,673,740) | (1,361,230) |
Net increase (decrease) | 127,253 | 5,322 | $ 1,022,329 | $ 114,877 |
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
Advisor Communications Equipment Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Life of
fundA |
Institutional Class B | -6.64% | 2.74% | -3.21% |
A From December 27, 2000.
B Prior to October 1, 2006, Advisor Communications Eqipment operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Communications Equipment Fund - Institutional Class on December 27, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Communications Equipment Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -6.91%, -7.16%, -7.58% and -7.59%, respectively (excluding sales charges), edging the - -7.64% return of the MSCI® US Investable Market Communications Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock picking in the semiconductors group was most productive, with stock selection in application software and Internet software/services, along with a modest cash position, also bolstering performance. Starent Networks, a provider of infrastructure hardware/software products, was the top contributor, with China-based Cogo Group, which sells electronic components to telecommunication equipment companies, and German chip maker Infineon Technologies, an out-of-index holding, also contributing. I sold Cogo to lock in profits. Conversely, unfavorable stock choices in communications equipment detracted, as did picks in advertising and electronic equipment/instruments. Our foreign holdings also hurt, hampered in part by currency fluctuations. Canadian out-of-index holding Research In Motion was our biggest detractor, sidetracked by increasingly stiff competition in the smartphone market, while Powerwave Technologies, which makes equipment for wireless communications networks, and Comverse Technology, an out-of-index maker of software and systems, also hurt. A large underweighting in network equipment maker Cisco Systems - the MSCI index's largest component - was counterproductive as well, although I added substantially to the position by period end.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Communications Equipment Fund: During the past year, the fund's Institutional Class shares returned -6.64%, beating the -7.64% return of the MSCI® US Investable Market Communications Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock picking in the semiconductors group was most productive, with stock selection in application software and Internet software/services, along with a modest cash position, also bolstering performance. Starent Networks, a provider of infrastructure hardware/software products, was the top contributor, with China-based Cogo Group, which sells electronic components to telecommunication equipment companies, and German chip maker Infineon Technologies, an out-of-index holding, also contributing. I sold Cogo to lock in profits. Conversely, unfavorable stock choices in communications equipment detracted, as did picks in advertising and electronic equipment/instruments. Our foreign holdings also hurt, hampered in part by currency fluctuations. Canadian out-of-index holding Research In Motion was our biggest detractor, sidetracked by increasingly stiff competition in the smartphone market, while Powerwave Technologies, which makes equipment for wireless communications networks, and Comverse Technology, an out-of-index maker of software and systems, also hurt. A large underweighting in network equipment maker Cisco Systems - the MSCI index's largest component - was counterproductive as well, although I added substantially to the position 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.
Communications Equipment
Advisor Communications Equipment Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,610.60 | $ 9.06 |
Hypothetical A | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,609.50 | $ 10.68 |
Hypothetical A | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,607.10 | $ 13.90 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,604.70 | $ 13.89 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% | | | |
Actual | | $ 1,000.00 | $ 1,612.60 | $ 7.45 |
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).
Annual Report
Advisor Communications Equipment Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Cisco Systems, Inc. | 16.0 | 16.7 |
QUALCOMM, Inc. | 10.8 | 19.0 |
Juniper Networks, Inc. | 4.7 | 0.0 |
Tellabs, Inc. | 3.9 | 2.0 |
Starent Networks Corp. | 3.8 | 10.7 |
Tekelec | 3.4 | 0.2 |
Motorola, Inc. | 3.4 | 1.5 |
Adtran, Inc. | 3.2 | 2.2 |
Harmonic, Inc. | 2.9 | 0.0 |
TeleCommunication Systems, Inc. Class A | 2.9 | 0.0 |
| 55.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Communications Equipment | 75.1% | |
 | Semiconductors & Semiconductor Equipment | 9.2% | |
 | Software | 6.2% | |
 | Internet Software & Services | 2.8% | |
| Wireless Telecommunication Services | 2.5% | |
| All Others* | 4.2% | |
|
As of January 31, 2009 |
| Communications Equipment | 76.1% | |
| Semiconductors & Semiconductor Equipment | 8.6% | |
| Software | 5.4% | |
| Wireless Telecommunication Services | 4.7% | |
| Media | 2.0% | |
| All Others* | 3.2% | |
* Includes short-term investments and net other assets. |
Communications Equipment
Advisor Communications Equipment Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.4% |
| Shares | | Value |
COMMUNICATIONS EQUIPMENT - 75.0% |
Communications Equipment - 75.0% |
3Com Corp. (a) | 15,046 | | $ 56,723 |
Acme Packet, Inc. (a) | 15,665 | | 157,277 |
ADC Telecommunications, Inc. (a) | 6,700 | | 48,776 |
Adtran, Inc. | 14,283 | | 345,077 |
ADVA AG Optical Networking (a) | 7,013 | | 15,593 |
Alcatel-Lucent SA sponsored ADR (a) | 40,700 | | 112,332 |
Arris Group, Inc. (a) | 7,844 | | 95,540 |
Aruba Networks, Inc. (a) | 4,951 | | 43,965 |
BigBand Networks, Inc. (a) | 10,500 | | 57,645 |
Blue Coat Systems, Inc. (a) | 7,600 | | 142,044 |
Brocade Communications Systems, Inc. (a) | 25,400 | | 199,644 |
Ceragon Networks Ltd. (a) | 2,000 | | 14,900 |
China GrenTech Corp. Ltd. ADR (a) | 1,388 | | 5,059 |
Ciena Corp. (a) | 10,959 | | 122,302 |
Cisco Systems, Inc. (a) | 79,169 | | 1,742,512 |
CommScope, Inc. (a) | 9,100 | | 232,960 |
Comverse Technology, Inc. (a) | 9,206 | | 72,819 |
DragonWave, Inc. (a) | 2,800 | | 16,763 |
EMCORE Corp. (a) | 4,600 | | 5,796 |
Emulex Corp. (a) | 2,500 | | 22,825 |
F5 Networks, Inc. (a) | 6,300 | | 233,856 |
Harmonic, Inc. (a) | 45,700 | | 316,701 |
Harris Stratex Networks, Inc. Class A (a) | 2,867 | | 19,897 |
Infinera Corp. (a) | 1,300 | | 8,801 |
Ixia (a) | 5,900 | | 44,486 |
JDS Uniphase Corp. (a) | 12,113 | | 70,982 |
Juniper Networks, Inc. (a) | 19,600 | | 512,148 |
Motorola, Inc. | 51,200 | | 366,592 |
Oclaro, Inc. (a) | 4,194 | | 2,474 |
Oplink Communications, Inc. (a) | 1,974 | | 25,109 |
Opnext, Inc. (a) | 15,501 | | 31,467 |
Palm, Inc. (a) | 500 | | 7,865 |
Polycom, Inc. (a) | 8,900 | | 211,375 |
Powerwave Technologies, Inc. (a) | 8,139 | | 10,255 |
QUALCOMM, Inc. | 25,570 | | 1,181,590 |
Research In Motion Ltd. (a) | 100 | | 7,600 |
Riverbed Technology, Inc. (a) | 8,300 | | 166,083 |
Sandvine Corp. (a) | 18,400 | | 20,153 |
Sandvine Corp. (U.K.) (a) | 56,400 | | 60,777 |
ShoreTel, Inc. (a) | 2,304 | | 19,860 |
Sierra Wireless, Inc. (a) | 11,600 | | 83,553 |
Sonus Networks, Inc. (a) | 15,367 | | 29,197 |
Starent Networks Corp. (a) | 17,376 | | 416,676 |
Tekelec (a) | 20,400 | | 375,156 |
Telefonaktiebolaget LM Ericsson
(B Shares) sponsored ADR | 2,400 | | 23,328 |
Tellabs, Inc. (a) | 72,900 | | 422,820 |
| | 8,179,353 |
|
| Shares | | Value |
COMPUTERS & PERIPHERALS - 0.1% |
Computer Hardware - 0.0% |
Compal Electronics, Inc. | 28 | | $ 27 |
Computer Storage & Peripherals - 0.1% |
STEC, Inc. (a) | 400 | | 13,636 |
TOTAL COMPUTERS & PERIPHERALS | | 13,663 |
ELECTRONIC EQUIPMENT & COMPONENTS - 1.2% |
Electronic Components - 0.3% |
Universal Display Corp. (a) | 2,800 | | 34,020 |
Electronic Manufacturing Services - 0.8% |
Flextronics International Ltd. (a) | 6,200 | | 32,984 |
Foxconn International Holdings Ltd. (a) | 2,000 | | 1,399 |
SMART Modular Technologies (WWH), Inc. (a) | 4,416 | | 13,160 |
Trimble Navigation Ltd. (a) | 1,719 | | 40,757 |
| | 88,300 |
Technology Distributors - 0.1% |
Brightpoint, Inc. (a) | 718 | | 4,265 |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | | 126,585 |
INTERNET SOFTWARE & SERVICES - 2.8% |
Internet Software & Services - 2.8% |
comScore, Inc. (a) | 200 | | 3,044 |
Equinix, Inc. (a) | 300 | | 24,519 |
Keynote Systems, Inc. (a) | 5,100 | | 51,306 |
NetEase.com, Inc. sponsored ADR (a) | 200 | | 8,812 |
Sina Corp. (a) | 2,400 | | 79,632 |
Tencent Holdings Ltd. | 10,400 | | 140,369 |
| | 307,682 |
IT SERVICES - 0.8% |
Data Processing & Outsourced Services - 0.1% |
NeuStar, Inc. Class A (a) | 700 | | 15,876 |
IT Consulting & Other Services - 0.7% |
Amdocs Ltd. (a) | 2,700 | | 64,584 |
Yucheng Technologies Ltd. (a) | 1,200 | | 9,996 |
| | 74,580 |
TOTAL IT SERVICES | | 90,456 |
MEDIA - 0.6% |
Advertising - 0.3% |
VisionChina Media, Inc. ADR (a) | 4,700 | | 30,879 |
Cable & Satellite - 0.3% |
Virgin Media, Inc. | 3,850 | | 40,233 |
TOTAL MEDIA | | 71,112 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.2% |
Semiconductor Equipment - 0.8% |
Tessera Technologies, Inc. (a) | 2,900 | | 81,461 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - 8.4% |
Actel Corp. (a) | 451 | | $ 5,024 |
Altera Corp. | 1,200 | | 22,428 |
Applied Micro Circuits Corp. (a) | 2,758 | | 23,857 |
ARM Holdings PLC sponsored ADR | 2,800 | | 17,892 |
Cavium Networks, Inc. (a) | 8,854 | | 167,075 |
Ceva, Inc. (a) | 1,400 | | 12,278 |
Conexant Systems, Inc. (a) | 1,280 | | 1,920 |
CSR PLC (a) | 14,086 | | 100,488 |
Exar Corp. (a) | 143 | | 1,005 |
Hittite Microwave Corp. (a) | 100 | | 3,512 |
Ikanos Communications, Inc. (a) | 3,985 | | 7,014 |
Infineon Technologies AG (a) | 47,400 | | 191,491 |
Infineon Technologies AG rights 8/3/09 (a) | 60,700 | | 28,453 |
Microsemi Corp. (a) | 449 | | 6,129 |
Mindspeed Technologies, Inc. (a) | 2,501 | | 6,753 |
Netlogic Microsystems, Inc. (a) | 2,716 | | 107,934 |
Omnivision Technologies, Inc. (a) | 1,900 | | 25,137 |
ON Semiconductor Corp. (a) | 7,285 | | 53,181 |
Pericom Semiconductor Corp. (a) | 1,700 | | 16,150 |
Pixelplus Co. Ltd. ADR (a) | 900 | | 270 |
PLX Technology, Inc. (a) | 1,400 | | 5,460 |
PMC-Sierra, Inc. (a) | 3,100 | | 28,365 |
Silicon Storage Technology, Inc. (a) | 1,200 | | 2,256 |
Standard Microsystems Corp. (a) | 1,200 | | 27,840 |
TriQuint Semiconductor, Inc. (a) | 5,000 | | 35,900 |
Xilinx, Inc. | 900 | | 19,521 |
| | 917,333 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 998,794 |
SOFTWARE - 6.2% |
Application Software - 3.0% |
Citrix Systems, Inc. (a) | 2,300 | | 81,880 |
KongZhong Corp. sponsored ADR (a) | 4,100 | | 50,922 |
NetScout Systems, Inc. (a) | 1,200 | | 11,940 |
Smith Micro Software, Inc. (a) | 10,961 | | 125,284 |
Synchronoss Technologies, Inc. (a) | 2,600 | | 30,888 |
Taleo Corp. Class A (a) | 100 | | 1,750 |
Ulticom, Inc. | 13,765 | | 24,777 |
| | 327,441 |
|
| Shares | | Value |
Home Entertainment Software - 0.3% |
Ubisoft Entertainment SA (a) | 1,600 | | $ 27,331 |
Systems Software - 2.9% |
Allot Communications Ltd. (a) | 300 | | 1,200 |
Opnet Technologies, Inc. | 400 | | 3,800 |
TeleCommunication Systems, Inc.
Class A (a) | 37,897 | | 313,787 |
| | 318,787 |
TOTAL SOFTWARE | | 673,559 |
WIRELESS TELECOMMUNICATION SERVICES - 2.5% |
Wireless Telecommunication Services - 2.5% |
Crown Castle International Corp. (a) | 400 | | 11,496 |
Leap Wireless International, Inc. (a) | 300 | | 7,185 |
SBA Communications Corp. Class A (a) | 1,216 | | 31,725 |
Syniverse Holdings, Inc. (a) | 12,420 | | 217,723 |
| | 268,129 |
TOTAL COMMON STOCKS (Cost $10,198,498) | 10,729,333 |
Convertible Bonds - 0.1% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.1% |
Communications Equipment - 0.1% |
Ciena Corp. 0.25% 5/1/13
(Cost $20,000) | | $ 20,000 | | 13,998 |
Money Market Funds - 3.8% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b)
(Cost $413,521) | 413,521 | | 413,521 |
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $10,632,019) | | 11,156,852 |
NET OTHER ASSETS - (2.3)% | | (255,101) |
NET ASSETS - 100% | $ 10,901,751 |
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 | $ 3,395 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 71,112 | $ 71,112 | $ - | $ - |
Information Technology | 10,390,092 | 10,170,148 | 219,944 | - |
Telecommunication Services | 268,129 | 268,129 | - | - |
Corporate Bonds | 13,998 | - | 13,998 | - |
Money Market Funds | 413,521 | 413,521 | - | - |
Total Investments in Securities: | $ 11,156,852 | $ 10,922,910 | $ 233,942 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.2% |
Germany | 2.2% |
China | 2.1% |
Canada | 1.9% |
United Kingdom | 1.7% |
France | 1.3% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $601,215 of which $207,917 and $393,298 will expire on July 31, 2016 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $1,583,417 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Communications Equipment Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $10,218,498) | $ 10,743,331 | |
Fidelity Central Funds (cost $413,521) | 413,521 | |
Total Investments (cost $10,632,019) | | $ 11,156,852 |
Receivable for investments sold | | 70,963 |
Receivable for fund shares sold | | 25,985 |
Dividends receivable | | 1,285 |
Interest receivable | | 12 |
Distributions receivable from Fidelity Central Funds | | 131 |
Prepaid expenses | | 21 |
Receivable from investment adviser for expense reductions | | 4,637 |
Other receivables | | 16 |
Total assets | | 11,259,902 |
| | |
Liabilities | | |
Payable for investments purchased | $ 295,630 | |
Payable for fund shares redeemed | 12,609 | |
Accrued management fee | 4,559 | |
Distribution fees payable | 4,592 | |
Other affiliated payables | 2,674 | |
Other payables and accrued expenses | 38,087 | |
Total liabilities | | 358,151 |
| | |
Net Assets | | $ 10,901,751 |
Net Assets consist of: | | |
Paid in capital | | $ 12,706,664 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (2,329,322) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 524,409 |
Net Assets | | $ 10,901,751 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($3,476,172 ÷ 477,211 shares) | | $ 7.28 |
| | |
Maximum offering price per share (100/94.25 of $7.28) | | $ 7.72 |
Class T:
Net Asset Value and redemption price per share ($2,396,203 ÷ 336,031 shares) | | $ 7.13 |
| | |
Maximum offering price per share (100/96.50 of $7.13) | | $ 7.39 |
Class B:
Net Asset Value and offering price per share ($1,280,585 ÷ 187,570 shares)A | | $ 6.83 |
| | |
Class C:
Net Asset Value and offering price per share ($2,791,678 ÷ 409,118 shares)A | | $ 6.82 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($957,113 ÷ 128,521 shares) | | $ 7.45 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Communications Equipment Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
Investment Income | | |
Dividends | | $ 25,197 |
Special dividends | | 63,044 |
Interest | | 69 |
Income from Fidelity Central Funds | | 3,395 |
Total income | | 91,705 |
| | |
Expenses | | |
Management fee | $ 31,077 | |
Transfer agent fees | 20,269 | |
Distribution fees | 31,455 | |
Accounting fees and expenses | 2,144 | |
Custodian fees and expenses | 7,317 | |
Independent trustees' compensation | 34 | |
Registration fees | 50,096 | |
Audit | 47,883 | |
Legal | 35 | |
Miscellaneous | 153 | |
Total expenses before reductions | 190,463 | |
Expense reductions | (95,366) | 95,097 |
Net investment income (loss) | | (3,392) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (2,043,606) | |
Foreign currency transactions | (1,842) | |
Total net realized gain (loss) | | (2,045,448) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,654,702 | |
Assets and liabilities in foreign currencies | (309) | |
Total change in net unrealized appreciation (depreciation) | | 1,654,393 |
Net gain (loss) | | (391,055) |
Net increase (decrease) in net assets resulting from operations | | $ (394,447) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (3,392) | $ (110,235) |
Net realized gain (loss) | (2,045,448) | 45,848 |
Change in net unrealized appreciation (depreciation) | 1,654,393 | (1,477,802) |
Net increase (decrease) in net assets resulting from operations | (394,447) | (1,542,189) |
Distributions to shareholders from net realized gain | - | (150,546) |
Share transactions - net increase (decrease) | 4,154,179 | (1,556,420) |
Redemption fees | 239 | 979 |
Total increase (decrease) in net assets | 3,759,971 | (3,248,176) |
| | |
Net Assets | | |
Beginning of period | 7,141,780 | 10,389,956 |
End of period | $ 10,901,751 | $ 7,141,780 |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 | $ 6.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 F | (.08) | (.09) | (.09) | (.07) |
Net realized and unrealized gain (loss) | (.56) | (1.45) | 2.29 | (.32) | 1.24 |
Total from investment operations | (.54) | (1.53) | 2.20 | (.41) | 1.17 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 7.28 | $ 7.82 | $ 9.49 | $ 7.29 | $ 7.70 |
Total Return A,B | (6.91)% | (16.43)% | 30.18% | (5.32)% | 17.92% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.15% | 2.25% | 2.24% | 2.13% | 2.32% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.45% |
Expenses net of all reductions | 1.40% | 1.39% | 1.40% | 1.32% | 1.28% |
Net investment income (loss) | .26% F | (.91)% | (1.00)% | (1.05)% | (.92)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,476 | $ 2,459 | $ 2,825 | $ 3,145 | $ 2,406 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 | $ 6.48 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - F,H | (.10) | (.11) | (.11) | (.08) |
Net realized and unrealized gain (loss) | (.55) | (1.42) | 2.26 | (.31) | 1.21 |
Total from investment operations | (.55) | (1.52) | 2.15 | (.42) | 1.13 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 7.13 | $ 7.68 | $ 9.34 | $ 7.19 | $ 7.61 |
Total Return A,B | (7.16)% | (16.59)% | 29.90% | (5.52)% | 17.44% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.52% | 2.62% | 2.57% | 2.51% | 2.78% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.71% |
Expenses net of all reductions | 1.65% | 1.65% | 1.64% | 1.57% | 1.54% |
Net investment income (loss) | .01% F | (1.16)% | (1.25)% | (1.30)% | (1.18)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,396 | $ 2,138 | $ 3,271 | $ 2,932 | $ 3,034 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) F | (.14) | (.14) | (.14) | (.12) |
Net realized and unrealized gain (loss) | (.53) | (1.36) | 2.18 | (.31) | 1.20 |
Total from investment operations | (.56) | (1.50) | 2.04 | (.45) | 1.08 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 6.83 | $ 7.39 | $ 9.03 | $ 6.99 | $ 7.44 |
Total Return A,B | (7.58)% | (16.94)% | 29.18% | (6.05)% | 16.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.98% | 3.03% | 3.00% | 2.94% | 3.14% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.20% |
Expenses net of all reductions | 2.15% | 2.15% | 2.15% | 2.07% | 2.04% |
Net investment income (loss) | (.49)% F | (1.67)% | (1.75)% | (1.80)% | (1.68)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,281 | $ 1,219 | $ 2,225 | $ 2,406 | $ 2,864 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 | $ 6.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) F | (.14) | (.14) | (.15) | (.12) |
Net realized and unrealized gain (loss) | (.53) | (1.37) | 2.18 | (.30) | 1.20 |
Total from investment operations | (.56) | (1.51) | 2.04 | (.45) | 1.08 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 6.82 | $ 7.38 | $ 9.03 | $ 6.99 | $ 7.44 |
Total Return A,B | (7.59)% | (17.06)% | 29.18% | (6.05)% | 16.98% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 3.63% | 3.02% | 2.98% | 2.86% | 3.07% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.15% | 2.15% | 2.07% | 2.02% |
Net investment income (loss) | (.49)% F | (1.67)% | (1.75)% | (1.81)% | (1.66)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,792 | $ 1,097 | $ 1,745 | $ 1,768 | $ 1,846 |
Portfolio turnover rate E | 97% | 63% | 58% | 174% | 250% |
A Total returns 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 | $ 6.60 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .03 E | (.06) | (.07) | (.07) | (.05) |
Net realized and unrealized gain (loss) | (.56) | (1.47) | 2.33 | (.33) | 1.24 |
Total from investment operations | (.53) | (1.53) | 2.26 | (.40) | 1.19 |
Distributions from net realized gain | - | (.14) | - | - | - |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 7.45 | $ 7.98 | $ 9.65 | $ 7.39 | $ 7.79 |
Total Return A | (6.64)% | (16.16)% | 30.58% | (5.13)% | 18.03% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | 2.44% | 1.94% | 1.87% | 1.70% | 1.85% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.15% | 1.18% |
Expenses net of all reductions | 1.15% | 1.14% | 1.15% | 1.07% | 1.01% |
Net investment income (loss) | .51% E | (.66)% | (.75)% | (.80)% | (.65)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 957 | $ 229 | $ 324 | $ 379 | $ 319 |
Portfolio turnover rate D | 97% | 63% | 58% | 174% | 250% |
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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, 2009
1. Organization.
Fidelity Advisor Communications Equipment Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Communications Equipment
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,575,201 | |
Unrealized depreciation | (1,195,476) | |
Net unrealized appreciation (depreciation) | $ 379,725 | |
Capital loss carryforward | $ (601,215) | |
Cost for federal income tax purposes | $ 10,777,127 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Long-term Capital Gains | $ - | $ 150,546 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 $10,176,027 and $5,443,377, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | -% | .25% | $ 4,583 | $ 97 |
Class T | .25% | .25% | 7,680 | 6 |
Class B | .75% | .25% | 8,179 | 6,136 |
Class C | .75% | .25% | 11,013 | 1,861 |
| | | $ 31,455 | $ 8,100 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 3,618 |
Class T | 1,757 |
Class B* | 2,479 |
Class C* | 187 |
| $ 8,041 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 6,206 | .34 |
Class T | 6,869 | .45 |
Class B | 2,791 | .34 |
Class C | 3,803 | .34 |
Institutional Class | 600 | .26 |
| $ 20,269 | |
Communications Equipment
5. Fees and Other Transactions with Affiliates - continued
Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The fee is based on the level of average net assets for the month.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $515 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $23 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 32,129 |
Class T | 1.65% | 28,837 |
Class B | 2.15% | 15,001 |
Class C | 2.15% | 16,297 |
Institutional Class | 1.15% | 2,937 |
| | $ 95,201 |
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 $165 for the period
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ - | $ 39,064 |
Class T | - | 47,716 |
Class B | - | 32,890 |
Class C | - | 26,349 |
Institutional Class | - | 4,527 |
Total | $ - | $ 150,546 |
9. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 355,106 | 160,354 | $ 2,309,221 | $ 1,394,318 |
Reinvestment of distributions | - | 4,001 | - | 38,211 |
Shares redeemed | (192,148) | (147,761) | (977,112) | (1,297,098) |
Net increase (decrease) | 162,958 | 16,594 | $ 1,332,109 | $ 135,431 |
Annual Report
Notes to Financial Statements - continued
9. Share Transactions - continued
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class T | | | | |
Shares sold | 141,676 | 64,977 | $ 842,215 | $ 556,295 |
Reinvestment of distributions | - | 5,010 | - | 47,041 |
Shares redeemed | (84,049) | (141,880) | (471,168) | (1,263,739) |
Net increase (decrease) | 57,627 | (71,893) | $ 371,047 | $ (660,403) |
Class B | | | | |
Shares sold | 79,696 | 20,643 | $ 489,378 | $ 176,765 |
Reinvestment of distributions | - | 3,437 | - | 31,211 |
Shares redeemed | (57,101) | (105,422) | (282,381) | (851,909) |
Net increase (decrease) | 22,595 | (81,342) | $ 206,997 | $ (643,933) |
Class C | | | | |
Shares sold | 334,255 | 39,088 | $ 2,000,139 | $ 340,813 |
Reinvestment of distributions | - | 2,609 | - | 23,659 |
Shares redeemed | (73,743) | (86,305) | (434,705) | (711,202) |
Net increase (decrease) | 260,512 | (44,608) | $ 1,565,434 | $ (346,730) |
Institutional Class | | | | |
Shares sold | 116,053 | 5,041 | $ 776,070 | $ 45,930 |
Reinvestment of distributions | - | 356 | - | 3,461 |
Shares redeemed | (16,263) | (10,196) | (97,478) | (90,176) |
Net increase (decrease) | 99,790 | (4,799) | $ 678,592 | $ (40,785) |
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
Advisor Consumer Discretionary Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class A | -9.59% | -1.07% | -0.97% |
A Prior to October 1, 2006, Advisor Consumer Discretionary operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Discretionary Fund - Institutional Class on July 31, 1999. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Consumer Discretionary Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund: For the 12-month period ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares fell 9.81%, 10.04%, 10.53% and 10.61%, respectively (excluding sales charges), beating the S&P 500®. The fund's sector benchmark, the MSCI® US Investable Market Consumer Discretionary Index, fell 10.18%. The fund outperformed the MSCI index during the first half of the period by owning what I believed to be quality firms whose earnings would hold up better in the downbeat environment. However, over time, investors increased their appetite for risk, and within the consumer discretionary space, a number of lower-quality stocks began to outperform this past spring as they were revalued upwards. Given my quality bias, I decided not to chase the risk trade, which unfortunately turned out to be much stronger than I expected, hampering the fund's relative return during the latter part of the period. Significant contributors to results included Iconix Brand Group, which buys down-and-out brands and re-launches them through "big-box," value-oriented retailers like Wal-Mart. Adult education firm Apollo Group enjoyed solid enrollment gains, and its shares rose early in the period when most other stocks declined. Home improvement retailer Lowe's, a leading franchise in its category, was another success story. On the negative side, our shares in casino operator Las Vegas Sands plummeted when the company's business in Macau, China, was slowed by governmental actions there, while here in the U.S., visits to the firm's Las Vegas property also declined. Underweighting home improvement giant Home Depot detracted when the company's stock outperformed the index. Underweighting Ford Motor hurt as well. The company was the only domestic automaker to avoid government assistance, and its shares surged during the second half of the period.
Comments from John Harris, Portfolio Manager of Fidelity® Advisor Consumer Discretionary Fund: For the 12-month period ending July 31, 2009, the fund's Institutional Class shares fell 9.59%, outperforming the S&P 500® and the fund's sector benchmark, the MSCI US Investable Market Consumer Discretionary Index, which declined 10.18%. The fund outperformed the MSCI index during the first half of the period by owning what I believed to be quality firms whose earnings would hold up better in the downbeat environment. However, over time, investors increased their appetite for risk, and within the consumer discretionary space, a number of lower-quality stocks began to outperform this past spring as they were revalued upwards. Given my quality bias, I decided not to chase the risk trade, which unfortunately turned out to be much stronger than I expected, hampering the fund's relative return during the latter part of the period. Significant contributors to results included Iconix Brand Group, which buys down-and-out brands and re-launches them through "big-box," value-oriented retailers like Wal-Mart. Adult education firm Apollo Group enjoyed solid enrollment gains, and its shares rose early in the period when most other stocks declined. Home improvement retailer Lowe's, a leading franchise in its category, was another success story. On the negative side, our shares in casino operator Las Vegas Sands plummeted when the company's business in Macau, China, was slowed by governmental actions there, while here in the U.S., visits to the firm's Las Vegas property also declined. Underweighting home improvement giant Home Depot detracted when the company's stock outperformed the index. Underweighting Ford Motor hurt as well. The company was the only domestic automaker to avoid government assistance, and its shares surged during the second half of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Consumer Discretionary
Advisor Consumer Discretionary Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,298.70 | $ 7.98 |
HypotheticalA | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,296.00 | $ 9.39 |
Hypothetical A | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,293.30 | $ 12.23 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,292.90 | $ 12.22 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% | | | |
Actual | | $ 1,000.00 | $ 1,300.00 | $ 6.56 |
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).
Annual Report
Advisor Consumer Discretionary Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Lowe's Companies, Inc. | 7.6 | 6.4 |
Target Corp. | 6.6 | 6.4 |
McDonald's Corp. | 5.6 | 8.8 |
The Walt Disney Co. | 5.1 | 4.6 |
Comcast Corp. Class A | 3.5 | 5.0 |
Staples, Inc. | 2.9 | 3.3 |
Amazon.com, Inc. | 2.6 | 2.4 |
Advance Auto Parts, Inc. | 2.6 | 2.0 |
Home Depot, Inc. | 2.5 | 3.8 |
Carnival Corp. unit | 2.1 | 1.2 |
| 41.1 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Specialty Retail | 25.4% | |
| Media | 19.9% | |
| Hotels, Restaurants
& Leisure | 18.8% | |
| Multiline Retail | 6.6% | |
| Textiles, Apparel
& Luxury Goods | 5.3% | |
| All Others* | 24.0% | |
As of January 31, 2009 |
| Media | 26.0% | |
| Specialty Retail | 22.7% | |
| Hotels, Restaurants
& Leisure | 18.9% | |
| Multiline Retail | 7.0% | |
| Textiles, Apparel
& Luxury Goods | 6.5% | |
| All Others* | 18.9% | |
* Includes short-term investments and net other assets. |
Consumer Discretionary
Advisor Consumer Discretionary Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.7% |
| Shares | | Value |
AUTO COMPONENTS - 3.7% |
Auto Parts & Equipment - 3.7% |
Autoliv, Inc. | 2,400 | | $ 85,944 |
BorgWarner, Inc. | 7,200 | | 238,968 |
Federal-Mogul Corp. Class A (a) | 5,800 | | 81,954 |
Gentex Corp. | 6,000 | | 89,820 |
Johnson Controls, Inc. | 26,400 | | 683,232 |
| | 1,179,918 |
AUTOMOBILES - 2.2% |
Automobile Manufacturers - 1.7% |
Ford Motor Co. (a) | 67,400 | | 539,200 |
Motorcycle Manufacturers - 0.5% |
Harley-Davidson, Inc. (d) | 8,100 | | 183,060 |
TOTAL AUTOMOBILES | | 722,260 |
CONSUMER FINANCE - 0.5% |
Consumer Finance - 0.5% |
Capital One Financial Corp. | 5,600 | | 171,920 |
DISTRIBUTORS - 0.9% |
Distributors - 0.9% |
Li & Fung Ltd. | 104,000 | | 306,638 |
DIVERSIFIED CONSUMER SERVICES - 2.7% |
Education Services - 2.4% |
Apollo Group, Inc. Class A (non-vtg.) (a) | 3,000 | | 207,120 |
DeVry, Inc. | 4,100 | | 203,934 |
Lincoln Educational Services Corp. (a) | 1,800 | | 36,648 |
Princeton Review, Inc. (a) | 13,729 | | 74,411 |
Strayer Education, Inc. | 1,300 | | 276,094 |
| | 798,207 |
Specialized Consumer Services - 0.3% |
Regis Corp. | 6,700 | | 91,522 |
TOTAL DIVERSIFIED CONSUMER SERVICES | | 889,729 |
FOOD & STAPLES RETAILING - 3.8% |
Food Retail - 0.8% |
Susser Holdings Corp. (a) | 22,405 | | 263,707 |
Hypermarkets & Super Centers - 3.0% |
Costco Wholesale Corp. | 12,400 | | 613,800 |
Wal-Mart Stores, Inc. | 6,800 | | 339,184 |
| | 952,984 |
TOTAL FOOD & STAPLES RETAILING | | 1,216,691 |
HOTELS, RESTAURANTS & LEISURE - 18.8% |
Casinos & Gaming - 4.4% |
Ameristar Casinos, Inc. | 5,600 | | 104,664 |
Bally Technologies, Inc. (a) | 1,800 | | 65,178 |
International Game Technology | 8,800 | | 173,800 |
|
| Shares | | Value |
Las Vegas Sands Corp. unit | 2,100 | | $ 331,527 |
Penn National Gaming, Inc. (a) | 11,400 | | 361,494 |
WMS Industries, Inc. (a) | 10,000 | | 361,600 |
| | 1,398,263 |
Hotels, Resorts & Cruise Lines - 4.4% |
Carnival Corp. unit | 24,700 | | 691,353 |
Marriott International, Inc. Class A | 8,437 | | 181,733 |
Starwood Hotels & Resorts Worldwide, Inc. | 5,200 | | 122,772 |
Wyndham Worldwide Corp. | 30,700 | | 428,265 |
| | 1,424,123 |
Restaurants - 10.0% |
Burger King Holdings, Inc. | 17,700 | | 301,254 |
Darden Restaurants, Inc. | 12,900 | | 417,831 |
Jack in the Box, Inc. (a) | 4,800 | | 101,280 |
McDonald's Corp. | 32,900 | | 1,811,474 |
P.F. Chang's China Bistro, Inc. (a)(d) | 4,000 | | 135,640 |
Sonic Corp. (a) | 12,000 | | 132,360 |
Yum! Brands, Inc. | 9,300 | | 329,778 |
| | 3,229,617 |
TOTAL HOTELS, RESTAURANTS & LEISURE | | 6,052,003 |
HOUSEHOLD DURABLES - 3.6% |
Home Furnishings - 0.5% |
Mohawk Industries, Inc. (a) | 3,200 | | 165,056 |
Homebuilding - 1.8% |
Centex Corp. | 7,700 | | 84,007 |
Lennar Corp. Class A | 7,930 | | 93,891 |
M.D.C. Holdings, Inc. | 1,200 | | 42,288 |
NVR, Inc. (a) | 100 | | 60,115 |
Pulte Homes, Inc. (d) | 20,100 | | 228,537 |
Toll Brothers, Inc. (a) | 3,700 | | 72,372 |
| | 581,210 |
Household Appliances - 0.8% |
Whirlpool Corp. | 4,200 | | 239,778 |
Housewares & Specialties - 0.5% |
Newell Rubbermaid, Inc. | 12,900 | | 166,023 |
TOTAL HOUSEHOLD DURABLES | | 1,152,067 |
INTERNET & CATALOG RETAIL - 2.6% |
Internet Retail - 2.6% |
Amazon.com, Inc. (a) | 9,700 | | 831,872 |
INTERNET SOFTWARE & SERVICES - 1.8% |
Internet Software & Services - 1.8% |
Google, Inc. Class A (a) | 1,000 | | 443,050 |
Tencent Holdings Ltd. | 9,400 | | 126,872 |
| | 569,922 |
LEISURE EQUIPMENT & PRODUCTS - 0.7% |
Leisure Products - 0.7% |
Hasbro, Inc. | 8,716 | | 230,974 |
Common Stocks - continued |
| Shares | | Value |
MEDIA - 19.9% |
Advertising - 1.8% |
Interpublic Group of Companies, Inc. (a) | 70,600 | | $ 367,826 |
Lamar Advertising Co. Class A (a)(d) | 9,396 | | 197,692 |
| | 565,518 |
Cable & Satellite - 8.2% |
Comcast Corp. Class A | 74,850 | | 1,112,271 |
DISH Network Corp. Class A (a) | 3,800 | | 64,410 |
Liberty Media Corp. Entertainment Series A (a) | 13,100 | | 366,407 |
The DIRECTV Group, Inc. (a)(d) | 16,500 | | 427,350 |
Time Warner Cable, Inc. | 16,397 | | 542,085 |
Virgin Media, Inc. | 12,600 | | 131,670 |
| | 2,644,193 |
Movies & Entertainment - 9.1% |
News Corp. Class A | 24,000 | | 247,920 |
The Walt Disney Co. | 66,200 | | 1,662,944 |
Time Warner, Inc. | 18,233 | | 486,092 |
Viacom, Inc. Class B (non-vtg.) (a) | 23,500 | | 544,260 |
| | 2,941,216 |
Publishing - 0.8% |
McGraw-Hill Companies, Inc. | 8,100 | | 253,935 |
TOTAL MEDIA | | 6,404,862 |
MULTILINE RETAIL - 6.6% |
General Merchandise Stores - 6.6% |
Target Corp. | 48,700 | | 2,124,294 |
SOFTWARE - 0.2% |
Application Software - 0.2% |
Blackboard, Inc. (a) | 1,894 | | 64,339 |
SPECIALTY RETAIL - 25.4% |
Apparel Retail - 4.5% |
Citi Trends, Inc. (a) | 6,447 | | 188,252 |
DSW, Inc. Class A (a)(d) | 3,288 | | 44,355 |
Gymboree Corp. (a) | 2,100 | | 83,538 |
Pacific Sunwear of California, Inc. (a) | 34,800 | | 115,536 |
Ross Stores, Inc. | 9,600 | | 423,264 |
TJX Companies, Inc. | 6,100 | | 221,003 |
Urban Outfitters, Inc. (a) | 10,493 | | 252,252 |
Zumiez, Inc. (a) | 14,500 | | 138,475 |
| | 1,466,675 |
Automotive Retail - 3.9% |
Advance Auto Parts, Inc. | 17,800 | | 822,894 |
AutoZone, Inc. (a) | 1,500 | | 230,355 |
Monro Muffler Brake, Inc. | 3,000 | | 79,770 |
Penske Automotive Group, Inc. | 5,700 | | 117,876 |
| | 1,250,895 |
|
| Shares | | Value |
Computer & Electronics Retail - 1.7% |
Best Buy Co., Inc. | 6,800 | | $ 254,116 |
Gamestop Corp. Class A (a) | 8,400 | | 183,876 |
RadioShack Corp. | 6,200 | | 96,162 |
| | 534,154 |
Home Improvement Retail - 11.1% |
Home Depot, Inc. | 31,356 | | 813,375 |
Lowe's Companies, Inc. | 109,100 | | 2,450,386 |
Lumber Liquidators, Inc. (a)(d) | 19,025 | | 312,391 |
| | 3,576,152 |
Homefurnishing Retail - 0.0% |
Aarons, Inc. | 500 | | 13,735 |
Specialty Stores - 4.2% |
PetSmart, Inc. | 3,300 | | 73,821 |
Sally Beauty Holdings, Inc. (a) | 16,800 | | 117,264 |
Staples, Inc. | 44,138 | | 927,781 |
Tiffany & Co., Inc. | 3,500 | | 104,405 |
Zale Corp. (a) | 21,300 | | 126,096 |
| | 1,349,367 |
TOTAL SPECIALTY RETAIL | | 8,190,978 |
TEXTILES, APPAREL & LUXURY GOODS - 5.3% |
Apparel, Accessories & Luxury Goods - 1.8% |
Coach, Inc. | 17,679 | | 523,122 |
Hanesbrands, Inc. (a) | 3,800 | | 75,620 |
| | 598,742 |
Footwear - 3.5% |
Deckers Outdoor Corp. (a) | 1,900 | | 128,459 |
Iconix Brand Group, Inc. (a) | 21,024 | | 368,340 |
NIKE, Inc. Class B | 11,100 | | 628,704 |
| | 1,125,503 |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | | 1,724,245 |
TOTAL COMMON STOCKS (Cost $33,057,810) | 31,832,712 |
Money Market Funds - 5.9% |
| Shares | | Value |
Fidelity Cash Central Fund, 0.37% (b) | 507,701 | | $ 507,701 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 1,388,675 | | 1,388,675 |
TOTAL MONEY MARKET FUNDS (Cost $1,896,376) | 1,896,376 |
TOTAL INVESTMENT PORTFOLIO - 104.6% (Cost $34,954,186) | | 33,729,088 |
NET OTHER ASSETS - (4.6)% | | (1,486,448) |
NET ASSETS - 100% | $ 32,242,640 |
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 | $ 3,271 |
Fidelity Securities Lending Cash Central Fund | 29,176 |
Total | $ 32,447 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 29,809,840 | $ 29,478,313 | $ 331,527 | $ - |
Consumer Staples | 1,216,691 | 1,216,691 | - | - |
Financials | 171,920 | 171,920 | - | - |
Information Technology | 634,261 | 634,261 | - | - |
Money Market Funds | 1,896,376 | 1,896,376 | - | - |
Total Investments in Securities | $ 33,729,088 | $ 33,397,561 | $ 331,527 | $ - |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $5,178,091 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $3,918,129 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Discretionary Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $1,366,413) - See accompanying schedule: Unaffiliated issuers (cost $33,057,810) | $ 31,832,712 | |
Fidelity Central Funds (cost $1,896,376) | 1,896,376 | |
Total Investments (cost $34,954,186) | | $ 33,729,088 |
Foreign currency held at value
(cost $5) | | 4 |
Receivable for investments sold | | 1,140,880 |
Receivable for fund shares sold | | 161,985 |
Dividends receivable | | 5,866 |
Distributions receivable from Fidelity Central Funds | | 532 |
Prepaid expenses | | 101 |
Receivable from investment adviser for expense reductions | | 732 |
Total assets | | 35,039,188 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,277,467 | |
Payable for fund shares redeemed | 59,508 | |
Accrued management fee | 14,166 | |
Distribution fees payable | 10,319 | |
Other affiliated payables | 9,169 | |
Other payables and accrued expenses | 37,244 | |
Collateral on securities loaned, at value | 1,388,675 | |
Total liabilities | | 2,796,548 |
| | |
Net Assets | | $ 32,242,640 |
Net Assets consist of: | | |
Paid in capital | | $ 42,890,661 |
Undistributed net investment income | | 5,602 |
Accumulated undistributed net realized gain (loss) on investments | | (9,428,524) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (1,225,099) |
Net Assets | | $ 32,242,640 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($13,009,975 ÷ 1,268,249 shares) | | $ 10.26 |
| | |
Maximum offering price per share (100/94.25 of $10.26) | | $ 10.89 |
Class T:
Net Asset Value and redemption price per share ($6,738,080 ÷ 677,905 shares) | | $ 9.94 |
| | |
Maximum offering price per share (100/96.50 of $9.94) | | $ 10.30 |
Class B:
Net Asset Value and offering price per share ($3,550,387 ÷ 383,380 shares) A | | $ 9.26 |
| | |
Class C:
Net Asset Value and offering price per share ($2,954,664 ÷ 318,579 shares) A | | $ 9.27 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($5,989,534 ÷ 561,921 shares) | | $ 10.66 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Consumer Discretionary Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 409,975 |
Interest | | 31 |
Income from Fidelity Central Funds (including $29,176 from security lending) | | 32,447 |
Total income | | 442,453 |
| | |
Expenses | | |
Management fee | $ 136,955 | |
Transfer agent fees | 78,739 | |
Distribution fees | 120,665 | |
Accounting and security lending fees | 10,026 | |
Custodian fees and expenses | 8,663 | |
Independent trustees' compensation | 164 | |
Registration fees | 50,599 | |
Audit | 45,747 | |
Legal | 132 | |
Miscellaneous | 1,549 | |
Total expenses before reductions | 453,239 | |
Expense reductions | (52,328) | 400,911 |
Net investment income (loss) | | 41,542 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | | (6,306,395) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 3,085,864 | |
Assets and liabilities in foreign currencies | (1) | |
Total change in net unrealized appreciation (depreciation) | | 3,085,863 |
Net gain (loss) | | (3,220,532) |
Net increase (decrease) in net assets resulting from operations | | $ (3,178,990) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 41,542 | $ (64,816) |
Net realized gain (loss) | (6,306,395) | (2,749,077) |
Change in net unrealized appreciation (depreciation) | 3,085,863 | (6,918,327) |
Net increase (decrease) in net assets resulting from operations | (3,178,990) | (9,732,220) |
Distributions to shareholders from net investment income | (36,930) | - |
Distributions to shareholders from net realized gain | - | (4,774,547) |
Total distributions | (36,930) | (4,774,547) |
Share transactions - net increase (decrease) | 5,542,508 | (10,594,844) |
Redemption fees | 4,036 | 847 |
Total increase (decrease) in net assets | 2,330,624 | (25,100,764) |
| | |
Net Assets | | |
Beginning of period | 29,912,016 | 55,012,780 |
End of period (including undistributed net investment income of $5,602 and accumulated net investment loss of $4, respectively) | $ 32,242,640 | $ 29,912,016 |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 | $ 14.51 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .04 | .02 | .02 F | (.04) | (.07) |
Net realized and unrealized gain (loss) | (1.16) | (3.09) | 1.83 | (.07) | 2.71 |
Total from investment operations | (1.12) | (3.07) | 1.85 | (.11) | 2.64 |
Distributions from net investment income | (.03) | - | (.05) | - | - |
Distributions from net realized gain | - | (1.41) | (2.30) | (.12) | (.53) |
Total distributions | (.03) | (1.41) | (2.35) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 10.26 | $ 11.41 | $ 15.89 | $ 16.39 | $ 16.62 |
Total Return A,B | (9.81)% | (21.24)% | 11.67% | (.69)% | 18.85% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.62% | 1.40% | 1.42% | 1.42% | 1.47% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.44% |
Expenses net of all reductions | 1.40% | 1.40% | 1.39% | 1.39% | 1.42% |
Net investment income (loss) | .42% | .15% | .11% F | (.23)% | (.45)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,010 | $ 11,899 | $ 19,708 | $ 16,935 | $ 17,887 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 | $ 14.27 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .01 | (.01) | (.02) F | (.07) | (.11) |
Net realized and unrealized gain (loss) | (1.12) | (3.00) | 1.79 | (.07) | 2.66 |
Total from investment operations | (1.11) | (3.01) | 1.77 | (.14) | 2.55 |
Distributions from net investment income | (.02) | - | (.03) | - | - |
Distributions from net realized gain | - | (1.39) | (2.30) | (.12) | (.53) |
Total distributions | (.02) | (1.39) | (2.33) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 9.94 | $ 11.07 | $ 15.47 | $ 16.03 | $ 16.29 |
Total Return A,B | (10.04)% | (21.41)% | 11.43% | (.89)% | 18.52% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.89% | 1.64% | 1.69% | 1.69% | 1.75% |
Expenses net of fee waivers, if any | 1.65% | 1.64% | 1.65% | 1.65% | 1.69% |
Expenses net of all reductions | 1.65% | 1.62% | 1.61% | 1.62% | 1.67% |
Net investment income (loss) | .17% | (.08)% | (.10)% F | (.46)% | (.70)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 6,738 | $ 9,095 | $ 14,787 | $ 14,267 | $ 16,782 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 | $ 13.75 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) | (.07) | (.10) F | (.15) | (.17) |
Net realized and unrealized gain (loss) | (1.06) | (2.81) | 1.70 | (.07) | 2.55 |
Total from investment operations | (1.09) | (2.88) | 1.60 | (.22) | 2.38 |
Distributions from net realized gain | - | (1.33) | (2.30) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 9.26 | $ 10.35 | $ 14.56 | $ 15.26 | $ 15.60 |
Total Return A,B | (10.53)% | (21.80)% | 10.82% | (1.45)% | 17.97% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.38% | 2.14% | 2.20% | 2.19% | 2.24% |
Expenses net of fee waivers, if any | 2.15% | 2.14% | 2.15% | 2.15% | 2.19% |
Expenses net of all reductions | 2.15% | 2.14% | 2.15% | 2.14% | 2.16% |
Net investment income (loss) | (.33)% | (.60)% | (.64)% F | (.98)% | (1.20)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,550 | $ 5,090 | $ 11,081 | $ 14,088 | $ 18,862 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 | $ 13.77 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.03) | (.07) | (.10) F | (.15) | (.17) |
Net realized and unrealized gain (loss) | (1.07) | (2.81) | 1.71 | (.07) | 2.55 |
Total from investment operations | (1.10) | (2.88) | 1.61 | (.22) | 2.38 |
Distributions from net realized gain | - | (1.34) | (2.30) | (.12) | (.53) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 9.27 | $ 10.37 | $ 14.59 | $ 15.28 | $ 15.62 |
Total Return A,B | (10.61)% | (21.77)% | 10.88% | (1.45)% | 17.94% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.38% | 2.15% | 2.16% | 2.12% | 2.17% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.12% | 2.17% |
Expenses net of all reductions | 2.15% | 2.14% | 2.15% | 2.12% | 2.14% |
Net investment income (loss) | (.33)% | (.60)% | (.64)% F | (.95)% | (1.18)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 2,955 | $ 3,430 | $ 8,051 | $ 7,160 | $ 8,505 |
Portfolio turnover rate E | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.07)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 | $ 14.81 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .06 | .06 | .06 E | - G | (.03) |
Net realized and unrealized gain (loss) | (1.20) | (3.22) | 1.89 | (.07) | 2.76 |
Total from investment operations | (1.14) | (3.16) | 1.95 | (.07) | 2.73 |
Distributions from net investment income | (.04) | - | (.06) | - | - |
Distributions from net realized gain | - | (1.41) | (2.30) | (.12) | (.53) |
Total distributions | (.04) | (1.41) | (2.36) | (.12) | (.53) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 10.66 | $ 11.84 | $ 16.41 | $ 16.82 | $ 17.01 |
Total Return A | (9.59)% | (21.09)% | 12.04% | (.44)% | 19.08% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | 1.15% | 1.14% | 1.15% | 1.18% | 1.26% |
Expenses net of fee waivers, if any | 1.15% | 1.14% | 1.15% | 1.15% | 1.20% |
Expenses net of all reductions | 1.15% | 1.14% | 1.14% | 1.14% | 1.17% |
Net investment income (loss) | .67% | .40% | .36% E | .02% | (.21)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,990 | $ 398 | $ 1,385 | $ 1,144 | $ 1,371 |
Portfolio turnover rate D | 99% | 63% | 164% | 81% | 66% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.07)%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Consumer Discretionary Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 2,491,877 | |
Unrealized depreciation | (4,049,280) | |
Net unrealized appreciation (depreciation) | $ (1,557,403) | |
Undistributed ordinary income | $ 5,602 | |
Capital loss carryforward | $ (5,178,091) | |
Cost for federal income tax purposes | $ 35,286,491 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 36,930 | $ 2,279,900 |
Long-term Capital Gains | - | 2,494,647 |
Total | $ 36,930 | $ 4,774,547 |
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.
Consumer Discretionary
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $29,642,758 and $24,462,462, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 25,093 | $ 620 |
Class T | .25% | .25% | 33,396 | 158 |
Class B | .75% | .25% | 35,454 | 26,685 |
Class C | .75% | .25% | 26,722 | 2,706 |
| | | $ 120,665 | $ 30,169 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 9,438 |
Class T | 1,513 |
Class B* | 8,682 |
Class C* | 137 |
| $ 19,770 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 32,778 | .33 |
Class T | 22,187 | .33 |
Class B | 11,374 | .32 |
Class C | 8,652 | .32 |
Institutional Class | 3,748 | .27 |
| $ 78,739 | |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
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 $1,565 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $107 and is reflected in Miscellaneous Expense 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.
8. Expense Reductions.
FMR voluntarily agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 21,880 |
Class T | 1.65% | 16,098 |
Class B | 2.15% | 8,165 |
Class C | 2.15% | 6,136 |
Institutional Class | 1.15% | 36 |
| | $ 52,315 |
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 $13 for the period.
Consumer Discretionary
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 24,249 | $ - |
Class T | 11,523 | - |
Institutional Class | 1,158 | - |
Total | $ 36,930 | $ - |
From net realized gain | | |
Class A | $ - | $ 1,697,903 |
Class T | - | 1,304,169 |
Class B | - | 954,937 |
Class C | - | 712,594 |
Institutional Class | - | 104,944 |
Total | $ - | $ 4,774,547 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 816,977 | 231,645 | $ 7,713,175 | $ 3,074,782 |
Reinvestment of distributions | 2,650 | 104,669 | 22,145 | 1,531,841 |
Shares redeemed | (593,853) | (533,803) | (5,358,348) | (7,132,154) |
Net increase (decrease) | 225,774 | (197,489) | $ 2,376,972 | $ (2,525,531) |
Class T | | | | |
Shares sold | 78,811 | 113,866 | $ 695,608 | $ 1,488,704 |
Reinvestment of distributions | 1,356 | 84,915 | 11,014 | 1,207,897 |
Shares redeemed | (223,538) | (333,215) | (1,973,930) | (4,304,558) |
Net increase (decrease) | (143,371) | (134,434) | $ (1,267,308) | $ (1,607,957) |
Class B | | | | |
Shares sold | 72,993 | 34,749 | $ 620,027 | $ 420,244 |
Reinvestment of distributions | - | 65,209 | - | 871,754 |
Shares redeemed | (181,364) | (369,099) | (1,535,455) | (4,475,959) |
Net increase (decrease) | (108,371) | (269,141) | $ (915,428) | $ (3,183,961) |
Class C | | | | |
Shares sold | 90,426 | 46,115 | $ 763,994 | $ 563,853 |
Reinvestment of distributions | - | 37,909 | - | 507,333 |
Shares redeemed | (102,729) | (304,893) | (841,041) | (3,642,610) |
Net increase (decrease) | (12,303) | (220,869) | $ (77,047) | $ (2,571,424) |
Institutional Class | | | | |
Shares sold | 581,111 | 41,241 | $ 5,891,294 | $ 586,738 |
Reinvestment of distributions | 104 | 5,683 | 903 | 86,193 |
Shares redeemed | (52,903) | (97,732) | (466,878) | (1,378,902) |
Net increase (decrease) | 528,312 | (50,808) | $ 5,425,319 | $ (705,971) |
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
Advisor Electronics Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Life of
fundA |
Institutional Class | -2.74% | 0.30% | -4.47% |
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
Advisor Electronics Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -2.95%, -3.15%, -3.73% and -3.74%, respectively (excluding sales charges), topping the -9.17% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock selection in the fund's core areas of semiconductors and semiconductor equipment aided performance. Some out-of-benchmark picks in computer storage and peripherals helped as well. Amkor Technology, the fund's top relative contributor, provides packaging and testing services for the chip industry. Further bolstering our results were Marvell Technology Group, a producer of chips for computer hard-disk drives and smartphones, and MEMC Electronic Materials, which makes silicon wafers for the solar and semiconductor industries. Taiwan Semiconductor Manufacturing and hard-disk drive maker Seagate Technology - both out-of-index positions - also helped. Conversely, unfavorable picks in electrical components/equipment and life science tools/services detracted. Additionally, the fund's foreign holdings were hampered in part by currency fluctuations. Underweighting strong-performing index component Cypress Semiconductor hurt. Other detractors included chip maker Atmel, as well as nanotechnology products developer Arrowhead Research and solar power components maker Renewable Energy, the latter two being out-of-index positions.
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 -2.74%, topping the -9.17% return of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and the S&P 500®. Versus the MSCI index, favorable stock selection in the fund's core areas of semiconductors and semiconductor equipment aided performance. Some out-of-benchmark picks in computer storage and peripherals helped as well. Amkor Technology, the fund's top relative contributor, provides packaging and testing services for the chip industry. Further bolstering our results were Marvell Technology Group, a producer of chips for computer hard-disk drives and smartphones, and MEMC Electronic Materials, which makes silicon wafers for the solar and semiconductor industries. Taiwan Semiconductor Manufacturing and hard-disk drive maker Seagate Technology - both out-of-index positions - also helped. Conversely, unfavorable picks in electrical components/equipment and life science tools/services detracted. Additionally, the fund's foreign holdings were hampered in part by currency fluctuations. Underweighting strong-performing index component Cypress Semiconductor hurt. Other detractors included chip maker Atmel, as well as nanotechnology products developer Arrowhead Research and solar power components maker Renewable Energy, the latter two being out-of-index positions.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Electronics
Advisor Electronics Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.40% | | | |
Actual | | $ 1,000.00 | $ 1,631.20 | $ 9.13 |
Hypothetical A | | $ 1,000.00 | $ 1,017.85 | $ 7.00 |
Class T | 1.65% | | | |
Actual | | $ 1,000.00 | $ 1,627.20 | $ 10.75 |
Hypothetical A | | $ 1,000.00 | $ 1,016.61 | $ 8.25 |
Class B | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,624.70 | $ 13.99 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Class C | 2.15% | | | |
Actual | | $ 1,000.00 | $ 1,622.00 | $ 13.98 |
Hypothetical A | | $ 1,000.00 | $ 1,014.13 | $ 10.74 |
Institutional Class | 1.15% | | | |
Actual | | $ 1,000.00 | $ 1,630.40 | $ 7.50 |
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).
Annual Report
Advisor Electronics Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Intel Corp. | 23.5 | 24.0 |
Texas Instruments, Inc. | 9.3 | 10.1 |
Applied Materials, Inc. | 6.0 | 7.4 |
Marvell Technology Group Ltd. | 3.4 | 3.2 |
Micron Technology, Inc. | 3.1 | 1.5 |
Atmel Corp. | 2.5 | 1.3 |
National Semiconductor Corp. | 2.3 | 2.4 |
Analog Devices, Inc. | 2.3 | 2.9 |
Fairchild Semiconductor International, Inc. | 1.9 | 0.9 |
NVIDIA Corp. | 1.9 | 1.3 |
| 56.2 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Semiconductors & Semiconductor Equipment | 85.3% | |
| Electronic Equipment
& Components | 3.8% | |
| Computers
& Peripherals | 3.2% | |
| Communications Equipment | 1.8% | |
| Electrical Equipment | 0.4% | |
| All Others* | 5.5% | |
As of January 31, 2009 |
| Semiconductors & Semiconductor Equipment | 86.2% | |
| Electronic Equipment
& Components | 4.5% | |
| Communications Equipment | 2.6% | |
| Electrical Equipment | 1.6% | |
| Computers
& Peripherals | 1.0% | |
| All Others* | 4.1% | |
* Includes short-term investments and net other assets. |
Electronics
Advisor Electronics Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 93.4% |
| Shares | | Value |
COMMUNICATIONS EQUIPMENT - 1.5% |
Communications Equipment - 1.5% |
Cisco Systems, Inc. (a) | 1,000 | | $ 22,010 |
QUALCOMM, Inc. | 4,100 | | 189,461 |
| | 211,471 |
COMPUTERS & PERIPHERALS - 3.2% |
Computer Hardware - 1.6% |
Dell, Inc. (a) | 9,970 | | 133,399 |
Hewlett-Packard Co. | 2,300 | | 99,590 |
| | 232,989 |
Computer Storage & Peripherals - 1.6% |
SanDisk Corp. (a) | 4,166 | | 74,238 |
Seagate Technology | 10,900 | | 131,236 |
Western Digital Corp. (a) | 500 | | 15,125 |
| | 220,599 |
TOTAL COMPUTERS & PERIPHERALS | | 453,588 |
ELECTRICAL EQUIPMENT - 0.3% |
Electrical Components & Equipment - 0.3% |
Motech Industries, Inc. | 1 | | 4 |
Sunpower Corp. Class B (a) | 1,700 | | 46,410 |
| | 46,414 |
ELECTRONIC EQUIPMENT & COMPONENTS - 3.6% |
Electronic Components - 0.6% |
Everlight Electronics Co. Ltd. | 14,559 | | 40,602 |
Vishay Intertechnology, Inc. (a) | 6,300 | | 44,793 |
| | 85,395 |
Electronic Manufacturing Services - 1.6% |
DDi Corp. (a) | 3,344 | | 16,051 |
Flextronics International Ltd. (a) | 24,700 | | 131,404 |
Jabil Circuit, Inc. | 5,304 | | 48,585 |
Tyco Electronics Ltd. | 1,700 | | 36,499 |
| | 232,539 |
Technology Distributors - 1.4% |
Arrow Electronics, Inc. (a) | 2,100 | | 54,117 |
Avnet, Inc. (a) | 5,621 | | 137,152 |
| | 191,269 |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | | 509,203 |
HOUSEHOLD DURABLES - 0.4% |
Consumer Electronics - 0.4% |
Harman International Industries, Inc. | 2,000 | | 49,360 |
LIFE SCIENCES TOOLS & SERVICES - 0.2% |
Life Sciences Tools & Services - 0.2% |
Arrowhead Research Corp. warrants 5/21/17 (a) | 64,879 | | 23,885 |
|
| Shares | | Value |
METALS & MINING - 0.0% |
Diversified Metals & Mining - 0.0% |
Timminco Ltd. (a) | 2,600 | | $ 2,534 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 84.1% |
Semiconductor Equipment - 18.1% |
Advanced Energy Industries, Inc. (a) | 200 | | 2,406 |
Aixtron AG | 3,100 | | 50,810 |
Amkor Technology, Inc. (a) | 38,400 | | 240,384 |
Applied Materials, Inc. | 62,000 | | 855,600 |
ASML Holding NV (NY Shares) | 6,730 | | 175,047 |
ATMI, Inc. (a) | 1,500 | | 27,285 |
Brooks Automation, Inc. (a) | 300 | | 1,779 |
Cabot Microelectronics Corp. (a) | 100 | | 3,392 |
Cohu, Inc. | 100 | | 1,213 |
Cymer, Inc. (a) | 4,400 | | 150,524 |
Entegris, Inc. (a) | 600 | | 2,238 |
FEI Co. (a) | 200 | | 4,900 |
FormFactor, Inc. (a) | 5,250 | | 121,013 |
KLA-Tencor Corp. | 2,930 | | 93,408 |
Kulicke & Soffa Industries, Inc. (a) | 9,365 | | 54,973 |
Lam Research Corp. (a) | 8,290 | | 249,197 |
LTX-Credence Corp. (a) | 1,044 | | 940 |
Mattson Technology, Inc. (a) | 16,930 | | 25,564 |
MEMC Electronic Materials, Inc. (a) | 9,846 | | 173,487 |
MKS Instruments, Inc. (a) | 1,295 | | 25,084 |
Teradyne, Inc. (a) | 2,500 | | 19,700 |
Tessera Technologies, Inc. (a) | 300 | | 8,427 |
Ultratech, Inc. (a) | 100 | | 1,191 |
Varian Semiconductor Equipment Associates, Inc. (a) | 6,000 | | 192,240 |
Veeco Instruments, Inc. (a) | 200 | | 3,768 |
Verigy Ltd. (a) | 6,700 | | 89,043 |
| | 2,573,613 |
Semiconductors - 66.0% |
Actel Corp. (a) | 100 | | 1,114 |
Advanced Analogic Technologies, Inc. (a) | 7,130 | | 34,367 |
Advanced Micro Devices, Inc. (a) | 9,900 | | 36,234 |
Altera Corp. | 1,800 | | 33,642 |
Analog Devices, Inc. | 11,800 | | 322,966 |
Applied Micro Circuits Corp. (a) | 1,900 | | 16,435 |
ARM Holdings PLC sponsored ADR | 15,700 | | 100,323 |
Atheros Communications, Inc. (a) | 1,000 | | 25,000 |
Atmel Corp. (a) | 86,500 | | 360,705 |
AuthenTec, Inc. (a) | 2,800 | | 6,860 |
Broadcom Corp. Class A (a) | 8,050 | | 227,252 |
California Micro Devices Corp. (a) | 12,426 | | 39,763 |
Chartered Semiconductor Manufacturing Ltd. (a) | 3,700 | | 5,759 |
Chartered Semiconductor Manufacturing Ltd. ADR (a) | 2,914 | | 45,896 |
Cirrus Logic, Inc. (a) | 2,309 | | 12,422 |
Cree, Inc. (a) | 400 | | 12,824 |
Cypress Semiconductor Corp. (a) | 7,100 | | 75,402 |
Common Stocks - continued |
| Shares | | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED |
Semiconductors - continued |
Diodes, Inc. (a) | 200 | | $ 3,692 |
DSP Group, Inc. (a) | 200 | | 1,742 |
Exar Corp. (a) | 200 | | 1,406 |
Fairchild Semiconductor International, Inc. (a) | 30,500 | | 269,315 |
Global Unichip Corp. | 5,596 | | 30,700 |
Himax Technologies, Inc. sponsored ADR | 10,800 | | 41,256 |
Infineon Technologies AG (a) | 38,200 | | 154,324 |
Infineon Technologies AG rights 8/3/09 (a) | 34,700 | | 16,266 |
Inotera Memories, Inc. sponsored ADR (a)(c) | 5,600 | | 29,186 |
Intel Corp. | 173,490 | | 3,339,679 |
International Rectifier Corp. (a) | 9,053 | | 149,918 |
Intersil Corp. Class A | 2,500 | | 35,925 |
Linear Technology Corp. | 2,800 | | 75,236 |
LSI Corp. (a) | 4,600 | | 23,828 |
Marvell Technology Group Ltd. (a) | 35,950 | | 479,573 |
Maxim Integrated Products, Inc. | 4,200 | | 74,424 |
Microchip Technology, Inc. | 3,200 | | 86,176 |
Micron Technology, Inc. (a) | 69,730 | | 445,575 |
Microsemi Corp. (a) | 3,100 | | 42,315 |
Monolithic Power Systems, Inc. (a) | 200 | | 4,438 |
National Semiconductor Corp. | 22,000 | | 331,320 |
Netlogic Microsystems, Inc. (a) | 100 | | 3,974 |
NVIDIA Corp. (a) | 20,300 | | 262,479 |
O2Micro International Ltd. sponsored ADR (a) | 2,700 | | 13,986 |
Omnivision Technologies, Inc. (a) | 1,100 | | 14,553 |
ON Semiconductor Corp. (a) | 24,529 | | 179,062 |
PMC-Sierra, Inc. (a) | 5,400 | | 49,410 |
Rambus, Inc. (a) | 500 | | 8,465 |
Samsung Electronics Co. Ltd. | 150 | | 88,820 |
Semiconductor Manufacturing International Corp. sponsored ADR (a) | 6,900 | | 18,285 |
Semtech Corp. (a) | 400 | | 7,360 |
Sigma Designs, Inc. (a) | 100 | | 1,617 |
Silicon Image, Inc. (a) | 4,955 | | 12,140 |
Silicon Laboratories, Inc. (a) | 300 | | 12,849 |
Silicon Storage Technology, Inc. (a) | 500 | | 940 |
Standard Microsystems Corp. (a) | 2,100 | | 48,720 |
STATS ChipPAC Ltd. (a) | 73,000 | | 38,042 |
STMicroelectronics NV (NY Shares) | 1,500 | | 11,385 |
Supertex, Inc. (a) | 60 | | 1,383 |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 5,744 | | 60,140 |
Texas Instruments, Inc. | 54,900 | | 1,320,345 |
TriQuint Semiconductor, Inc. (a) | 800 | | 5,744 |
Volterra Semiconductor Corp. (a) | 200 | | 3,318 |
|
| Shares | | Value |
Xilinx, Inc. | 9,900 | | $ 214,731 |
Zoran Corp. (a) | 300 | | 3,456 |
| | 9,374,462 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 11,948,075 |
SOFTWARE - 0.1% |
Application Software - 0.1% |
Mentor Graphics Corp. (a) | 2,629 | | 18,245 |
TOTAL COMMON STOCKS (Cost $14,266,418) | 13,262,775 |
Convertible Bonds - 1.8% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.3% |
Communications Equipment - 0.3% |
Lucent Technologies, Inc. 2.875% 6/15/25 | | $ 50,000 | | 39,233 |
ELECTRICAL EQUIPMENT - 0.1% |
Electrical Components & Equipment - 0.1% |
Sunpower Corp. 4.75% 4/15/14 | | 10,000 | | 13,290 |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% |
Electronic Manufacturing Services - 0.2% |
TTM Technologies, Inc. 3.25% 5/15/15 | | 30,000 | | 25,809 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.2% |
Semiconductors - 1.2% |
Advanced Micro Devices, Inc. 6% 5/1/15 | | 220,000 | | 133,100 |
Xilinx, Inc. 3.125% 3/15/37 | | 60,000 | | 47,400 |
| | 180,500 |
TOTAL CONVERTIBLE BONDS (Cost $172,539) | 258,832 |
Money Market Funds - 4.4% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b)
(Cost $627,002) | 627,002 | | 627,002 |
Cash Equivalents - 0.2% |
| Maturity Amount | | Value |
Investments in repurchase agreements in a joint trading account at 0.19%, dated 7/31/09 due 8/3/09 (Collateralized by U.S. Treasury Obligations) #
(Cost $33,000) | $ 33,001 | | $ 33,000 |
TOTAL INVESTMENT PORTFOLIO - 99.8% (Cost $15,098,959) | | 14,181,609 |
NET OTHER ASSETS - 0.2% | | 26,585 |
NET ASSETS - 100% | $ 14,208,194 |
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) 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 $29,186 or 0.2% of net assets. |
# Additional information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$33,000 due 8/03/09 at 0.19% |
BNP Paribas Securities Corp. | $ 1,486 |
Barclays Capital, Inc. | 5,754 |
Credit Suisse Securities (USA) LLC | 1,509 |
Deutsche Bank Securities, Inc. | 4,833 |
HSBC Securities (USA), Inc. | 6,288 |
ING Financial Markets LLC | 6,905 |
J.P. Morgan Securities, Inc. | 1,046 |
Mizuho Securities USA, Inc. | 1,151 |
Morgan Stanley & Co., Inc. | 1,151 |
Societe Generale, New York Branch | 2,877 |
| $ 33,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,292 |
Fidelity Securities Lending Cash Central Fund | 19 |
Total | $ 3,311 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 49,360 | $ 49,360 | $ - | $ - |
Health Care | 23,885 | - | 23,885 | - |
Industrials | 46,414 | 46,414 | - | - |
Information Technology | 13,140,582 | 12,940,806 | 199,776 | - |
Materials | 2,534 | 2,534 | - | - |
Cash Equivalents | 33,000 | - | 33,000 | - |
Corporate Bonds | 258,832 | - | 258,832 | - |
Money Market Funds | 627,002 | 627,002 | - | - |
Total Investments in Securities: | $ 14,181,609 | $ 13,666,116 | $ 515,493 | $ - |
United States of America | 87.4% |
Bermuda | 3.4% |
Singapore | 2.1% |
Germany | 1.6% |
Cayman Islands | 1.5% |
Netherlands | 1.3% |
Taiwan | 1.1% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $12,832,682 of which $4,774,109, $2,265,871, $279,201, $310,663 and $5,202,838 will expire on July 31, 2011, 2012, 2013, 2016 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $2,011,669 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Electronics
Advisor Electronics Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including repurchase agreements of $33,000) - See accompanying schedule: Unaffiliated issuers (cost $14,471,957) | $ 13,554,607 | |
Fidelity Central Funds (cost $627,002) | 627,002 | |
Total Investments (cost $15,098,959) | | $ 14,181,609 |
Cash | | 7,029 |
Receivable for investments sold | | 59,977 |
Receivable for fund shares sold | | 290,782 |
Dividends receivable | | 9,325 |
Interest receivable | | 4,463 |
Distributions receivable from Fidelity Central Funds | | 148 |
Prepaid expenses | | 42 |
Receivable from investment adviser for expense reductions | | 8,412 |
Other receivables | | 3 |
Total assets | | 14,561,790 |
| | |
Liabilities | | |
Payable for investments purchased | $ 289,647 | |
Payable for fund shares redeemed | 10,888 | |
Accrued management fee | 5,753 | |
Distribution fees payable | 5,684 | |
Other affiliated payables | 3,578 | |
Other payables and accrued expenses | 38,046 | |
Total liabilities | | 353,596 |
| | |
Net Assets | | $ 14,208,194 |
Net Assets consist of: | | |
Paid in capital | | $ 30,441,535 |
Undistributed net investment income | | 33,992 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (15,349,966) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (917,367) |
Net Assets | | $ 14,208,194 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($5,432,735 ÷ 824,831 shares) | | $ 6.59 |
| | |
Maximum offering price per share (100/94.25 of $6.59) | | $ 6.99 |
Class T:
Net Asset Value and redemption price per share ($4,195,215 ÷ 649,598 shares) | | $ 6.46 |
| | |
Maximum offering price per share (100/96.50 of $6.46) | | $ 6.69 |
Class B:
Net Asset Value and offering price per share ($1,196,587 ÷ 193,287 shares) A | | $ 6.19 |
| | |
Class C:
Net Asset Value and offering price per share ($3,016,214 ÷ 487,759 shares) A | | $ 6.18 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($367,443 ÷ 54,421 shares) | | $ 6.75 |
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, 2009 |
| | |
Investment Income | | |
Dividends | | $ 169,557 |
Interest | | 31,978 |
Income from Fidelity Central Funds | | 3,311 |
Total income | | 204,846 |
| | |
Expenses | | |
Management fee | $ 55,064 | |
Transfer agent fees | 33,932 | |
Distribution fees | 57,204 | |
Accounting and security lending fees | 3,800 | |
Custodian fees and expenses | 22,887 | |
Independent trustees' compensation | 65 | |
Registration fees | 50,693 | |
Audit | 50,445 | |
Legal | 120 | |
Miscellaneous | 1,380 | |
Total expenses before reductions | 275,590 | |
Expense reductions | (105,465) | 170,125 |
Net investment income (loss) | | 34,721 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (3,410,322) | |
Foreign currency transactions | (1,936) | |
Total net realized gain (loss) | | (3,412,258) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 2,662,786 | |
Assets and liabilities in foreign currencies | 95 | |
Total change in net unrealized appreciation (depreciation) | | 2,662,881 |
Net gain (loss) | | (749,377) |
Net increase (decrease) in net assets resulting from operations | | $ (714,656) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 34,721 | $ (90,535) |
Net realized gain (loss) | (3,412,258) | (4,347,575) |
Change in net unrealized appreciation (depreciation) | 2,662,881 | (2,232,309) |
Net increase (decrease) in net assets resulting from operations | (714,656) | (6,670,419) |
Share transactions - net increase (decrease) | 612,433 | (8,363,960) |
Redemption fees | 572 | 266 |
Total increase (decrease) in net assets | (101,651) | (15,034,113) |
| | |
Net Assets | | |
Beginning of period | 14,309,845 | 29,343,958 |
End of period (including undistributed net investment income of $33,992 and $0, respectively) | $ 14,208,194 | $ 14,309,845 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 | $ 6.58 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .04 | - G | (.03) | (.04) | (.07) |
Net realized and unrealized gain (loss) | (.24) | (2.32) | 1.76 | (.62) | 1.53 |
Total from investment operations | (.20) | (2.32) | 1.73 | (.66) | 1.46 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.59 | $ 6.79 | $ 9.11 | $ 7.38 | $ 8.04 |
Total Return A,B | (2.95)% | (25.47)% | 23.44% | (8.21)% | 22.19% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.44% | 1.72% | 1.60% | 1.50% | 1.59% |
Expenses net of fee waivers, if any | 1.40% | 1.40% | 1.40% | 1.40% | 1.45% |
Expenses net of all reductions | ��1.40% | 1.39% | 1.38% | 1.36% | 1.38% |
Net investment income (loss) | .69% | (.02)% | (.35)% | (.52)% | (.96)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 5,433 | $ 3,970 | $ 7,551 | $ 7,916 | $ 11,397 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 | $ 6.53 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.02) | (.05) | (.06) | (.08) |
Net realized and unrealized gain (loss) | (.23) | (2.29) | 1.74 | (.61) | 1.51 |
Total from investment operations | (.21) | (2.31) | 1.69 | (.67) | 1.43 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.46 | $ 6.67 | $ 8.98 | $ 7.29 | $ 7.96 |
Total Return A,B | (3.15)% | (25.72)% | 23.18% | (8.42)% | 21.90% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.77% | 2.02% | 1.89% | 1.82% | 1.89% |
Expenses net of fee waivers, if any | 1.65% | 1.65% | 1.65% | 1.65% | 1.69% |
Expenses net of all reductions | 1.65% | 1.64% | 1.64% | 1.61% | 1.61% |
Net investment income (loss) | .44% | (.27)% | (.60)% | (.77)% | (1.20)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 4,195 | $ 4,635 | $ 8,103 | $ 9,048 | $ 12,085 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 | $ 6.42 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - G | (.06) | (.09) | (.10) | (.12) |
Net realized and unrealized gain (loss) | (.24) | (2.21) | 1.69 | (.58) | 1.48 |
Total from investment operations | (.24) | (2.27) | 1.60 | (.68) | 1.36 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.19 | $ 6.43 | $ 8.70 | $ 7.10 | $ 7.78 |
Total Return A,B | (3.73)% | (26.09)% | 22.54% | (8.74)% | 21.18% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.22% | 2.48% | 2.36% | 2.29% | 2.41% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.21% |
Expenses net of all reductions | 2.15% | 2.14% | 2.13% | 2.11% | 2.13% |
Net investment income (loss) | (.06)% | (.77)% | (1.10)% | (1.27)% | (1.72)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 1,197 | $ 2,027 | $ 4,572 | $ 6,123 | $ 8,963 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 | $ 6.41 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | - G | (.06) | (.09) | (.10) | (.11) |
Net realized and unrealized gain (loss) | (.24) | (2.21) | 1.69 | (.58) | 1.47 |
Total from investment operations | (.24) | (2.27) | 1.60 | (.68) | 1.36 |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 6.18 | $ 6.42 | $ 8.69 | $ 7.09 | $ 7.77 |
Total Return A,B | (3.74)% | (26.12)% | 22.57% | (8.75)% | 21.22% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 3.21% | 2.47% | 2.34% | 2.26% | 2.31% |
Expenses net of fee waivers, if any | 2.15% | 2.15% | 2.15% | 2.15% | 2.18% |
Expenses net of all reductions | 2.15% | 2.14% | 2.13% | 2.11% | 2.11% |
Net investment income (loss) | (.06)% | (.77)% | (1.10)% | (1.27)% | (1.69)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,016 | $ 3,325 | $ 8,389 | $ 7,009 | $ 11,058 |
Portfolio turnover rate E | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Electronics
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 | $ 6.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .05 | .02 | (.01) | (.02) | (.05) |
Net realized and unrealized gain (loss) | (.24) | (2.38) | 1.80 | (.62) | 1.55 |
Total from investment operations | (.19) | (2.36) | 1.79 | (.64) | 1.50 |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 6.75 | $ 6.94 | $ 9.30 | $ 7.51 | $ 8.15 |
Total Return A | (2.74)% | (25.38)% | 23.83% | (7.85)% | 22.56% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 2.16% | 1.47% | 1.26% | 1.11% | 1.16% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.15% | 1.11% | 1.16% |
Expenses net of all reductions | 1.15% | 1.14% | 1.13% | 1.07% | 1.08% |
Net investment income (loss) | .94% | .23% | (.10)% | (.23)% | (.67)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 367 | $ 353 | $ 730 | $ 750 | $ 899 |
Portfolio turnover rate D | 92% | 93% | 97% | 95% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Electronics Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds, pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Electronics
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 1,768,361 | |
Unrealized depreciation | (3,184,922) | |
Net unrealized appreciation (depreciation) | $ (1,416,561) | |
Undistributed ordinary income | $ 27,572 | |
Capital loss carryforward | $ (12,832,682) | |
Cost for federal income tax purposes | $ 15,598,170 | |
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.
Annual Report
Notes to Financial Statements - continued
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $9,256,381 and $9,054,538, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 7,374 | $ 202 |
Class T | .25% | .25% | 15,986 | 152 |
Class B | .75% | .25% | 11,254 | 8,471 |
Class C | .75% | .25% | 22,590 | 1,350 |
| | | $ 57,204 | $ 10,175 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 3,636 |
Class T | 1,113 |
Class B* | 4,193 |
Class C* | 85 |
| $ 9,027 |
* 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.
Electronics
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 9,685 | .33 |
Class T | 12,326 | .38 |
Class B | 3,672 | .33 |
Class C | 7,460 | .33 |
Institutional Class | 789 | .33 |
| $ 33,932 | |
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 $925 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $43 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $19.
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.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions - continued
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.40% | $ 30,793 |
Class T | 1.65% | 35,853 |
Class B | 2.15% | 12,082 |
Class C | 2.15% | 24,086 |
Institutional Class | 1.15% | 2,401 |
| | $ 105,215 |
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 $250 for the period.
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 454,229 | 161,701 | $ 2,515,743 | $ 1,242,418 |
Shares redeemed | (214,204) | (405,321) | (1,126,041) | (3,221,767) |
Net increase (decrease) | 240,025 | (243,620) | $ 1,389,702 | $ (1,979,349) |
Class T | | | | |
Shares sold | 211,424 | 93,832 | $ 1,046,750 | $ 747,770 |
Shares redeemed | (256,279) | (301,416) | (1,247,787) | (2,324,905) |
Net increase (decrease) | (44,855) | (207,584) | $ (201,037) | $ (1,577,135) |
Class B | | | | |
Shares sold | 57,656 | 35,607 | $ 278,136 | $ 276,103 |
Shares redeemed | (179,676) | (246,055) | (832,636) | (1,804,727) |
Net increase (decrease) | (122,020) | (210,448) | $ (554,500) | $ (1,528,624) |
Class C | | | | |
Shares sold | 132,135 | 107,517 | $ 684,005 | $ 865,728 |
Shares redeemed | (162,035) | (555,338) | (721,474) | (3,939,431) |
Net increase (decrease) | (29,900) | (447,821) | $ (37,469) | $ (3,073,703) |
Institutional Class | | | | |
Shares sold | 29,924 | 9,123 | $ 158,084 | $ 82,426 |
Shares redeemed | (26,319) | (36,772) | (142,347) | (287,575) |
Net increase (decrease) | 3,605 | (27,649) | $ 15,737 | $ (205,149) |
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
Advisor Energy Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | | -38.68% | 9.91% | 9.08% |
A Prior to October 1, 2006, Advisor Energy operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Energy Fund - Institutional Class on July 31, 1999. 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.
Natural Resources
Advisor Energy Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the 12 months ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -38.86%, -38.99%, -39.31% and -39.31%, respectively (excluding sales charges), lagging the S&P 500® and the -30.31% return of the MSCI® US Investable Market Energy Index. Energy stocks suffered setbacks along with much of the market during the period's first half. The fund's fairly aggressive positioning in mid- and smaller-sized company stocks, along with a large underweighting in stronger-performing integrated oil stocks, led to its underperformance versus the MSCI index, though it regained momentum during the period's final months. The biggest detractor was a sizable underweighting in index giant Exxon Mobil. Large positions in drill-rig manufacturer National Oilwell Varco and rig leasing company Nabors Industries also dampened results. An overweighting in the poorly-performing refining/marketing group hurt, highlighted by a big position in refiner Valero Energy. A major stake in coal producer Peabody Energy also disappointed. I sold the position. Brighter spots included large stakes in low-cost natural gas exploration/production companies Range Resources and Southwestern Energy. Coal producer Massey Energy also contributed, as did underweighting integrated oil producer ConocoPhillips when the stock faltered amid the company's financial difficulties and falling oil prices.
Comments from John Dowd, Portfolio Manager of Fidelity® Advisor Energy Fund: For the 12 months ending July 31, 2009, the fund's Institutional Class shares returned -38.68%, lagging the S&P 500® and the -30.31% return of the MSCI® US Investable Market Energy Index. Energy stocks suffered setbacks along with much of the market during the period's first half. The fund's fairly aggressive positioning in mid- and smaller-sized company stocks, along with a large underweighting in stronger-performing integrated oil stocks, led to its underperformance versus the MSCI index, though it regained momentum during the period's final months. The biggest detractor was a sizable underweighting in index giant Exxon Mobil. Large positions in drill-rig manufacturer National Oilwell Varco and rig leasing company Nabors Industries also dampened results. An overweighting in the poorly-performing refining/marketing group hurt, highlighted by a big position in refiner Valero Energy. A major stake in coal producer Peabody Energy also disappointed. I sold the position. Brighter spots included large stakes in low-cost natural gas exploration/production companies Range Resources and Southwestern Energy. Coal producer Massey Energy also contributed, as did underweighting integrated oil producer ConocoPhillips when the stock faltered amid the company's financial difficulties and falling oil prices.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund
Annual Report
Advisor Energy Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.24% | | | |
Actual | | $ 1,000.00 | $ 1,246.10 | $ 6.91 |
Hypothetical A | | $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.48% | | | |
Actual | | $ 1,000.00 | $ 1,245.10 | $ 8.24 |
Hypothetical A | | $ 1,000.00 | $ 1,017.46 | $ 7.40 |
Class B | 1.99% | | | |
Actual | | $ 1,000.00 | $ 1,241.40 | $ 11.06 |
Hypothetical A | | $ 1,000.00 | $ 1,014.93 | $ 9.94 |
Class C | 1.98% | | | |
Actual | | $ 1,000.00 | $ 1,241.80 | $ 11.01 |
Hypothetical A | | $ 1,000.00 | $ 1,014.98 | $ 9.89 |
Institutional Class | .97% | | | |
Actual | | $ 1,000.00 | $ 1,247.90 | $ 5.41 |
Hypothetical A | | $ 1,000.00 | $ 1,019.98 | $ 4.86 |
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
Advisor Energy Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Occidental Petroleum Corp. | 6.2 | 4.8 |
Schlumberger Ltd. | 5.8 | 2.3 |
Southwestern Energy Co. | 4.9 | 4.8 |
Petrohawk Energy Corp. | 4.0 | 2.9 |
Transocean Ltd. | 3.8 | 2.5 |
Marathon Oil Corp. | 3.5 | 2.4 |
Chevron Corp. | 3.4 | 3.2 |
Noble Corp. | 3.3 | 4.9 |
Weatherford International Ltd. | 3.3 | 1.7 |
Range Resources Corp. | 3.2 | 4.2 |
| 41.4 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Oil, Gas &
Consumable Fuels | 58.0% | |
| Energy Equipment & Services | 37.0% | |
| Electrical Equipment | 3.1% | |
| Gas Utilities | 1.1% | |
| Construction & Engineering | 0.5% | |
| All Others* | 0.3% | |
|
As of January 31, 2009 |
| Oil, Gas &
Consumable Fuels | 69.1% | |
| Energy Equipment & Services | 26.1% | |
| Electrical Equipment | 1.9% | |
| Gas Utilities | 1.0% | |
| Construction & Engineering | 0.7% | |
| All Others* | 1.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Energy Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.9% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 0.0% |
Environmental & Facility Services - 0.0% |
Fuel Tech, Inc. (a) | 16,062 | | $ 143,916 |
CONSTRUCTION & ENGINEERING - 0.5% |
Construction & Engineering - 0.5% |
Jacobs Engineering Group, Inc. (a) | 65,300 | | 2,675,994 |
ELECTRICAL EQUIPMENT - 3.0% |
Electrical Components & Equipment - 2.8% |
centrotherm photovoltaics AG (a) | 25,223 | | 1,305,671 |
Energy Conversion Devices, Inc. (a)(c) | 103,019 | | 1,466,991 |
Evergreen Solar, Inc. (a)(c) | 242,942 | | 510,178 |
First Solar, Inc. (a)(c) | 35,000 | | 5,403,650 |
JA Solar Holdings Co. Ltd. ADR (a)(c) | 959,395 | | 4,614,690 |
Q-Cells SE (a)(c) | 16,793 | | 302,289 |
Sunpower Corp.: | | | |
Class A (a) | 22,200 | | 714,840 |
Class B (a) | 94,500 | | 2,579,850 |
| | 16,898,159 |
Heavy Electrical Equipment - 0.2% |
Vestas Wind Systems AS (a) | 12,700 | | 894,486 |
TOTAL ELECTRICAL EQUIPMENT | | 17,792,645 |
ENERGY EQUIPMENT & SERVICES - 37.0% |
Oil & Gas Drilling - 14.5% |
Atwood Oceanics, Inc. (a) | 305,546 | | 8,811,947 |
Diamond Offshore Drilling, Inc. | 100 | | 8,987 |
ENSCO International, Inc. | 35,400 | | 1,341,306 |
Helmerich & Payne, Inc. | 285,453 | | 9,808,165 |
Hercules Offshore, Inc. (a) | 164,594 | | 780,176 |
Nabors Industries Ltd. (a) | 740,822 | | 12,608,790 |
Noble Corp. | 584,243 | | 19,782,468 |
Patterson-UTI Energy, Inc. | 116,517 | | 1,609,100 |
Pride International, Inc. (a) | 188,287 | | 4,720,355 |
Seadrill Ltd. | 205,100 | | 3,291,260 |
Songa Offshore Se (a) | 89,000 | | 320,763 |
Transocean Ltd. (a) | 286,264 | | 22,812,378 |
| | 85,895,695 |
Oil & Gas Equipment & Services - 22.5% |
Baker Hughes, Inc. | 5,500 | | 222,750 |
Basic Energy Services, Inc. (a) | 33,140 | | 223,695 |
BJ Services Co. | 943,674 | | 13,381,297 |
Cameron International Corp. (a) | 20,200 | | 630,846 |
Complete Production Services, Inc. (a) | 37,254 | | 307,718 |
Core Laboratories NV | 23,200 | | 1,994,272 |
Dresser-Rand Group, Inc. (a) | 35,900 | | 1,045,049 |
Dril-Quip, Inc. (a) | 112,455 | | 4,755,722 |
Exterran Holdings, Inc. (a) | 77,875 | | 1,354,246 |
FMC Technologies, Inc. (a) | 112,900 | | 4,911,150 |
Fugro NV (Certificaten Van Aandelen) unit | 1,693 | | 75,972 |
Global Industries Ltd. (a) | 328,703 | | 2,245,041 |
Halliburton Co. | 371,660 | | 8,209,969 |
|
| Shares | | Value |
Helix Energy Solutions Group, Inc. (a) | 69,700 | | $ 731,153 |
Hornbeck Offshore Services, Inc. (a) | 41,015 | | 893,307 |
Key Energy Services, Inc. (a) | 56,200 | | 390,028 |
Lufkin Industries, Inc. | 7,190 | | 326,426 |
National Oilwell Varco, Inc. (a) | 390,457 | | 14,033,025 |
Newpark Resources, Inc. (a) | 19,781 | | 52,024 |
Oceaneering International, Inc. (a) | 132,100 | | 6,726,532 |
Oil States International, Inc. (a) | 39,300 | | 1,065,816 |
Schlumberger Ltd. | 643,600 | | 34,432,600 |
Smith International, Inc. | 154,300 | | 3,877,559 |
Superior Energy Services, Inc. (a) | 174,884 | | 2,901,326 |
Tenaris SA sponsored ADR | 107,100 | | 3,247,272 |
Tidewater, Inc. | 46,959 | | 2,113,155 |
TSC Offshore Group Ltd. (a) | 1,258,000 | | 219,140 |
Weatherford International Ltd. (a) | 1,053,164 | | 19,757,357 |
Willbros Group, Inc. (a) | 263,094 | | 3,628,066 |
| | 133,752,513 |
TOTAL ENERGY EQUIPMENT & SERVICES | | 219,648,208 |
GAS UTILITIES - 1.1% |
Gas Utilities - 1.1% |
EQT Corp. | 56,300 | | 2,160,794 |
Questar Corp. | 122,000 | | 4,034,540 |
Zhongyu Gas Holdings Ltd. (a) | 6,538,000 | | 455,560 |
| | 6,650,894 |
METALS & MINING - 0.3% |
Diversified Metals & Mining - 0.3% |
Teck Resources Ltd. Class B (sub. vtg.) | 59,900 | | 1,576,243 |
MULTI-UTILITIES - 0.0% |
Multi-Utilities - 0.0% |
Sempra Energy | 4 | | 210 |
OIL, GAS & CONSUMABLE FUELS - 58.0% |
Coal & Consumable Fuels - 8.6% |
Alpha Natural Resources, Inc. (a) | 81,700 | | 2,721,427 |
Arch Coal, Inc. | 523,385 | | 9,112,133 |
CONSOL Energy, Inc. | 229,613 | | 8,158,150 |
Foundation Coal Holdings, Inc. | 356,286 | | 12,801,356 |
Massey Energy Co. | 655,644 | | 17,440,130 |
PT Bumi Resources Tbk | 2,851,800 | | 804,541 |
| | 51,037,737 |
Integrated Oil & Gas - 16.0% |
Chevron Corp. | 293,300 | | 20,375,551 |
ConocoPhillips | 141,346 | | 6,178,234 |
Exxon Mobil Corp. | 831 | | 58,494 |
Hess Corp. | 119,750 | | 6,610,200 |
Marathon Oil Corp. | 635,253 | | 20,486,909 |
Occidental Petroleum Corp. | 517,600 | | 36,925,578 |
Suncor Energy, Inc. | 146,900 | | 4,750,542 |
| | 95,385,508 |
Common Stocks - continued |
| Shares | | Value |
OIL, GAS & CONSUMABLE FUELS - CONTINUED |
Oil & Gas Exploration & Production - 29.6% |
Anadarko Petroleum Corp. | 222,600 | | $ 10,729,320 |
Apache Corp. | 120,100 | | 10,082,395 |
Berry Petroleum Co. Class A | 74,901 | | 1,776,652 |
Cabot Oil & Gas Corp. | 506,702 | | 17,800,441 |
Canadian Natural Resources Ltd. | 94,300 | | 5,668,416 |
Chesapeake Energy Corp. | 663,546 | | 14,226,426 |
Comstock Resources, Inc. (a) | 189,211 | | 7,284,624 |
Concho Resources, Inc. (a) | 96,998 | | 2,977,839 |
Denbury Resources, Inc. (a) | 369,243 | | 6,129,434 |
EOG Resources, Inc. | 1,284 | | 95,055 |
EXCO Resources, Inc. (a) | 528,347 | | 7,259,488 |
Forest Oil Corp. (a) | 41,200 | | 694,220 |
Newfield Exploration Co. (a) | 52,650 | | 2,070,725 |
Niko Resources Ltd. | 16,500 | | 1,162,436 |
Noble Energy, Inc. | 7,400 | | 452,288 |
Oil Search Ltd. | 349,202 | | 1,647,092 |
OPTI Canada, Inc. (a)(c) | 144,200 | | 210,140 |
Petrobank Energy & Resources Ltd. (a) | 25,100 | | 763,705 |
Petrohawk Energy Corp. (a) | 971,626 | | 23,591,079 |
Plains Exploration & Production Co. (a) | 276,469 | | 7,920,837 |
Quicksilver Resources, Inc. (a)(c) | 210,500 | | 2,412,330 |
Range Resources Corp. | 412,988 | | 19,166,773 |
SandRidge Energy, Inc. (a) | 51,550 | | 481,993 |
Southwestern Energy Co. (a) | 704,100 | | 29,170,863 |
Talisman Energy, Inc. | 5,000 | | 77,273 |
Ultra Petroleum Corp. (a) | 41,200 | | 1,817,744 |
| | 175,669,588 |
Oil & Gas Refining & Marketing - 3.1% |
Frontier Oil Corp. | 326,359 | | 4,536,390 |
Holly Corp. | 244,079 | | 5,191,560 |
Sunoco, Inc. | 110,300 | | 2,723,307 |
Tesoro Corp. | 133,876 | | 1,752,437 |
Valero Energy Corp. | 225,563 | | 4,060,134 |
| | 18,263,828 |
|
| Shares | | Value |
Oil & Gas Storage & Transport - 0.7% |
El Paso Corp. | 298,100 | | $ 2,998,886 |
Williams Companies, Inc. | 83,877 | | 1,399,907 |
| | 4,398,793 |
TOTAL OIL, GAS & CONSUMABLE FUELS | | 344,755,454 |
TOTAL COMMON STOCKS (Cost $575,114,875) | 593,243,564 |
Convertible Bonds - 0.1% |
| Principal Amount | | |
ELECTRICAL EQUIPMENT - 0.1% |
Electrical Components & Equipment - 0.1% |
Sunpower Corp. 4.75% 4/15/14
(Cost $320,000) | | $ 320,000 | | 425,280 |
Money Market Funds - 2.7% |
| Shares | | |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(d)
(Cost $16,132,988) | 16,132,988 | | 16,132,988 |
TOTAL INVESTMENT PORTFOLIO - 102.7% (Cost $591,567,863) | | 609,801,832 |
NET OTHER ASSETS - (2.7)% | | (15,754,586) |
NET ASSETS - 100% | $ 594,047,246 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) 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 | $ 67,263 |
Fidelity Securities Lending Cash Central Fund | 260,635 |
Total | $ 327,898 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Energy | $ 564,403,662 | $ 564,403,662 | $ - | $ - |
Industrials | 20,612,555 | 20,612,555 | - | - |
Materials | 1,576,243 | 1,576,243 | - | - |
Utilities | 6,651,104 | 6,651,104 | - | - |
Corporate Bonds | 425,280 | - | 425,280 | - |
Money Market Funds | 16,132,988 | 16,132,988 | - | - |
Total Investments in Securities: | $ 609,801,832 | $ 609,376,552 | $ 425,280 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 77.7% |
Switzerland | 10.4% |
Netherlands Antilles | 5.8% |
Canada | 2.8% |
Others (individually less than 1%) | 3.3% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $106,222,894 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $79,621,140 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Energy
Advisor Energy Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $14,613,637) - See accompanying schedule: Unaffiliated issuers (cost $575,434,875) | $ 593,668,844 | |
Fidelity Central Funds (cost $16,132,988) | 16,132,988 | |
Total Investments (cost $591,567,863) | | $ 609,801,832 |
Receivable for investments sold | | 8,745,983 |
Receivable for fund shares sold | | 624,703 |
Dividends receivable | | 170,103 |
Interest receivable | | 3,631 |
Distributions receivable from Fidelity Central Funds | | 10,611 |
Prepaid expenses | | 2,220 |
Other receivables | | 941 |
Total assets | | 619,360,024 |
| | |
Liabilities | | |
Payable to custodian bank | $ 941,099 | |
Payable for investments purchased | 5,895,387 | |
Payable for fund shares redeemed | 1,622,339 | |
Accrued management fee | 260,687 | |
Distribution fees payable | 234,627 | |
Other affiliated payables | 182,812 | |
Other payables and accrued expenses | 42,839 | |
Collateral on securities loaned, at value | 16,132,988 | |
Total liabilities | | 25,312,778 |
| | |
Net Assets | | $ 594,047,246 |
Net Assets consist of: | | |
Paid in capital | | $ 784,094,022 |
Accumulated net investment loss | | (108) |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (208,278,596) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 18,231,928 |
Net Assets | | $ 594,047,246 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($216,595,298 ÷ 8,387,697 shares) | | $ 25.82 |
| | |
Maximum offering price per share (100/94.25 of $25.82) | | $ 27.40 |
Class T:
Net Asset Value and redemption price per share ($224,375,948 ÷ 8,477,233 shares) | | $ 26.47 |
| | |
Maximum offering price per share (100/96.50 of $26.47) | | $ 27.43 |
Class B:
Net Asset Value and offering price per share ($47,795,293 ÷ 1,952,217 shares)A | | $ 24.48 |
| | |
Class C:
Net Asset Value and offering price per share ($86,649,865 ÷ 3,514,920 shares)A | | $ 24.65 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($18,630,842 ÷ 694,381 shares) | | $ 26.83 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Energy
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 5,736,564 |
Interest | | 3,658 |
Income from Fidelity Central Funds | | 327,898 |
Total income | | 6,068,120 |
| | |
Expenses | | |
Management fee | $ 3,178,324 | |
Transfer agent fees | 1,772,403 | |
Distribution fees | 2,918,713 | |
Accounting and security lending fees | 214,986 | |
Custodian fees and expenses | 34,973 | |
Independent trustees' compensation | 3,527 | |
Registration fees | 120,752 | |
Audit | 54,744 | |
Legal | 3,977 | |
Interest | 2,024 | |
Miscellaneous | 36,597 | |
Total expenses before reductions | 8,341,020 | |
Expense reductions | (16,532) | 8,324,488 |
Net investment income (loss) | | (2,256,368) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (205,504,221) | |
Foreign currency transactions | (156,579) | |
Total net realized gain (loss) | | (205,660,800) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (183,346,663) | |
Assets and liabilities in foreign currencies | 49 | |
Total change in net unrealized appreciation (depreciation) | | (183,346,614) |
Net gain (loss) | | (389,007,414) |
Net increase (decrease) in net assets resulting from operations | | $ (391,263,782) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (2,256,368) | $ (6,384,696) |
Net realized gain (loss) | (205,660,800) | 190,336,922 |
Change in net unrealized appreciation (depreciation) | (183,346,614) | (81,040,623) |
Net increase (decrease) in net assets resulting from operations | (391,263,782) | 102,911,603 |
Distributions to shareholders from net realized gain | (137,595,735) | (64,657,747) |
Share transactions - net increase (decrease) | 82,598,513 | 82,916,045 |
Redemption fees | 78,335 | 43,632 |
Total increase (decrease) in net assets | (446,182,669) | 121,213,533 |
| | |
Net Assets | | |
Beginning of period | 1,040,229,915 | 919,016,382 |
End of period (including accumulated net investment loss of $108 and accumulated net investment loss of $795, respectively) | $ 594,047,246 | $ 1,040,229,915 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 | $ 29.12 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.04) | (.17) | (.02) F | (.04) | .06 |
Net realized and unrealized gain (loss) | (17.48) | 5.59 | 8.42 | 12.30 | 12.21 |
Total from investment operations | (17.52) | 5.42 | 8.40 | 12.26 | 12.27 |
Distributions from net investment income | - | - | - | - | (.06) |
Distributions from net realized gain | (6.90) | (3.46) | (6.51) | (6.81) | (.41) |
Total distributions | (6.90) | (3.46) | (6.51) | (6.81) | (.47) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 25.82 | $ 50.24 | $ 48.28 | $ 46.39 | $ 40.93 |
Total Return A,B | (38.86)% | 11.52% | 22.08% | 32.90% | 42.69% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.22% | 1.14% | 1.19% | 1.21% | 1.25% |
Expenses net of fee waivers, if any | 1.22% | 1.14% | 1.19% | 1.21% | 1.25% |
Expenses net of all reductions | 1.21% | 1.14% | 1.19% | 1.17% | 1.19% |
Net investment income (loss) | (.14)% | (.32)% | (.05)% F | (.09)% | .19% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 216,595 | $ 355,200 | $ 268,108 | $ 204,391 | $ 90,342 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.17)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 | $ 29.52 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.10) | (.29) | (.11) F | (.13) | - H |
Net realized and unrealized gain (loss) | (17.93) | 5.72 | 8.61 | 12.49 | 12.37 |
Total from investment operations | (18.03) | 5.43 | 8.50 | 12.36 | 12.37 |
Distributions from net investment income | - | - | - | - | (.03) |
Distributions from net realized gain | (6.90) | (3.29) | (6.42) | (6.65) | (.41) |
Total distributions | (6.90) | (3.29) | (6.42) | (6.65) | (.44) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 26.47 | $ 51.40 | $ 49.26 | $ 47.18 | $ 41.46 |
Total Return A,B | (38.99)% | 11.27% | 21.84% | 32.60% | 42.41% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.45% | 1.36% | 1.40% | 1.42% | 1.44% |
Expenses net of fee waivers, if any | 1.45% | 1.36% | 1.40% | 1.42% | 1.44% |
Expenses net of all reductions | 1.45% | 1.35% | 1.39% | 1.38% | 1.39% |
Net investment income (loss) | (.38)% | (.54)% | (.26)% F | (.29)% | (.01)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 224,376 | $ 407,784 | $ 382,222 | $ 362,272 | $ 280,820 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.37)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 | $ 28.54 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.22) | (.56) | (.34) F | (.35) | (.18) |
Net realized and unrealized gain (loss) | (16.75) | 5.41 | 8.17 | 11.98 | 11.93 |
Total from investment operations | (16.97) | 4.85 | 7.83 | 11.63 | 11.75 |
Distributions from net realized gain | (6.90) | (3.14) | (6.29) | (6.43) | (.41) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 24.48 | $ 48.35 | $ 46.64 | $ 45.10 | $ 39.89 |
Total Return A,B | (39.31)% | 10.62% | 21.18% | 31.86% | 41.66% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 1.93% | 1.96% | 1.96% | 1.98% |
Expenses net of fee waivers, if any | 1.96% | 1.93% | 1.96% | 1.96% | 1.98% |
Expenses net of all reductions | 1.96% | 1.93% | 1.95% | 1.92% | 1.93% |
Net investment income (loss) | (.89)% | (1.11)% | (.82)% F | (.84)% | (.55)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 47,795 | $ 98,602 | $ 116,487 | $ 130,973 | $ 102,003 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.93)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 | $ 28.68 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.21) | (.54) | (.32) F | (.34) | (.17) |
Net realized and unrealized gain (loss) | (16.87) | 5.45 | 8.20 | 12.06 | 11.99 |
Total from investment operations | (17.08) | 4.91 | 7.88 | 11.72 | 11.82 |
Distributions from net realized gain | (6.90) | (3.16) | (6.33) | (6.50) | (.41) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 24.65 | $ 48.63 | $ 46.88 | $ 45.33 | $ 40.10 |
Total Return A,B | (39.31)% | 10.71% | 21.22% | 31.96% | 41.70% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.96% | 1.87% | 1.91% | 1.92% | 1.94% |
Expenses net of fee waivers, if any | 1.96% | 1.87% | 1.91% | 1.92% | 1.94% |
Expenses net of all reductions | 1.95% | 1.87% | 1.91% | 1.88% | 1.89% |
Net investment income (loss) | (.88)% | (1.05)% | (.77)% F | (.79)% | (.51)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 86,650 | $ 156,393 | $ 135,072 | $ 125,424 | $ 72,832 |
Portfolio turnover rate E | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.88)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Energy
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 | $ 29.64 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .03 | (.02) | .11 E | .12 | .19 |
Net realized and unrealized gain (loss) | (18.06) | 5.74 | 8.67 | 12.56 | 12.44 |
Total from investment operations | (18.03) | 5.72 | 8.78 | 12.68 | 12.63 |
Distributions from net investment income | - | - | - | - | (.11) |
Distributions from net realized gain | (6.90) | (3.64) | (6.58) | (6.97) | (.41) |
Total distributions | (6.90) | (3.64) | (6.58) | (6.97) | (.52) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | .01 |
Net asset value, end of period | $ 26.83 | $ 51.76 | $ 49.68 | $ 47.48 | $ 41.76 |
Total Return A | (38.68)% | 11.83% | 22.47% | 33.35% | 43.21% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | .95% | .85% | .88% | .87% | .89% |
Expenses net of fee waivers, if any | .95% | .85% | .88% | .87% | .89% |
Expenses net of all reductions | .94% | .85% | .88% | .83% | .84% |
Net investment income (loss) | .13% | (.03)% | .25% E | .26% | .54% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 18,631 | $ 22,250 | $ 17,127 | $ 19,553 | $ 9,433 |
Portfolio turnover rate D | 148% | 90% | 80% | 139% | 125% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Energy Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds, pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, net operating losses and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 103,421,824 | |
Unrealized depreciation | (107,624,464) | |
Net unrealized appreciation (depreciation) | $ (4,202,640) | |
| | |
Capital loss carryforward | $ (106,222,894) | |
| | |
Cost for federal income tax purposes | $ 614,004,472 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ - | $ 4,772,747 |
Long-term Capital Gains | 137,595,735 | 59,885,000 |
Total | $ 137,595,735 | $ 64,657,747 |
Energy
3. Significant Accounting Policies - continued
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 $884,680,102 and $936,618,293, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 495,972 | $ 16,561 |
Class T | .25% | .25% | 1,105,084 | 8,598 |
Class B | .75% | .25% | 498,256 | 374,110 |
Class C | .75% | .25% | 819,401 | 145,902 |
| | | $ 2,918,713 | $ 545,171 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 158,560 |
Class T | 35,423 |
Class B* | 127,592 |
Class C* | 28,192 |
| $ 349,767 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 636,855 | .32 |
Class T | 680,042 | .31 |
Class B | 159,600 | .32 |
Class C | 257,524 | .31 |
Institutional Class | 38,382 | .30 |
| $ 1,772,403 | |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
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 $5,063 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 10,970,000 | 2.87% | $ 875 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $2,544 and is reflected in Miscellaneous Expense 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 $260,635.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $6,162,000. The weighted average interest rate was 3.36%. The interest expense amounted to $1,149 under the bank borrowing program.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $15,931 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $601.
Energy
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ 46,997,290 | $ 20,341,408 |
Class T | 53,170,678 | 25,677,389 |
Class B | 13,492,835 | 7,474,589 |
Class C | 21,034,743 | 9,397,317 |
Institutional Class | 2,900,189 | 1,767,044 |
Total | $ 137,595,735 | $ 64,657,747 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 3,517,345 | 3,202,103 | $ 85,305,714 | $ 169,499,687 |
Reinvestment of distributions | 1,158,188 | 375,188 | 42,134,872 | 18,473,322 |
Shares redeemed | (3,358,560) | (2,059,529) | (88,397,497) | (107,985,396) |
Net increase (decrease) | 1,316,973 | 1,517,762 | $ 39,043,089 | $ 79,987,613 |
Class T | | | | |
Shares sold | 2,191,463 | 1,610,611 | $ 53,583,018 | $ 87,007,613 |
Reinvestment of distributions | 1,332,408 | 478,816 | 49,792,078 | 24,107,280 |
Shares redeemed | (2,980,646) | (1,914,780) | (77,608,101) | (102,045,896) |
Net increase (decrease) | 543,225 | 174,647 | $ 25,766,995 | $ 9,068,997 |
Class B | | | | |
Shares sold | 529,128 | 504,843 | $ 12,513,157 | $ 25,728,046 |
Reinvestment of distributions | 339,485 | 135,516 | 11,786,924 | 6,434,106 |
Shares redeemed | (955,690) | (1,098,735) | (23,571,286) | (55,433,977) |
Net increase (decrease) | (87,077) | (458,376) | $ 728,795 | $ (23,271,825) |
Class C | | | | |
Shares sold | 1,217,008 | 993,512 | $ 28,382,837 | $ 51,238,082 |
Reinvestment of distributions | 507,064 | 161,795 | 17,726,948 | 7,736,565 |
Shares redeemed | (1,425,212) | (820,290) | (35,998,056) | (41,459,377) |
Net increase (decrease) | 298,860 | 335,017 | $ 10,111,729 | $ 17,515,270 |
Institutional Class | | | | |
Shares sold | 470,080 | 839,635 | $ 12,030,140 | $ 44,656,187 |
Reinvestment of distributions | 54,219 | 25,669 | 2,044,586 | 1,318,208 |
Shares redeemed | (259,760) | (780,213) | (7,126,821) | (46,358,405) |
Net increase (decrease) | 264,539 | 85,091 | $ 6,947,905 | $ (384,010) |
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
Advisor Financial Services Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | -25.68% | -7.72% | -1.12% |
$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, 1999. 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
Advisor Financial Services Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -25.87%, -26.00%, -26.35% and -26.38%, respectively (excluding sales charges). This performance beat the MSCI® US Investable Market Financials Index, which returned -33.29%, but lagged the S&P 500®. Overweightings in investment banking/brokerage, life/health insurance and reinsurance helped relative to the MSCI index, as did strong stock selection in property/casualty insurance, data processing/outsourced services and diversified banks. Contributors included Fidelity National Financial, a title insurer that benefited as falling interest rates boosted mortgage refinancings, and non-index holding BM&F BOVESPA, the Brazilian stock and futures exchange, which rallied on improved trading volumes. A large overweighting in investment bank Morgan Stanley also helped, as the stock declined less than the index. Stock selection within other diversified financial services, regional banks, thrifts/mortgage finance and retail real estate investment trusts (REITs) hindered performance versus the index. Detractors included CIT Group, a specialized finance company hurt by worse-than-expected credit losses, and KeyCorp, a regional bank that sank after a poorly executed capital offering. CIT was gone from the portfolio before period end.
Comments from Benjamin Hesse, Portfolio Manager of Fidelity® Advisor Financial Services Fund: For the year ending July 31, 2009, the fund's Institutional Class shares returned -25.68%. This performance beat the MSCI® US Investable Market Financials Index, which returned - -33.29%, but lagged the S&P 500®. Overweightings in investment banking/brokerage, life/health insurance and reinsurance helped relative to the MSCI index, as did strong stock selection in property/casualty insurance, data processing/outsourced services and diversified banks. Contributors included Fidelity National Financial, a title insurer that benefited as falling interest rates boosted mortgage refinancings, and non-index holding BM&F BOVESPA, the Brazilian stock and futures exchange, which rallied on improved trading volumes. A large overweighting in investment bank Morgan Stanley also helped, as the stock declined less than the index. Stock selection within other diversified financial services, regional banks, thrifts/mortgage finance and retail real estate investment trusts (REITs) hindered performance versus the index. Detractors included CIT Group, a specialized finance company hurt by worse-than-expected credit losses, and KeyCorp, a regional bank that sank after a poorly executed capital offering. CIT was gone from the portfolio before period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor 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, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.31% | | | |
Actual | | $ 1,000.00 | $ 1,373.20 | $ 7.71 |
Hypothetical A | | $ 1,000.00 | $ 1,018.30 | $ 6.56 |
Class T | 1.58% | | | |
Actual | | $ 1,000.00 | $ 1,371.80 | $ 9.29 |
Hypothetical A | | $ 1,000.00 | $ 1,016.96 | $ 7.90 |
Class B | 2.06% | | | |
Actual | | $ 1,000.00 | $ 1,368.00 | $ 12.09 |
Hypothetical A | | $ 1,000.00 | $ 1,014.58 | $ 10.29 |
Class C | 2.06% | | | |
Actual | | $ 1,000.00 | $ 1,368.30 | $ 12.10 |
Hypothetical A | | $ 1,000.00 | $ 1,014.58 | $ 10.29 |
Institutional Class | 1.06% | | | |
Actual | | $ 1,000.00 | $ 1,374.50 | $ 6.24 |
Hypothetical A | | $ 1,000.00 | $ 1,019.54 | $ 5.31 |
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
Advisor Financial Services Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Morgan Stanley | 5.1 | 4.4 |
Deutsche Bank AG (NY Shares) | 4.3 | 0.0 |
Genworth Financial, Inc. Class A | 4.1 | 0.0 |
Goldman Sachs Group, Inc. | 4.1 | 5.1 |
Euronet Worldwide, Inc. | 3.6 | 0.0 |
Mizuho Financial Group, Inc. | 3.6 | 0.0 |
JPMorgan Chase & Co. | 3.6 | 5.7 |
McGraw-Hill Companies, Inc. | 3.5 | 0.0 |
China Merchants Bank Co. Ltd. (H Shares) | 3.1 | 0.0 |
Xinyuan Real Estate Co. Ltd. ADR | 3.0 | 0.3 |
| 38.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Capital Markets | 28.9% | |
| Commercial Banks | 18.3% | |
| Insurance | 16.1% | |
| Diversified
Financial Services | 10.9% | |
| IT Services | 8.6% | |
| All Others* | 17.2% | |
As of January 31, 2009 |
| Capital Markets | 27.3% | |
| Insurance | 23.6% | |
| Diversified
Financial Services | 17.5% | |
| Commercial Banks | 9.5% | |
| IT Services | 4.9% | |
| All Others* | 17.2% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Financial Services Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.5% |
| Shares | | Value |
CAPITAL MARKETS - 28.9% |
Asset Management & Custody Banks - 11.5% |
AllianceBernstein Holding LP | 70,800 | | $ 1,461,312 |
Bank Sarasin & Co. Ltd.: | | | |
rights 9/15/09 (a) | 44,316 | | 40,640 |
Series B (Reg.) | 44,316 | | 1,445,200 |
EFG International (c) | 185,392 | | 2,289,968 |
Franklin Resources, Inc. | 31,105 | | 2,758,391 |
GLG Partners, Inc. | 21,100 | | 85,033 |
Janus Capital Group, Inc. | 45,400 | | 620,164 |
Julius Baer Holding Ltd. | 33,161 | | 1,579,465 |
KKR Private Equity Investors, LP Restricted Depositary Units (a)(d) | 17,200 | | 116,960 |
Legg Mason, Inc. (c) | 83,353 | | 2,345,553 |
T. Rowe Price Group, Inc. | 34,025 | | 1,589,308 |
The Blackstone Group LP | 247,400 | | 2,785,724 |
| | 17,117,718 |
Diversified Capital Markets - 4.8% |
Credit Suisse Group sponsored ADR | 15,400 | | 729,498 |
Deutsche Bank AG (NY Shares) | 99,800 | | 6,477,020 |
| | 7,206,518 |
Investment Banking & Brokerage - 12.6% |
GFI Group, Inc. | 465,278 | | 3,001,043 |
Goldman Sachs Group, Inc. | 36,900 | | 6,025,770 |
Lazard Ltd. Class A | 29,100 | | 1,076,409 |
MF Global Ltd. (a) | 167,606 | | 1,069,326 |
Morgan Stanley | 268,900 | | 7,663,648 |
| | 18,836,196 |
TOTAL CAPITAL MARKETS | | 43,160,432 |
COMMERCIAL BANKS - 18.3% |
Diversified Banks - 11.7% |
Banco Macro SA sponsored ADR (a)(c) | 125,343 | | 2,128,324 |
BBVA Banco Frances SA sponsored ADR (a)(c) | 72,400 | | 338,108 |
China Citic Bank Corp. Ltd. Class H | 3,247,000 | | 2,262,470 |
China Merchants Bank Co. Ltd. (H Shares) | 1,948,500 | | 4,580,949 |
Mizuho Financial Group, Inc. (c) | 2,366,500 | | 5,377,841 |
U.S. Bancorp, Delaware | 62,400 | | 1,273,584 |
Wells Fargo & Co. | 62,100 | | 1,518,966 |
| | 17,480,242 |
Regional Banks - 6.6% |
Bank of Hawaii Corp. | 25,042 | | 960,862 |
Cathay General Bancorp (c) | 16,988 | | 154,931 |
Fifth Third Bancorp | 50,500 | | 479,750 |
Glacier Bancorp, Inc. (c) | 107,929 | | 1,680,455 |
Huntington Bancshares, Inc. | 93,000 | | 380,370 |
KeyCorp | 636,300 | | 3,677,814 |
PNC Financial Services Group, Inc. | 28,045 | | 1,028,130 |
|
| Shares | | Value |
Umpqua Holdings Corp. (c) | 72,584 | | $ 704,065 |
Zions Bancorp (c) | 59,200 | | 803,936 |
| | 9,870,313 |
TOTAL COMMERCIAL BANKS | | 27,350,555 |
CONSUMER FINANCE - 0.7% |
Consumer Finance - 0.7% |
Capital One Financial Corp. | 24,487 | | 751,751 |
Promise Co. Ltd. | 25,300 | | 266,611 |
| | 1,018,362 |
DIVERSIFIED FINANCIAL SERVICES - 10.9% |
Other Diversified Financial Services - 7.4% |
Bank of America Corp. | 285,262 | | 4,219,025 |
Citigroup, Inc. | 472,076 | | 1,496,481 |
JPMorgan Chase & Co. | 138,848 | | 5,366,475 |
| | 11,081,981 |
Specialized Finance - 3.5% |
BM&F BOVESPA SA | 222,700 | | 1,436,928 |
CME Group, Inc. | 1,470 | | 409,880 |
JSE Ltd. | 20,600 | | 160,579 |
Moody's Corp. | 132,099 | | 3,136,030 |
| | 5,143,417 |
TOTAL DIVERSIFIED FINANCIAL SERVICES | | 16,225,398 |
INSURANCE - 16.1% |
Insurance Brokers - 0.5% |
Arthur J. Gallagher & Co. | 22,700 | | 519,830 |
National Financial Partners Corp. | 19,000 | | 142,500 |
| | 662,330 |
Life & Health Insurance - 5.5% |
Lincoln National Corp. | 91,119 | | 1,930,812 |
MetLife, Inc. | 94,605 | | 3,211,840 |
Principal Financial Group, Inc. | 126,100 | | 2,988,570 |
Protective Life Corp. | 9,000 | | 134,550 |
| | 8,265,772 |
Multi-Line Insurance - 4.6% |
Genworth Financial, Inc. Class A | 885,085 | | 6,107,087 |
Hartford Financial Services Group, Inc. | 47,900 | | 789,871 |
| | 6,896,958 |
Property & Casualty Insurance - 3.5% |
CNA Financial Corp. | 92,800 | | 1,582,240 |
Fidelity National Financial, Inc. Class A | 40,796 | | 585,423 |
United America Indemnity Ltd. Class A (a) | 14,200 | | 76,822 |
XL Capital Ltd. Class A | 209,189 | | 2,945,381 |
| | 5,189,866 |
Reinsurance - 2.0% |
Everest Re Group Ltd. | 20,300 | | 1,628,466 |
Common Stocks - continued |
| Shares | | Value |
INSURANCE - CONTINUED |
Reinsurance - continued |
Transatlantic Holdings, Inc. | 2,100 | | $ 99,351 |
Validus Holdings Ltd. (c) | 54,500 | | 1,237,150 |
| | 2,964,967 |
TOTAL INSURANCE | | 23,979,893 |
INTERNET SOFTWARE & SERVICES - 2.1% |
Internet Software & Services - 2.1% |
China Finance Online Co. Ltd. ADR (a) | 252,815 | | 3,142,490 |
IT SERVICES - 8.6% |
Data Processing & Outsourced Services - 7.7% |
CyberSource Corp. (a) | 16,853 | | 292,231 |
Euronet Worldwide, Inc. (a) | 257,244 | | 5,412,414 |
MasterCard, Inc. Class A | 4,300 | | 834,329 |
MoneyGram International, Inc. (a) | 551,830 | | 1,236,099 |
Visa, Inc. Class A | 56,300 | | 3,685,398 |
| | 11,460,471 |
IT Consulting & Other Services - 0.9% |
Cognizant Technology Solutions Corp. Class A (a) | 39,200 | | 1,159,928 |
Satyam Computer Services Ltd. sponsored ADR | 44,900 | | 226,296 |
| | 1,386,224 |
TOTAL IT SERVICES | | 12,846,695 |
MEDIA - 3.5% |
Publishing - 3.5% |
McGraw-Hill Companies, Inc. | 167,147 | | 5,240,058 |
PROFESSIONAL SERVICES - 0.4% |
Research & Consulting Services - 0.4% |
First Advantage Corp. Class A (a) | 36,831 | | 598,872 |
REAL ESTATE INVESTMENT TRUSTS - 0.4% |
Industrial REITs - 0.1% |
ProLogis Trust | 11,800 | | 103,722 |
Mortgage REITs - 0.0% |
Chimera Investment Corp. | 15,800 | | 56,564 |
Residential REITs - 0.3% |
UDR, Inc. | 37,841 | | 395,438 |
Retail REITs - 0.0% |
CBL & Associates Properties, Inc. | 8,102 | | 48,126 |
Developers Diversified Realty Corp. | 1,147 | | 6,435 |
| | 54,561 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 610,285 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 5.8% |
Diversified Real Estate Activities - 0.4% |
Mitsubishi Estate Co. Ltd. | 38,000 | | 633,400 |
|
| Shares | | Value |
Real Estate Development - 5.4% |
Central China Real Estate Ltd. | 11,725,000 | | $ 3,494,874 |
Xinyuan Real Estate Co. Ltd. ADR (a)(c) | 657,952 | | 4,474,074 |
| | 7,968,948 |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | | 8,602,348 |
ROAD & RAIL - 2.5% |
Trucking - 2.5% |
Arkansas Best Corp. | 67,000 | | 1,908,160 |
Dollar Thrifty Automotive Group, Inc. (a) | 115,210 | | 1,906,726 |
| | 3,814,886 |
SPECIALTY RETAIL - 0.1% |
Home Improvement Retail - 0.1% |
Home Depot, Inc. | 6,600 | | 171,204 |
THRIFTS & MORTGAGE FINANCE - 0.2% |
Thrifts & Mortgage Finance - 0.2% |
Radian Group, Inc. | 79,900 | | 266,067 |
TOTAL COMMON STOCKS (Cost $129,519,080) | 147,027,545 |
Money Market Funds - 10.2% |
| | | |
Fidelity Cash Central Fund, 0.37% (e) | 1,230,596 | | 1,230,596 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(e) | 14,013,335 | | 14,013,335 |
TOTAL MONEY MARKET FUNDS (Cost $15,243,931) | 15,243,931 |
TOTAL INVESTMENT PORTFOLIO - 108.7% (Cost $144,763,011) | | 162,271,476 |
NET OTHER ASSETS - (8.7)% | | (12,977,570) |
NET ASSETS - 100% | $ 149,293,906 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $116,960 or 0.1% of net assets. |
(e) 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 | $ 81,244 |
Fidelity Securities Lending Cash Central Fund | 892,645 |
Total | $ 973,889 |
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 | 69.1% |
China | 6.7% |
Cayman Islands | 5.4% |
Germany | 4.3% |
Japan | 4.2% |
Switzerland | 4.1% |
Bermuda | 3.3% |
Argentina | 1.6% |
Brazil | 1.0% |
Others (individually less than 1%) | 0.3% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $55,672,202 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $56,712,899 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Advisor Financial Services Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $13,162,343) - See accompanying schedule: Unaffiliated issuers (cost $129,519,080) | $ 147,027,545 | |
Fidelity Central Funds (cost $15,243,931) | 15,243,931 | |
Total Investments (cost $144,763,011) | | $ 162,271,476 |
Cash | | 15,783 |
Foreign currency held at value (cost $2) | | 2 |
Receivable for investments sold | | 2,744,984 |
Receivable for fund shares sold | | 511,732 |
Dividends receivable | | 36,308 |
Distributions receivable from Fidelity Central Funds | | 27,464 |
Prepaid expenses | | 688 |
Other receivables | | 306 |
Total assets | | 165,608,743 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,870,714 | |
Payable for fund shares redeemed | 218,158 | |
Accrued management fee | 65,379 | |
Distribution fees payable | 59,827 | |
Other affiliated payables | 45,204 | |
Other payables and accrued expenses | 42,220 | |
Collateral on securities loaned, at value | 14,013,335 | |
Total liabilities | | 16,314,837 |
| | |
Net Assets | | $ 149,293,906 |
Net Assets consist of: | | |
Paid in capital | | $ 249,738,210 |
Undistributed net investment income | | 1,248,708 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (119,201,760) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 17,508,748 |
Net Assets | | $ 149,293,906 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($68,244,752 ÷ 7,160,921 shares) | | $ 9.53 |
| | |
Maximum offering price per share (100/94.25 of $9.53) | | $ 10.11 |
Class T:
Net Asset Value and redemption price per share ($34,926,732 ÷ 3,670,248 shares) | | $ 9.52 |
| | |
Maximum offering price per share (100/96.50 of $9.52) | | $ 9.87 |
Class B:
Net Asset Value and offering price per share ($12,476,834 ÷ 1,337,962 shares) A | | $ 9.33 |
| | |
Class C:
Net Asset Value and offering price per share ($29,848,683 ÷ 3,228,183 shares) A | | $ 9.25 |
| | |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($3,796,905 ÷ 391,840 shares) | | $ 9.69 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Financial Services Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 3,813,685 |
Interest | | 3,096 |
Income from Fidelity Central Funds (including $892,645 from security lending) | | 973,889 |
Total income | | 4,790,670 |
| | |
Expenses | | |
Management fee | $ 791,277 | |
Transfer agent fees | 447,700 | |
Distribution fees | 725,190 | |
Accounting and security lending fees | 58,144 | |
Custodian fees and expenses | 39,474 | |
Independent trustees' compensation | 980 | |
Registration fees | 63,566 | |
Audit | 50,802 | |
Legal | 1,422 | |
Miscellaneous | 14,361 | |
Total expenses before reductions | 2,192,916 | |
Expense reductions | (9,561) | 2,183,355 |
Net investment income (loss) | | 2,607,315 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (88,890,295) | |
Investment not meeting investment restrictions | (2,593) | |
Foreign currency transactions | 31,910 | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 2,593 | |
Total net realized gain (loss) | | (88,858,385) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 30,047,813 | |
Assets and liabilities in foreign currencies | (40) | |
Total change in net unrealized appreciation (depreciation) | | 30,047,773 |
Net gain (loss) | | (58,810,612) |
Net increase (decrease) in net assets resulting from operations | | $ (56,203,297) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 2,607,315 | $ 3,920,838 |
Net realized gain (loss) | (88,858,385) | (25,372,931) |
Change in net unrealized appreciation (depreciation) | 30,047,773 | (75,621,214) |
Net increase (decrease) in net assets resulting from operations | (56,203,297) | (97,073,307) |
Distributions to shareholders from net investment income | (3,219,822) | (2,830,191) |
Distributions to shareholders from net realized gain | (320,528) | (22,361,262) |
Total distributions | (3,540,350) | (25,191,453) |
Share transactions - net increase (decrease) | 1,444,825 | (845,081) |
Redemption fees | 13,297 | 10,552 |
Total increase (decrease) in net assets | (58,285,525) | (123,099,289) |
| | |
Net Assets | | |
Beginning of period | 207,579,431 | 330,678,720 |
End of period (including undistributed net investment income of $1,248,708 and undistributed net investment income of $2,125,111, respectively) | $ 149,293,906 | $ 207,579,431 |
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 | $ 22.17 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .19 | .30 | .23 | .20 | .19 |
Net realized and unrealized gain (loss) | (3.58) | (6.41) | .92 | 2.02 | 2.48 |
Total from investment operations | (3.39) | (6.11) | 1.15 | 2.22 | 2.67 |
Distributions from net investment income | (.24) | (.27) | (.22) | (.26) | (.07) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.63) | (1.76) |
Total distributions | (.26) | (1.73) | (3.47) H | (1.89) | (1.83) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.53 | $ 13.18 | $ 21.02 | $ 23.34 | $ 23.01 |
Total Return A,B | (25.87)% | (31.67)% | 4.54% | 10.32% | 12.60% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.29% | 1.21% | 1.23% | 1.25% | 1.26% |
Expenses net of fee waivers, if any | 1.29% | 1.21% | 1.23% | 1.25% | 1.26% |
Expenses net of all reductions | 1.28% | 1.21% | 1.22% | 1.23% | 1.23% |
Net investment income (loss) | 2.12% | 1.75% | 1.01% | .87% | .88% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 68,245 | $ 90,037 | $ 106,722 | $ 85,356 | $ 68,012 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.47 per share is comprised of distributions from net investment income of $.223 and distributions from net realized gain of $3.250 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 | $ 22.07 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .16 | .26 | .18 | .15 | .14 |
Net realized and unrealized gain (loss) | (3.56) | (6.41) | .91 | 2.02 | 2.47 |
Total from investment operations | (3.40) | (6.15) | 1.09 | 2.17 | 2.61 |
Distributions from net investment income | (.20) | (.19) | (.16) | (.15) | (.05) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.63) | (1.76) |
Total distributions | (.22) | (1.65) | (3.41) H | (1.78) | (1.81) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.52 | $ 13.14 | $ 20.94 | $ 23.26 | $ 22.87 |
Total Return A,B | (26.00)% | (31.85)% | 4.25% | 10.11% | 12.37% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.55% | 1.47% | 1.46% | 1.47% | 1.48% |
Expenses net of fee waivers, if any | 1.55% | 1.47% | 1.46% | 1.47% | 1.48% |
Expenses net of all reductions | 1.54% | 1.47% | 1.46% | 1.46% | 1.46% |
Net investment income (loss) | 1.86% | 1.50% | .77% | .65% | .66% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 34,927 | $ 53,526 | $ 95,426 | $ 113,344 | $ 128,388 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.41 per share is comprised of distributions from net investment income of $.156 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 | $ 21.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .12 | .18 | .06 | .03 | .03 |
Net realized and unrealized gain (loss) | (3.50) | (6.29) | .89 | 1.97 | 2.41 |
Total from investment operations | (3.38) | (6.11) | .95 | 2.00 | 2.44 |
Distributions from net investment income | (.12) | (.04) | (.02) | (.01) | - |
Distributions from net realized gain | (.02) | (1.44) | (3.25) | (1.57) | (1.76) |
Total distributions | (.14) | (1.48) | (3.26) H | (1.58) | (1.76) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.33 | $ 12.85 | $ 20.44 | $ 22.75 | $ 22.33 |
Total Return A,B | (26.35)% | (32.21)% | 3.71% | 9.52% | 11.78% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.04% | 1.96% | 1.98% | 1.99% | 2.00% |
Expenses net of fee waivers, if any | 2.04% | 1.96% | 1.98% | 1.99% | 2.00% |
Expenses net of all reductions | 2.03% | 1.96% | 1.98% | 1.98% | 1.98% |
Net investment income (loss) | 1.38% | 1.01% | .25% | .13% | .14% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 12,477 | $ 20,420 | $ 64,837 | $ 113,652 | $ 145,046 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.26 per share is comprised of distributions from net investment income of $.015 and distributions from net realized gain of $3.247 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 | $ 21.65 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .12 | .17 | .06 | .04 | .04 |
Net realized and unrealized gain (loss) | (3.48) | (6.24) | .90 | 1.98 | 2.42 |
Total from investment operations | (3.36) | (6.07) | .96 | 2.02 | 2.46 |
Distributions from net investment income | (.15) | (.09) | (.05) | (.02) | (.01) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.60) | (1.76) |
Total distributions | (.17) | (1.55) | (3.30) H | (1.62) | (1.77) |
Redemption fees added to paid in capital C,G | - | - | - | - | - |
Net asset value, end of period | $ 9.25 | $ 12.78 | $ 20.40 | $ 22.74 | $ 22.34 |
Total Return A,B | (26.38)% | (32.18)% | 3.75% | 9.58% | 11.88% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 2.04% | 1.96% | 1.94% | 1.94% | 1.95% |
Expenses net of fee waivers, if any | 2.04% | 1.96% | 1.94% | 1.94% | 1.95% |
Expenses net of all reductions | 2.03% | 1.96% | 1.94% | 1.93% | 1.92% |
Net investment income (loss) | 1.37% | 1.01% | .29% | .18% | .19% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 29,849 | $ 37,777 | $ 55,219 | $ 62,469 | $ 72,181 |
Portfolio turnover rate E | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
H Total distributions of $3.30 per share is comprised of distributions from net investment income of $.049 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 | $ 22.37 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .21 | .36 | .31 | .29 | .29 |
Net realized and unrealized gain (loss) | (3.63) | (6.51) | .93 | 2.05 | 2.50 |
Total from investment operations | (3.42) | (6.15) | 1.24 | 2.34 | 2.79 |
Distributions from net investment income | (.25) | (.33) | (.30) | (.37) | (.11) |
Distributions from net realized gain | (.02) | (1.46) | (3.25) | (1.63) | (1.76) |
Total distributions | (.27) | (1.79) | (3.55) G | (2.00) | (1.87) |
Redemption fees added to paid in capital B,F | - | - | - | - | - |
Net asset value, end of period | $ 9.69 | $ 13.38 | $ 21.32 | $ 23.63 | $ 23.29 |
Total Return A | (25.68)% | (31.47)% | 4.88% | 10.78% | 13.06% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | 1.04% | .93% | .89% | .86% | .86% |
Expenses net of fee waivers, if any | 1.04% | .93% | .89% | .86% | .86% |
Expenses net of all reductions | 1.03% | .92% | .88% | .85% | .84% |
Net investment income (loss) | 2.37% | 2.04% | 1.34% | 1.26% | 1.28% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 3,797 | $ 5,819 | $ 8,474 | $ 11,892 | $ 12,629 |
Portfolio turnover rate D | 269% | 48% | 53% | 33% | 61% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
G Total distributions of $3.55 per share is comprised of distributions from net investment income of $.298 and distributions from net realized gain of $3.250 per share.
See accompanying notes which are an integral part of the financial statements.
Financial Services
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Financial Services Fund (the Fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Financial Services
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 24,622,992 | |
Unrealized depreciation | (13,962,815) | |
Net unrealized appreciation (depreciation) | $ 10,660,177 | |
Undistributed ordinary income | $ 1,280,618 | |
Capital loss carryforward | $ (55,672,202) | |
Cost for federal income tax purposes | $ 151,611,299 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 3,219,822 | $ 3,522,419 |
Long-term Capital Gains | 320,528 | 21,669,034 |
Total | $ 3,540,350 | $ 25,191,453 |
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.
Annual Report
Notes to Financial Statements - continued
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 $389,494,837 and $376,625,610, respectively.
The Fund realized a loss of $2,593 on the sale of an investment not meeting the investment restrictions of the Fund. The loss was fully reimbursed by the Fund's investment advisor.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 156,975 | $ 2,652 |
Class T | .25% | .25% | 172,146 | 1,242 |
Class B | .75% | .25% | 126,814 | 95,214 |
Class C | .75% | .25% | 269,255 | 66,998 |
| | | $ 725,190 | $ 166,106 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 58,766 |
Class T | 8,548 |
Class B* | 33,196 |
Class C* | 12,567 |
| $ 113,077 |
* 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
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
Average
Net Assets |
Class A | $ 198,975 | .32 |
Class T | 112,385 | .33 |
Class B | 39,964 | .31 |
Class C | 85,377 | .32 |
Institutional Class | 10,999 | .31 |
| $ 447,700 | |
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 $77,056 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $637 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $9,561 for the period.
Annual Report
Notes to Financial Statements - continued
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 1,698,174 | $ 1,429,035 |
Class T | 781,807 | 833,715 |
Class B | 182,682 | 103,026 |
Class C | 461,265 | 241,388 |
Institutional Class | 95,894 | 223,027 |
Total | $ 3,219,822 | $ 2,830,191 |
From net realized gain | | |
Class A | $ 139,687 | $ 7,599,793 |
Class T | 80,989 | 6,343,916 |
Class B | 31,565 | 3,935,726 |
Class C | 60,568 | 3,829,942 |
Institutional Class | 7,719 | 651,885 |
Total | $ 320,528 | $ 22,361,262 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,723,908 | 3,476,462 | $ 24,853,928 | $ 58,217,275 |
Reinvestment of distributions | 159,397 | 413,881 | 1,638,390 | 8,062,306 |
Shares redeemed | (2,556,039) | (2,133,725) | (22,026,835) | (36,028,050) |
Net increase (decrease) | 327,266 | 1,756,618 | $ 4,465,483 | $ 30,251,531 |
Class T | | | | |
Shares sold | 995,392 | 825,338 | $ 8,604,735 | $ 13,397,557 |
Reinvestment of distributions | 77,111 | 344,513 | 791,775 | 6,720,713 |
Shares redeemed | (1,475,806) | (1,652,503) | (12,935,480) | (28,919,771) |
Net increase (decrease) | (403,303) | (482,652) | $ (3,538,970) | $ (8,801,501) |
Class B | | | | |
Shares sold | 506,058 | 511,474 | $ 4,460,037 | $ 8,246,792 |
Reinvestment of distributions | 19,064 | 187,873 | 185,301 | 3,607,784 |
Shares redeemed | (776,048) | (2,282,248) | (6,568,493) | (40,060,805) |
Net increase (decrease) | (250,926) | (1,582,901) | $ (1,923,155) | $ (28,206,229) |
Class C | | | | |
Shares sold | 1,273,214 | 1,114,854 | $ 11,448,111 | $ 17,550,045 |
Reinvestment of distributions | 43,964 | 173,040 | 431,812 | 3,294,216 |
Shares redeemed | (1,045,476) | (1,038,077) | (8,677,353) | (17,222,702) |
Net increase (decrease) | 271,702 | 249,817 | $ 3,202,570 | $ 3,621,559 |
Institutional Class | | | | |
Shares sold | 270,723 | 1,075,511 | $ 2,262,133 | $ 20,129,434 |
Reinvestment of distributions | 6,287 | 36,137 | 65,572 | 687,993 |
Shares redeemed | (320,256) | (1,074,000) | (3,088,808) | (18,527,868) |
Net increase (decrease) | (43,246) | 37,648 | $ (761,103) | $ 2,289,559 |
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.
Financial Services
Advisor Health Care Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | | -11.19% | 3.04% | 2.63% |
$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, 1999. 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
Advisor Health Care Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -11.37%, -11.65%, -12.07% and -12.09%, respectively (excluding sales charges), narrowly underperforming the MSCI® US Investable Market Health Care Index, which returned -10.73%, but beating the S&P 500®. Early in the period, the economic downturn took its toll on Mosaic and Monsanto, two out-of-benchmark fertilizers/agricultural chemicals stocks, and on Thermo Fisher Scientific, which makes analytical instruments and laboratory equipment. We sold our positions in Mosaic and Thermo Fisher. Underweightings in pharmaceuticals heavyweights Johnson & Johnson and Pfizer hurt during the flight to quality that followed the downturn. An out-of-benchmark investment in Switzerland-based Alcon, a maker of eye-care products, also detracted, and we sold this position. The fund's foreign holdings disappointed, overall, hampered in part by currency fluctuations. Some of the fund's losses were recouped later in the period. We benefited from good stock picking in the pharmaceuticals industry, including overweightings in Wyeth and Schering-Plough, which were acquired; an underweighting in Abbott Laboratories, which lost ground; and an out-of-benchmark investment in Teva Pharmaceutical, a maker of generic drugs. Our investments in Genentech, a biotech firm that was acquired, and in pharmacy benefits manager Medco Health Solutions also boosted relative performance.
Comments from Edward Yoon, Portfolio Manager of Fidelity® Advisor Health Care Fund: For the 12 months ending July 31, 2009, the fund's Institutional Class shares returned -11.19%, narrowly underperforming the MSCI® US Investable Market Health Care Index, which returned - -10.73%, but beating the S&P 500®. Early in the period, the economic downturn took its toll on Mosaic and Monsanto, two out-of-benchmark fertilizers/agricultural chemicals stocks, and on Thermo Fisher Scientific, which makes analytical instruments and laboratory equipment. We sold our positions in Mosaic and Thermo Fisher. Underweightings in pharmaceuticals heavyweights Johnson & Johnson and Pfizer hurt during the defensive flight to quality that followed the downturn. An out-of-benchmark investment in Switzerland-based Alcon, a maker of eye-care products, also detracted, and we sold this position. The fund's foreign holdings disappointed overall, hampered in part by currency fluctuations. Some of the fund's losses were recouped later in the period. We benefited from good stock picking in the pharmaceuticals industry, including overweightings in Wyeth and Schering-Plough, which were acquired; an underweighting in Abbott Laboratories, which lost ground; and an out-of-benchmark investment in Teva Pharmaceutical, a maker of generic drugs. Our investments in Genentech, a biotech firm that was acquired, and in pharmacy benefits manager Medco Health Solutions also boosted relative performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
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, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.24% | | | |
Actual | | $ 1,000.00 | $ 1,150.20 | $ 6.61 |
Hypothetical A | | $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.51% | | | |
Actual | | $ 1,000.00 | $ 1,148.70 | $ 8.04 |
Hypothetical A | | $ 1,000.00 | $ 1,017.31 | $ 7.55 |
Class B | 1.99% | | | |
Actual | | $ 1,000.00 | $ 1,145.60 | $ 10.59 |
HypotheticalA | | $ 1,000.00 | $ 1,014.93 | $ 9.94 |
Class C | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,145.10 | $ 10.64 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | .99% | | | |
Actual | | $ 1,000.00 | $ 1,151.60 | $ 5.28 |
HypotheticalA | | $ 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).
Health Care
Advisor Health Care Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Pfizer, Inc. | 7.6 | 6.5 |
Covidien PLC | 5.5 | 4.4 |
Allergan, Inc. | 5.3 | 1.7 |
Medco Health Solutions, Inc. | 5.1 | 5.3 |
Amgen, Inc. | 4.9 | 3.4 |
Merck & Co., Inc. | 4.7 | 6.4 |
Express Scripts, Inc. | 4.0 | 2.4 |
Baxter International, Inc. | 3.6 | 4.7 |
Illumina, Inc. | 3.0 | 1.1 |
CIGNA Corp. | 3.0 | 0.0 |
| 46.7 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Pharmaceuticals | 25.4% | |
| Health Care
Equipment & Supplies | 23.3% | |
| Health Care
Providers & Services | 21.3% | |
| Biotechnology | 14.4% | |
| Life Sciences
Tools & Services | 10.7% | |
| All Others* | 4.9% | |
As of January 31, 2009 |
| Pharmaceuticals | 35.4% | |
| Biotechnology | 20.6% | |
| Health Care
Providers & Services | 20.4% | |
| Health Care
Equipment & Supplies | 18.0% | |
| Life Sciences
Tools & Services | 2.9% | |
| All Others* | 2.7% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Health Care Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.7% |
| Shares | | Value |
BIOTECHNOLOGY - 14.4% |
Biotechnology - 14.4% |
Alexion Pharmaceuticals, Inc. (a) | 68,312 | | $ 3,009,144 |
Alnylam Pharmaceuticals, Inc. (a) | 52,137 | | 1,213,228 |
Amgen, Inc. (a) | 308,312 | | 19,210,921 |
Biogen Idec, Inc. (a) | 175,479 | | 8,344,026 |
BioMarin Pharmaceutical, Inc. (a) | 192,767 | | 3,163,306 |
Dendreon Corp. (a) | 38,700 | | 936,927 |
Genzyme Corp. (a) | 18,500 | | 959,965 |
Gilead Sciences, Inc. (a) | 122,811 | | 6,009,142 |
GTx, Inc. (a)(c) | 49,917 | | 525,127 |
Human Genome Sciences, Inc. (a) | 11,900 | | 170,170 |
ImmunoGen, Inc. (a) | 6,700 | | 58,223 |
Micromet, Inc. (a) | 30,900 | | 198,687 |
Momenta Pharmaceuticals, Inc. (a)(c) | 54,305 | | 589,209 |
Myriad Genetics, Inc. (a) | 101,341 | | 2,778,770 |
OncoGenex Pharmaceuticals, Inc. (a) | 23,098 | | 674,000 |
OSI Pharmaceuticals, Inc. (a) | 63,000 | | 2,128,770 |
Targacept, Inc. (a) | 5,000 | | 53,650 |
Theravance, Inc. (a) | 82,913 | | 1,251,986 |
United Therapeutics Corp. (a) | 51,200 | | 4,742,144 |
| | 56,017,395 |
CHEMICALS - 0.7% |
Fertilizers & Agricultural Chemicals - 0.7% |
Monsanto Co. | 32,900 | | 2,763,600 |
DIVERSIFIED CONSUMER SERVICES - 0.5% |
Specialized Consumer Services - 0.5% |
Carriage Services, Inc. Class A (a) | 252,255 | | 925,776 |
Stewart Enterprises, Inc. Class A | 186,543 | | 912,195 |
| | 1,837,971 |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.5% |
Electronic Equipment & Instruments - 0.5% |
Agilent Technologies, Inc. | 92,100 | | 2,138,562 |
FOOD & STAPLES RETAILING - 1.0% |
Drug Retail - 1.0% |
CVS Caremark Corp. | 112,653 | | 3,771,622 |
HEALTH CARE EQUIPMENT & SUPPLIES - 23.3% |
Health Care Equipment - 19.2% |
Abiomed, Inc. (a) | 154,409 | | 1,165,788 |
Baxter International, Inc. | 248,076 | | 13,984,044 |
Boston Scientific Corp. (a) | 706,042 | | 7,582,891 |
C.R. Bard, Inc. | 136,131 | | 10,015,158 |
Conceptus, Inc. (a) | 96,217 | | 1,615,483 |
Covidien PLC | 564,145 | | 21,330,322 |
Edwards Lifesciences Corp. (a) | 71,686 | | 4,688,981 |
Electro-Optical Sciences, Inc.: | | | |
warrants 11/2/11 (a)(f) | 60,018 | | 217,950 |
warrants 8/2/12 (a)(f) | 16,500 | | 62,672 |
|
| Shares | | Value |
ev3, Inc. (a) | 170,583 | | $ 2,093,053 |
HeartWare International, Inc. unit (a) | 668,258 | | 435,914 |
Kinetic Concepts, Inc. (a) | 31,200 | | 986,544 |
Masimo Corp. (a) | 32,592 | | 796,874 |
Micrus Endovascular Corp. (a) | 136,736 | | 1,231,991 |
Nobel Biocare Holding AG (Switzerland) | 89,747 | | 2,131,455 |
NuVasive, Inc. (a) | 68,000 | | 2,814,520 |
Orthofix International NV (a) | 37,017 | | 1,031,294 |
St. Jude Medical, Inc. (a) | 61,600 | | 2,322,936 |
William Demant Holding AS (a) | 1,600 | | 95,236 |
| | 74,603,106 |
Health Care Supplies - 4.1% |
Align Technology, Inc. (a)(c) | 84,648 | | 923,510 |
Cooper Companies, Inc. | 153,811 | | 4,220,574 |
InfuSystems Holdings, Inc. (a) | 453,700 | | 1,134,250 |
InfuSystems Holdings, Inc. warrants 4/11/11 (a) | 41,900 | | 2,095 |
Inverness Medical Innovations, Inc. (a) | 211,080 | | 7,102,842 |
Quidel Corp. (a) | 82,529 | | 1,232,158 |
RTI Biologics, Inc. (a) | 283,750 | | 1,257,013 |
| | 15,872,442 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 90,475,548 |
HEALTH CARE PROVIDERS & SERVICES - 21.3% |
Health Care Distributors & Services - 1.8% |
Henry Schein, Inc. (a) | 103,403 | | 5,312,846 |
Profarma Distribuidora de Produtos Farmaceuticos SA (a) | 214,800 | | 1,554,019 |
| | 6,866,865 |
Health Care Facilities - 2.1% |
Hanger Orthopedic Group, Inc. (a) | 155,165 | | 2,128,864 |
Health Management Associates, Inc. Class A (a) | 461,400 | | 2,782,242 |
Universal Health Services, Inc. Class B | 61,359 | | 3,412,174 |
| | 8,323,280 |
Health Care Services - 10.2% |
Express Scripts, Inc. (a) | 225,026 | | 15,760,821 |
Fresenius Medical Care AG & Co. KGaA sponsored ADR | 40,600 | | 1,863,134 |
Genoptix, Inc. (a) | 22,700 | | 710,737 |
Health Grades, Inc. (a) | 301,898 | | 1,443,072 |
Medco Health Solutions, Inc. (a) | 374,915 | | 19,818,007 |
| | 39,595,771 |
Managed Health Care - 7.2% |
Aetna, Inc. | 76,900 | | 2,073,993 |
CIGNA Corp. | 408,200 | | 11,592,880 |
Health Net, Inc. (a) | 128,100 | | 1,733,193 |
Humana, Inc. (a) | 152,379 | | 5,005,650 |
Common Stocks - continued |
| Shares | | Value |
HEALTH CARE PROVIDERS & SERVICES - CONTINUED |
Managed Health Care - continued |
UnitedHealth Group, Inc. | 161,169 | | $ 4,522,402 |
WellPoint, Inc. (a) | 58,300 | | 3,068,912 |
| | 27,997,030 |
TOTAL HEALTH CARE PROVIDERS & SERVICES | | 82,782,946 |
HEALTH CARE TECHNOLOGY - 0.8% |
Health Care Technology - 0.8% |
Allscripts-Misys Healthcare Solutions, Inc. | 78,027 | | 1,344,405 |
Cerner Corp. (a)(c) | 15,427 | | 1,003,989 |
MedAssets, Inc. (a) | 31,114 | | 581,210 |
| | 2,929,604 |
INTERNET SOFTWARE & SERVICES - 0.4% |
Internet Software & Services - 0.4% |
WebMD Health Corp. Class A (a) | 46,757 | | 1,562,151 |
LIFE SCIENCES TOOLS & SERVICES - 10.7% |
Life Sciences Tools & Services - 10.7% |
Bruker BioSciences Corp. (a) | 210,704 | | 2,119,682 |
Illumina, Inc. (a) | 321,284 | | 11,611,204 |
Life Technologies Corp. (a) | 201,119 | | 9,156,948 |
Millipore Corp. (a) | 31,500 | | 2,192,400 |
PerkinElmer, Inc. | 150,800 | | 2,658,604 |
QIAGEN NV (a) | 423,171 | | 8,023,322 |
Waters Corp. (a) | 117,706 | | 5,914,727 |
| | 41,676,887 |
PHARMACEUTICALS - 25.1% |
Pharmaceuticals - 25.1% |
Abbott Laboratories | 105,763 | | 4,758,277 |
Allergan, Inc. | 380,763 | | 20,344,167 |
Ardea Biosciences, Inc. (a) | 58,800 | | 1,145,424 |
Auxilium Pharmaceuticals, Inc. (a) | 21,400 | | 661,902 |
Cadence Pharmaceuticals, Inc. (a) | 136,986 | | 1,657,531 |
Cardiome Pharma Corp. (a) | 156,000 | | 650,151 |
Johnson & Johnson | 46,109 | | 2,807,577 |
King Pharmaceuticals, Inc. (a) | 423,100 | | 3,837,517 |
Merck & Co., Inc. | 610,551 | | 18,322,636 |
Optimer Pharmaceuticals, Inc. (a) | 83,562 | | 1,177,389 |
Pfizer, Inc. | 1,859,221 | | 29,617,393 |
Piramal Healthcare Ltd. | 61,392 | | 401,728 |
Pronova BioPharma ASA (a) | 253,100 | | 788,364 |
Roche Holding AG (participation certificate) | 22,966 | | 3,621,177 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 125,882 | | 6,714,546 |
XenoPort, Inc. (a) | 46,791 | | 950,325 |
| | 97,456,104 |
TOTAL COMMON STOCKS (Cost $350,331,398) | 383,412,390 |
Nonconvertible Bonds - 0.3% |
| Principal Amount | | Value |
PHARMACEUTICALS - 0.3% |
Pharmaceuticals - 0.3% |
Elan Finance PLC/Elan Finance Corp. 4.8831% 11/15/11 (d)
(Cost $866,072) | | $ 1,100,000 | | $ 1,045,000 |
Money Market Funds - 1.5% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (e) | 3,717,248 | | 3,717,248 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(e) | 2,289,750 | | 2,289,750 |
TOTAL MONEY MARKET FUNDS (Cost $6,006,998) | 6,006,998 |
TOTAL INVESTMENT PORTFOLIO - 100.5% (Cost $357,204,468) | | 390,464,388 |
NET OTHER ASSETS - (0.5)% | | (1,967,478) |
NET ASSETS - 100% | $ 388,496,910 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(e) 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. |
(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 $280,622 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Electro-Optical Sciences, Inc. warrants 11/2/11 | 11/1/06 | $ 6 |
Electro-Optical Sciences, Inc. warrants 8/2/12 | 8/1/07 | $ 17 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 74,419 |
Fidelity Securities Lending Cash Central Fund | 175,315 |
Total | $ 249,734 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 1,837,971 | $ 1,837,971 | $ - | $ - |
Consumer Staples | 3,771,622 | 3,771,622 | - | - |
Health Care | 371,338,484 | 371,057,862 | 280,622 | - |
Information Technology | 3,700,713 | 3,700,713 | - | - |
Materials | 2,763,600 | 2,763,600 | - | - |
Corporate Bonds | 1,045,000 | - | 1,045,000 | - |
Money Market Funds | 6,006,998 | 6,006,998 | - | - |
Total Investments in Securities | $ 390,464,388 | $ 389,138,766 | $ 1,325,622 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.6% |
Ireland | 5.8% |
Netherlands | 2.1% |
Israel | 1.7% |
Switzerland | 1.4% |
Others (individually less than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $30,833,729 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $34,215,799 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Health Care
Advisor Health Care Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $2,191,377) - See accompanying schedule: Unaffiliated issuers (cost $351,197,470) | $ 384,457,390 | |
Fidelity Central Funds (cost $6,006,998) | 6,006,998 | |
Total Investments (cost $357,204,468) | | $ 390,464,388 |
Cash | | 17,869 |
Foreign currency held at value (cost $7,193) | | 7,247 |
Receivable for investments sold | | 7,850,744 |
Receivable for fund shares sold | | 155,936 |
Dividends receivable | | 207,481 |
Interest receivable | | 11,191 |
Distributions receivable from Fidelity Central Funds | | 4,573 |
Prepaid expenses | | 1,751 |
Other receivables | | 35,737 |
Total assets | | 398,756,917 |
| | |
Liabilities | | |
Payable for investments purchased | $ 6,770,664 | |
Payable for fund shares redeemed | 715,137 | |
Accrued management fee | 173,797 | |
Distribution fees payable | 150,930 | |
Other affiliated payables | 116,855 | |
Other payables and accrued expenses | 42,874 | |
Collateral on securities loaned, at value | 2,289,750 | |
Total liabilities | | 10,260,007 |
| | |
Net Assets | | $ 388,496,910 |
Net Assets consist of: | | |
Paid in capital | | $ 429,184,577 |
Undistributed net investment income | | 43,822 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (73,985,169) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 33,253,680 |
Net Assets | | $ 388,496,910 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share ($177,889,969 ÷ 10,373,850 shares) | | $ 17.15 |
| | |
Maximum offering price per share (100/94.25 of $17.15) | | $ 18.20 |
Class T:
Net Asset Value and redemption price per share ($103,771,912 ÷ 6,217,297 shares) | | $ 16.69 |
| | |
Maximum offering price per share (100/96.50 of $16.69) | | $ 17.30 |
Class B:
Net Asset Value and offering price per share ($29,380,641 ÷ 1,866,452 shares) A | | $ 15.74 |
| | |
Class C:
Net Asset Value and offering price per share ($64,002,225 ÷ 4,075,838 shares) A | | $ 15.70 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($13,452,163 ÷ 756,564 shares) | | $ 17.78 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Health Care Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 4,826,076 |
Interest | | 142,746 |
Income from Fidelity Central Funds | | 249,734 |
Total income | | 5,218,556 |
| | |
Expenses | | |
Management fee | $ 2,196,970 | |
Transfer agent fees | 1,253,984 | |
Distribution fees | 1,938,962 | |
Accounting and security lending fees | 154,294 | |
Custodian fees and expenses | 65,068 | |
Independent trustees' compensation | 2,709 | |
Registration fees | 65,946 | |
Audit | 61,185 | |
Legal | 3,101 | |
Miscellaneous | 31,275 | |
Total expenses before reductions | 5,773,494 | |
Expense reductions | (8,456) | 5,765,038 |
Net investment income (loss) | | (546,482) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (71,886,398) | |
Foreign currency transactions | (94,820) | |
Total net realized gain (loss) | | (71,981,218) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 3,793,021 | |
Assets and liabilities in foreign currencies | (3,343) | |
Total change in net unrealized appreciation (depreciation) | | 3,789,678 |
Net gain (loss) | | (68,191,540) |
Net increase (decrease) in net assets resulting from operations | | $ (68,738,022) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (546,482) | $ (2,555,905) |
Net realized gain (loss) | (71,981,218) | 27,558,745 |
Change in net unrealized appreciation (depreciation) | 3,789,678 | (58,670,581) |
Net increase (decrease) in net assets resulting from operations | (68,738,022) | (33,667,741) |
Distributions to shareholders from net realized gain | (9,966,416) | (58,232,148) |
Share transactions - net increase (decrease) | (54,481,101) | (48,796,453) |
Redemption fees | 10,268 | 7,557 |
Total increase (decrease) in net assets | (133,175,271) | (140,688,785) |
| | |
Net Assets | | |
Beginning of period | 521,672,181 | 662,360,966 |
End of period (including undistributed net investment income of $43,822 and accumulated net investment loss of $71, respectively) | $ 388,496,910 | $ 521,672,181 |
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 | $ 18.91 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.03) | (.03) | (.09) | (.05) |
Net realized and unrealized gain (loss) | (2.22) | (1.08) | 1.91 | .96 | 4.08 |
Total from investment operations | (2.20) | (1.11) | 1.88 | .87 | 4.03 |
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 | $ 17.15 | $ 19.72 | $ 22.90 | $ 23.77 | $ 22.94 |
Total Return A,B | (11.37)% | (5.64)% | 8.54% | 3.79% | 21.31% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.23% | 1.20% | 1.22% | 1.25% | 1.28% |
Expenses net of fee waivers, if any | 1.23% | 1.20% | 1.22% | 1.25% | 1.28% |
Expenses net of all reductions | 1.23% | 1.19% | 1.21% | 1.21% | 1.26% |
Net investment income (loss) | .11% | (.13)% | (.14)% | (.38)% | (.22)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 177,890 | $ 220,888 | $ 234,656 | $ 199,221 | $ 139,158 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 | $ 18.60 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.02) | (.08) | (.09) | (.15) | (.09) |
Net realized and unrealized gain (loss) | (2.18) | (1.06) | 1.87 | .95 | 3.99 |
Total from investment operations | (2.20) | (1.14) | 1.78 | .80 | 3.90 |
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 | $ 16.69 | $ 19.26 | $ 22.39 | $ 23.26 | $ 22.50 |
Total Return A,B | (11.65)% | (5.86)% | 8.25% | 3.55% | 20.97% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.49% | 1.46% | 1.48% | 1.50% | 1.53% |
Expenses net of fee waivers, if any | 1.49% | 1.46% | 1.48% | 1.50% | 1.53% |
Expenses net of all reductions | 1.49% | 1.45% | 1.47% | 1.47% | 1.51% |
Net investment income (loss) | (.15)% | (.40)% | (.40)% | (.63)% | (.47)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 103,772 | $ 143,237 | $ 186,628 | $ 218,280 | $ 243,353 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Health Care
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 | $ 17.91 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) | (.18) | (.20) | (.25) | (.19) |
Net realized and unrealized gain (loss) | (2.07) | (.99) | 1.79 | .91 | 3.83 |
Total from investment operations | (2.16) | (1.17) | 1.59 | .66 | 3.64 |
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 | $ 15.74 | $ 18.27 | $ 21.29 | $ 22.17 | $ 21.55 |
Total Return A,B | (12.07)% | (6.30)% | 7.66% | 3.06% | 20.32% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.98% | 1.95% | 1.99% | 2.01% | 2.04% |
Expenses net of fee waivers, if any | 1.98% | 1.95% | 1.99% | 2.01% | 2.04% |
Expenses net of all reductions | 1.98% | 1.94% | 1.98% | 1.98% | 2.01% |
Net investment income (loss) | (.64)% | (.89)% | (.91)% | (1.14)% | (.98)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 29,381 | $ 55,589 | $ 113,384 | $ 180,364 | $ 266,319 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 | $ 17.94 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.09) | (.17) | (.19) | (.24) | (.17) |
Net realized and unrealized gain (loss) | (2.07) | (1.00) | 1.79 | .91 | 3.84 |
Total from investment operations | (2.16) | (1.17) | 1.60 | .67 | 3.67 |
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 | $ 15.70 | $ 18.23 | $ 21.29 | $ 22.24 | $ 21.61 |
Total Return A,B | (12.09)% | (6.31)% | 7.75% | 3.10% | 20.46% |
Ratios to Average Net Assets D,F | | | | | |
Expenses before reductions | 1.98% | 1.94% | 1.94% | 1.94% | 1.97% |
Expenses net of fee waivers, if any | 1.98% | 1.94% | 1.94% | 1.94% | 1.97% |
Expenses net of all reductions | 1.98% | 1.94% | 1.93% | 1.91% | 1.94% |
Net investment income (loss) | (.64)% | (.88)% | (.86)% | (1.07)% | (.91)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 64,002 | $ 83,133 | $ 105,519 | $ 115,644 | $ 131,277 |
Portfolio turnover rate E | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 | $ 19.28 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .06 | .03 | .05 | - F | .04 |
Net realized and unrealized gain (loss) | (2.30) | (1.12) | 1.96 | .99 | 4.16 |
Total from investment operations | (2.24) | (1.09) | 2.01 | .99 | 4.20 |
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 | $ 17.78 | $ 20.39 | $ 23.62 | $ 24.43 | $ 23.48 |
Total Return A | (11.19)% | (5.36)% | 8.90% | 4.21% | 21.78% |
Ratios to Average Net Assets C,E | | | | | |
Expenses before reductions | .98% | .93% | .88% | .86% | .88% |
Expenses net of fee waivers, if any | .98% | .93% | .88% | .86% | .88% |
Expenses net of all reductions | .98% | .92% | .87% | .83% | .85% |
Net investment income (loss) | .36% | .14% | .19% | .01% | .18% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,452 | $ 18,825 | $ 22,174 | $ 20,652 | $ 19,698 |
Portfolio turnover rate D | 172% | 134% | 141% | 99% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Health Care
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Health Care Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, market discount, partnerships, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 42,847,538 | |
Unrealized depreciation | (18,485,678) | |
Net unrealized appreciation (depreciation) | $ 24,361,860 | |
Capital loss carryforward | $ (30,833,729) | |
Cost for federal income tax purposes | $ 366,102,528 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ - | $ 10,044,071 |
Long-term Capital Gains | 9,966,416 | 48,188,077 |
Total | $ 9,966,416 | $ 58,232,148 |
Health Care
3. Significant Accounting Policies - continued
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 $672,225,886 and $733,888,669, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
�� | Distribution
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 430,420 | $ 9,614 |
Class T | .25% | .25% | 528,384 | 4,392 |
Class B | .75% | .25% | 350,642 | 263,466 |
Class C | .75% | .25% | 629,516 | 30,301 |
| | | $ 1,938,962 | $ 307,773 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 27,912 |
Class T | 13,756 |
Class B* | 59,931 |
Class C* | 2,458 |
| $ 104,057 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 549,723 | .32 |
Class T | 348,327 | .33 |
Class B | 111,218 | .32 |
Class C | 201,410 | .32 |
Institutional Class | 43,306 | .32 |
| $ 1,253,984 | |
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 $11,748 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $1,797 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $175,315.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $8,419 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction | |
Class A | $ 35 | |
Institutional Class | 2 | |
| $ 37 | |
Health Care
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net realized gain | | |
Class A | $ 4,165,896 | $ 21,294,782 |
Class T | 2,716,500 | 16,323,384 |
Class B | 1,072,948 | 9,098,884 |
Class C | 1,667,891 | 9,241,641 |
Institutional Class | 343,181 | 2,273,457 |
Total | $ 9,966,416 | $ 58,232,148 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,119,806 | 3,081,992 | $ 33,600,941 | $ 65,718,810 |
Reinvestment of distributions | 190,190 | 845,716 | 3,682,080 | 18,561,495 |
Shares redeemed | (3,135,479) | (2,977,484) | (48,422,714) | (63,109,379) |
Net increase (decrease) | (825,483) | 950,224 | $ (11,139,693) | $ 21,170,926 |
Class T | | | | |
Shares sold | 602,296 | 746,344 | $ 9,206,132 | $ 15,578,653 |
Reinvestment of distributions | 135,003 | 718,829 | 2,550,205 | 15,418,473 |
Shares redeemed | (1,958,228) | (2,364,110) | (29,483,941) | (48,580,585) |
Net increase (decrease) | (1,220,929) | (898,937) | $ (17,727,604) | $ (17,583,459) |
Class B | | | | |
Shares sold | 212,561 | 261,619 | $ 3,135,162 | $ 5,241,565 |
Reinvestment of distributions | 53,957 | 400,851 | 965,289 | 8,175,269 |
Shares redeemed | (1,442,718) | (2,945,003) | (20,918,367) | (58,341,596) |
Net increase (decrease) | (1,176,200) | (2,282,533) | $ (16,817,916) | $ (44,924,762) |
Class C | | | | |
Shares sold | 511,934 | 383,741 | $ 7,440,670 | $ 7,630,409 |
Reinvestment of distributions | 74,490 | 358,758 | 1,329,646 | 7,307,934 |
Shares redeemed | (1,071,755) | (1,138,609) | (15,223,014) | (22,157,508) |
Net increase (decrease) | (485,331) | (396,110) | $ (6,452,698) | $ (7,219,165) |
Institutional Class | | | | |
Shares sold | 260,510 | 423,102 | $ 4,409,032 | $ 9,559,061 |
Reinvestment of distributions | 12,578 | 64,316 | 251,944 | 1,455,613 |
Shares redeemed | (439,916) | (503,017) | (7,004,166) | (11,254,667) |
Net increase (decrease) | (166,828) | (15,599) | $ (2,343,190) | $ (239,993) |
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
Advisor Industrials Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class A | -22.31% | 4.92% | 5.70% |
A Prior to October 1, 2006, Advisor Industrials operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Industrials Fund - Institutional Class on July 31, 1999. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Advisor Industrials Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
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 -22.49%, -22.68%, -23.10% and -23.09%, respectively (excluding sales charges), topping the -30.10% mark of the MSCI® US Investable Market Industrials Index but trailing the S&P 500®. Versus the MSCI index, the fund benefited from an underweighting and favorable stock picking in industrial conglomerates. Stock selection in the tires and rubber group also helped our results, as did a combination of rewarding stock and industry positioning in aerospace and defense, electrical components and equipment, and air freight and logistics. Further, a modest cash position was timely when the market was declining. Major index component General Electric was our top contributor due to the fund's large underweighting in that poorly performing stock. As the financial crisis worsened, I became increasingly concerned about the exposure of GE's finance division to the rising rate of defaults among its commercial borrowers. I'll also mention Goodyear Tire and Rubber, an out-of-index holding, and package carrier United Parcel Service, both of which helped our results. In the case of Ingersoll-Rand, a maker of commercial air conditioning and climate control systems, avoiding a lot of the steep decline that occurred in October 2008 and increasing the position near the stock's lows accounted for much of the fund's outperformance. Home improvement and building products supplier Masco further bolstered performance. Conversely, a beneficial overweighting in heavy electrical equipment was outweighed by poor stock selection in the group. Weak stock and market selection in industrial machinery hampered performance as well, as did the fund's foreign holdings, which were hurt in part by currency movements. At the stock level, not owning industrial conglomerate 3M worked against us when the market was falling, although I established a position in the stock when it got too cheap to resist and our holdings returned about 58% during the period. Denmark-based Vestas Wind Systems, which had aided the fund's results in prior periods, was a drag on performance this time around. Construction and engineering holding Shaw Group was hurt by the weaker outlook for energy-related projects. Similar comments apply to industrial equipment maker SPX, which derives a significant portion of its revenues from projects for energy companies. Vestas, Shaw Group and SPX were sold during the period.
Comments from Tobias Welo, Portfolio Manager of Fidelity® Advisor Industrials Fund: During the past year, the fund's Institutional Class shares returned -22.31%, topping the -30.10% mark of the MSCI® US Investable Market Industrials Index but trailing the S&P 500®. Versus the MSCI index, the fund benefited from an underweighting and favorable stock picking in industrial conglomerates. Stock selection in the tires and rubber group also helped our results, as did a combination of rewarding stock and industry positioning in aerospace and defense, electrical components and equipment, and air freight and logistics. Further, a modest cash position was timely when the market was declining. Major index component General Electric was our top contributor due to the fund's large underweighting in that poorly performing stock. As the financial crisis worsened, I became increasingly concerned about the exposure of GE's finance division to the rising rate of defaults among its commercial borrowers. I'll also mention Goodyear Tire and Rubber, an out-of-index holding, and package carrier United Parcel Service, both of which helped our results. In the case of Ingersoll-Rand, a maker of commercial air conditioning and climate control systems, avoiding a lot of the steep decline that occurred in October 2008 and increasing the position near the stock's lows accounted for much of the fund's outperformance. Home improvement and building products supplier Masco further aided performance. Conversely, a beneficial overweighting in heavy electrical equipment was outweighed by poor stock selection in the group. Weak stock and market selection in industrial machinery hampered performance as well, as did the fund's foreign holdings, which were hurt in part by currency movements. At the stock level, not owning industrial conglomerate 3M worked against us when the market was falling, although I established a position in the stock when it got too cheap to resist and our holdings returned about 58% during the period. Denmark-based Vestas Wind Systems, which had aided the fund's results in prior periods, was a drag on performance this time around. Construction and engineering holding Shaw Group was hurt by the weaker outlook for energy-related projects. Similar comments apply to industrial equipment maker SPX, which derives a significant portion of its revenues from projects for energy companies. Vestas, Shaw Group and SPX were sold during the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Industrials
Advisor Industrials Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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 Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.25% | | | |
Actual | | $ 1,000.00 | $ 1,318.00 | $ 7.18 |
HypotheticalA | | $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | 1.51% | | | |
Actual | | $ 1,000.00 | $ 1,316.50 | $ 8.67 |
HypotheticalA | | $ 1,000.00 | $ 1,017.31 | $ 7.55 |
Class B | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,313.00 | $ 11.47 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,313.00 | $ 11.47 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | .97% | | | |
Actual | | $ 1,000.00 | $ 1,320.00 | $ 5.58 |
HypotheticalA | | $ 1,000.00 | $ 1,019.98 | $ 4.86 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Advisor Industrials Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
United Technologies Corp. | 5.6 | 6.9 |
Union Pacific Corp. | 5.0 | 4.0 |
Honeywell International, Inc. | 4.6 | 6.4 |
General Electric Co. | 4.4 | 1.7 |
Cummins, Inc. | 3.2 | 3.3 |
Danaher Corp. | 3.1 | 4.0 |
3M Co. | 3.1 | 0.0 |
Lockheed Martin Corp. | 2.8 | 3.9 |
Ingersoll-Rand Co. Ltd. | 2.6 | 0.8 |
Masco Corp. | 2.6 | 1.5 |
| 37.0 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Aerospace & Defense | 19.0% | |
| Machinery | 18.5% | |
| Road & Rail | 14.0% | |
| Industrial Conglomerates | 10.3% | |
| Electrical Equipment | 8.8% | |
| All Others* | 29.4% | |
As of January 31, 2009 |
| Aerospace & Defense | 28.6% | |
| Machinery | 18.4% | |
| Electrical Equipment | 10.5% | |
| Road & Rail | 9.1% | |
| Industrial Conglomerates | 7.8% | |
| All Others* | 25.6% | |
* Includes short-term investments and net other assets. |
Industrials
Advisor Industrials Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 98.9% |
| Shares | | Value |
AEROSPACE & DEFENSE - 19.0% |
Aerospace & Defense - 19.0% |
BE Aerospace, Inc. (a) | 76,400 | | $ 1,234,624 |
Goodrich Corp. | 59,200 | | 3,040,512 |
Honeywell International, Inc. | 340,300 | | 11,808,410 |
Lockheed Martin Corp. | 95,800 | | 7,162,008 |
Precision Castparts Corp. | 64,900 | | 5,179,669 |
Raytheon Co. | 106,900 | | 5,018,955 |
Spirit AeroSystems Holdings, Inc. Class A (a) | 48,000 | | 624,480 |
United Technologies Corp. | 263,400 | | 14,347,397 |
| | 48,416,055 |
AIR FREIGHT & LOGISTICS - 4.8% |
Air Freight & Logistics - 4.8% |
C.H. Robinson Worldwide, Inc. | 39,400 | | 2,148,482 |
FedEx Corp. | 85,200 | | 5,779,968 |
United Parcel Service, Inc. Class B | 79,300 | | 4,260,789 |
| | 12,189,239 |
AUTO COMPONENTS - 5.7% |
Auto Parts & Equipment - 3.1% |
BorgWarner, Inc. | 36,300 | | 1,204,797 |
Johnson Controls, Inc. | 251,700 | | 6,513,996 |
WABCO Holdings, Inc. | 12,000 | | 228,120 |
| | 7,946,913 |
Tires & Rubber - 2.6% |
The Goodyear Tire & Rubber Co. (a) | 380,900 | | 6,482,918 |
TOTAL AUTO COMPONENTS | | 14,429,831 |
BUILDING PRODUCTS - 3.4% |
Building Products - 3.4% |
Masco Corp. | 476,600 | | 6,639,038 |
Owens Corning (a) | 115,261 | | 2,118,497 |
| | 8,757,535 |
CHEMICALS - 1.0% |
Specialty Chemicals - 1.0% |
W.R. Grace & Co. (a) | 160,900 | | 2,675,767 |
COMMERCIAL SERVICES & SUPPLIES - 4.8% |
Commercial Printing - 0.9% |
R.R. Donnelley & Sons Co. | 168,200 | | 2,337,980 |
Diversified Support Services - 0.9% |
Cintas Corp. | 84,900 | | 2,137,782 |
Environmental & Facility Services - 1.9% |
Casella Waste Systems, Inc. Class A (a) | 240,947 | | 665,014 |
Clean Harbors, Inc. (a) | 15,600 | | 813,852 |
Republic Services, Inc. | 125,760 | | 3,345,216 |
| | 4,824,082 |
Office Services & Supplies - 0.5% |
United Stationers, Inc. (a) | 29,000 | | 1,346,180 |
|
| Shares | | Value |
Security & Alarm Services - 0.6% |
The Brink's Co. | 56,900 | | $ 1,544,835 |
TOTAL COMMERCIAL SERVICES & SUPPLIES | | 12,190,859 |
CONSTRUCTION MATERIALS - 0.5% |
Construction Materials - 0.5% |
Eagle Materials, Inc. | 25,500 | | 696,150 |
Vulcan Materials Co. (d) | 14,500 | | 688,460 |
| | 1,384,610 |
DIVERSIFIED CONSUMER SERVICES - 0.3% |
Specialized Consumer Services - 0.3% |
Brinks Home Security Holdings, Inc. (a) | 26,710 | | 796,492 |
ELECTRICAL EQUIPMENT - 8.8% |
Electrical Components & Equipment - 8.8% |
Acuity Brands, Inc. (d) | 54,542 | | 1,609,534 |
AMETEK, Inc. | 151,500 | | 4,902,540 |
Cooper Industries Ltd. Class A | 72,700 | | 2,395,465 |
Emerson Electric Co. | 48,720 | | 1,772,434 |
Ener1, Inc. (a)(d) | 120,173 | | 766,704 |
Regal-Beloit Corp. | 92,504 | | 4,288,485 |
Rockwell Automation, Inc. | 133,100 | | 5,511,671 |
Sunpower Corp. Class B (a) | 39,900 | | 1,089,270 |
| | 22,336,103 |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.5% |
Electronic Manufacturing Services - 0.5% |
Tyco Electronics Ltd. | 59,800 | | 1,283,906 |
HOUSEHOLD DURABLES - 1.5% |
Homebuilding - 0.3% |
Centex Corp. | 73,300 | | 799,703 |
Household Appliances - 1.2% |
Black & Decker Corp. | 78,500 | | 2,951,600 |
TOTAL HOUSEHOLD DURABLES | | 3,751,303 |
INDUSTRIAL CONGLOMERATES - 10.3% |
Industrial Conglomerates - 10.3% |
3M Co. | 112,600 | | 7,940,552 |
Carlisle Companies, Inc. | 36,057 | | 1,129,666 |
General Electric Co. | 825,946 | | 11,067,676 |
Textron, Inc. | 128,000 | | 1,720,320 |
Tyco International Ltd. | 146,725 | | 4,434,030 |
| | 26,292,244 |
MACHINERY - 18.5% |
Construction & Farm Machinery & Heavy Trucks - 10.6% |
Caterpillar, Inc. | 18,100 | | 797,486 |
Cummins, Inc. | 192,332 | | 8,272,199 |
Deere & Co. | 116,500 | | 5,095,710 |
Navistar International Corp. (a) | 150,988 | | 5,970,066 |
Common Stocks - continued |
| Shares | | Value |
MACHINERY - CONTINUED |
Construction & Farm Machinery & Heavy Trucks - continued |
PACCAR, Inc. | 158,500 | | $ 5,492,025 |
Toro Co. (d) | 42,071 | | 1,458,181 |
| | 27,085,667 |
Industrial Machinery - 7.9% |
Altra Holdings, Inc. (a) | 84,400 | | 741,876 |
Blount International, Inc. (a) | 73,701 | | 685,419 |
Danaher Corp. | 131,500 | | 8,053,060 |
Graco, Inc. | 49,700 | | 1,229,578 |
Ingersoll-Rand Co. Ltd. | 230,000 | | 6,642,400 |
Parker Hannifin Corp. | 61,800 | | 2,736,504 |
| | 20,088,837 |
TOTAL MACHINERY | | 47,174,504 |
MARINE - 0.3% |
Marine - 0.3% |
Ultrapetrol (Bahamas) Ltd. (a) | 175,033 | | 789,399 |
PROFESSIONAL SERVICES - 2.0% |
Human Resource & Employment Services - 1.2% |
Manpower, Inc. | 61,000 | | 2,924,950 |
Research & Consulting Services - 0.8% |
Equifax, Inc. | 82,307 | | 2,144,097 |
TOTAL PROFESSIONAL SERVICES | | 5,069,047 |
ROAD & RAIL - 14.0% |
Railroads - 9.6% |
CSX Corp. | 134,600 | | 5,400,152 |
Genesee & Wyoming, Inc. Class A (a) | 27,000 | | 736,830 |
Norfolk Southern Corp. | 125,810 | | 5,441,283 |
Union Pacific Corp. | 223,000 | | 12,826,960 |
| | 24,405,225 |
Trucking - 4.4% |
Con-way, Inc. | 94,900 | | 4,322,695 |
Hertz Global Holdings, Inc. (a) | 147,600 | | 1,393,344 |
Ryder System, Inc. | 136,278 | | 4,787,446 |
Saia, Inc. (a) | 42,816 | | 773,257 |
| | 11,276,742 |
TOTAL ROAD & RAIL | | 35,681,967 |
|
| Shares | | Value |
TRADING COMPANIES & DISTRIBUTORS - 3.1% |
Trading Companies & Distributors - 3.1% |
Fastenal Co. (d) | 46,400 | | $ 1,650,448 |
Interline Brands, Inc. (a) | 115,691 | | 1,958,649 |
Rush Enterprises, Inc. Class A (a) | 327,657 | | 4,292,307 |
| | 7,901,404 |
TRANSPORTATION INFRASTRUCTURE - 0.4% |
Marine Ports & Services - 0.4% |
Aegean Marine Petroleum Network, Inc. | 52,800 | | 897,600 |
TOTAL COMMON STOCKS (Cost $246,887,220) | 252,017,865 |
Money Market Funds - 4.4% |
| | | |
Fidelity Cash Central Fund, 0.37% (b) | 5,685,313 | | 5,685,313 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 5,409,403 | | 5,409,403 |
TOTAL MONEY MARKET FUNDS (Cost $11,094,716) | 11,094,716 |
TOTAL INVESTMENT PORTFOLIO - 103.3% (Cost $257,981,936) | | 263,112,581 |
NET OTHER ASSETS - (3.3)% | | (8,362,526) |
NET ASSETS - 100% | $ 254,750,055 |
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 | $ 89,362 |
Fidelity Securities Lending Cash Central Fund | 194,854 |
Total | $ 284,216 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 18,977,626 | $ 18,977,626 | $ - | $ - |
Industrials | 227,695,956 | 227,695,956 | - | - |
Information Technology | 1,283,906 | 1,283,906 | - | - |
Materials | 4,060,377 | 4,060,377 | - | - |
Money Market Funds | 11,094,716 | 11,094,716 | - | - |
Total Investments in Securities: | $ 263,112,581 | $ 263,112,581 | $ - | $ - |
The following is a reconciliation of Investments in Securities for which level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ 33,625 |
Total Realized Gain (Loss) | (35,288) |
Total Unrealized Gain (Loss) | 44,125 |
Cost of Purchases | - |
Proceeds of Sales | (42,462) |
Amortization/Accretion | - |
Transfer in/out of Level 3 | - |
Ending Balance | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investment 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 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $29,658,388 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $69,957,535 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Industrials Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $5,281,039) - See accompanying schedule: Unaffiliated issuers (cost $246,887,220) | $ 252,017,865 | |
Fidelity Central Funds (cost $11,094,716) | 11,094,716 | |
Total Investments (cost $257,981,936) | | $ 263,112,581 |
Receivable for investments sold | | 1,846,410 |
Receivable for fund shares sold | | 322,270 |
Dividends receivable | | 192,318 |
Distributions receivable from Fidelity Central Funds | | 14,840 |
Prepaid expenses | | 1,201 |
Total assets | | 265,489,620 |
| | |
Liabilities | | |
Payable for investments purchased | $ 4,150,255 | |
Payable for fund shares redeemed | 866,727 | |
Accrued management fee | 109,268 | |
Distribution fees payable | 91,250 | |
Other affiliated payables | 74,493 | |
Other payables and accrued expenses | 38,169 | |
Collateral on securities loaned, at value | 5,409,403 | |
Total liabilities | | 10,739,565 |
| | |
Net Assets | | $ 254,750,055 |
Net Assets consist of: | | |
Paid in capital | | $ 356,788,990 |
Undistributed net investment income | | 309,528 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (107,477,163) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 5,128,700 |
Net Assets | | $ 254,750,055 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($130,860,024 ÷ 7,758,461 shares) | | $ 16.87 |
| | |
Maximum offering price per share (100/94.25 of $16.87) | | $ 17.90 |
Class T:
Net Asset Value and redemption price per share ($48,053,558 ÷ 2,888,440 shares) | | $ 16.64 |
| | |
Maximum offering price per share (100/96.50 of $16.64) | | $ 17.24 |
Class B:
Net Asset Value and offering price per share ($25,212,202 ÷ 1,585,251 shares)A | | $ 15.90 |
| | |
Class C:
Net Asset Value and offering price per share ($37,861,997 ÷ 2,374,837 shares)A | | $ 15.94 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($12,762,274 ÷ 731,419 shares) | | $ 17.45 |
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, 2009 |
| | |
Investment Income | | |
Dividends | | $ 5,128,749 |
Interest | | 8 |
Income from Fidelity Central Funds | | 284,216 |
Total income | | 5,412,973 |
| | |
Expenses | | |
Management fee | $ 1,441,506 | |
Transfer agent fees | 797,379 | |
Distribution fees | 1,193,548 | |
Accounting and security lending fees | 101,694 | |
Custodian fees and expenses | 17,298 | |
Independent trustees' compensation | 1,743 | |
Registration fees | 76,779 | |
Audit | 53,161 | |
Legal | 1,416 | |
Interest | 259 | |
Miscellaneous | 16,863 | |
Total expenses before reductions | 3,701,646 | |
Expense reductions | (4,226) | 3,697,420 |
Net investment income (loss) | | 1,715,553 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (102,688,937) | |
Foreign currency transactions | 34,764 | |
Total net realized gain (loss) | | (102,654,173) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,468,404) | |
Assets and liabilities in foreign currencies | (1,142) | |
Total change in net unrealized appreciation (depreciation) | | (6,469,546) |
Net gain (loss) | | (109,123,719) |
Net increase (decrease) in net assets resulting from operations | | $ (107,408,166) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 1,715,553 | $ 880,536 |
Net realized gain (loss) | (102,654,173) | 5,734,188 |
Change in net unrealized appreciation (depreciation) | (6,469,546) | (28,847,344) |
Net increase (decrease) in net assets resulting from operations | (107,408,166) | (22,232,620) |
Distributions to shareholders from net investment income | (1,756,118) | - |
Distributions to shareholders from net realized gain | (285,855) | (36,229,373) |
Total distributions | (2,041,973) | (36,229,373) |
Share transactions - net increase (decrease) | (41,067,612) | 109,034,065 |
Redemption fees | 10,099 | 14,921 |
Total increase (decrease) in net assets | (150,507,652) | 50,586,993 |
| | |
Net Assets | | |
Beginning of period | 405,257,707 | 354,670,714 |
End of period (including undistributed net investment income of $309,528 and undistributed net investment income of $809,200, respectively) | $ 254,750,055 | $ 405,257,707 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 | $ 18.10 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .13 | .11 | .09 | .08 | .02 |
Net realized and unrealized gain (loss) | (5.08) | (1.17) | 5.11 | 1.63 | 4.35 |
Total from investment operations | (4.95) | (1.06) | 5.20 | 1.71 | 4.37 |
Distributions from net investment income | (.13) | - | (.06) | - | - |
Distributions from net realized gain | (.02) | (2.46) | (1.81) | (1.08) | (.94) |
Total distributions | (.15) | (2.46) | (1.87) | (1.08) | (.94) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 16.87 | $ 21.97 | $ 25.49 | $ 22.16 | $ 21.53 |
Total Return A, B | (22.49)% | (4.71)% | 25.13% | 8.40% | 25.04% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.23% | 1.17% | 1.21% | 1.26% | 1.34% |
Expenses net of fee waivers, if any | 1.23% | 1.17% | 1.21% | 1.26% | 1.34% |
Expenses net of all reductions | 1.23% | 1.16% | 1.21% | 1.24% | 1.29% |
Net investment income (loss) | .89% | .46% | .38% | .34% | .09% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 130,860 | $ 188,859 | $ 157,451 | $ 99,255 | $ 40,264 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 | $ 17.90 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .10 | .05 | .03 | .02 | (.03) |
Net realized and unrealized gain (loss) | (5.03) | (1.15) | 5.05 | 1.61 | 4.31 |
Total from investment operations | (4.93) | (1.10) | 5.08 | 1.63 | 4.28 |
Distributions from net investment income | (.08) | - | (.03) | - | - |
Distributions from net realized gain | (.02) | (2.40) | (1.74) | (1.04) | (.91) |
Total distributions | (.10) | (2.40) | (1.77) | (1.04) | (.91) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 16.64 | $ 21.67 | $ 25.17 | $ 21.86 | $ 21.27 |
Total Return A, B | (22.68)% | (4.96)% | 24.82% | 8.13% | 24.78% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.48% | 1.41% | 1.46% | 1.49% | 1.57% |
Expenses net of fee waivers, if any | 1.48% | 1.41% | 1.46% | 1.49% | 1.57% |
Expenses net of all reductions | 1.48% | 1.41% | 1.46% | 1.47% | 1.52% |
Net investment income (loss) | .63% | .21% | .13% | .11% | (.14)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 48,054 | $ 85,025 | $ 75,530 | $ 55,936 | $ 40,126 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Industrials
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 | $ 17.27 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.07) | (.09) | (.09) | (.13) |
Net realized and unrealized gain (loss) | (4.82) | (1.10) | 4.87 | 1.55 | 4.17 |
Total from investment operations | (4.80) | (1.17) | 4.78 | 1.46 | 4.04 |
Distributions from net investment income | (.04) | - | - | - | - |
Distributions from net realized gain | - | (2.28) | (1.61) | (.99) | (.76) |
Total distributions | (.04) | (2.28) | (1.61) | (.99) | (.76) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 15.90 | $ 20.74 | $ 24.19 | $ 21.02 | $ 20.55 |
Total Return A, B | (23.10)% | (5.46)% | 24.18% | 7.54% | 24.12% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.98% | 1.95% | 2.00% | 2.04% | 2.11% |
Expenses net of fee waivers, if any | 1.98% | 1.95% | 2.00% | 2.04% | 2.11% |
Expenses net of all reductions | 1.98% | 1.95% | 2.00% | 2.02% | 2.07% |
Net investment income (loss) | .13% | (.33)% | (.41)% | (.44)% | (.68)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 25,212 | $ 39,989 | $ 44,330 | $ 37,082 | $ 32,242 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 | $ 17.36 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 | (.06) | (.08) | (.08) | (.12) |
Net realized and unrealized gain (loss) | (4.83) | (1.11) | 4.88 | 1.56 | 4.19 |
Total from investment operations | (4.81) | (1.17) | 4.80 | 1.48 | 4.07 |
Distributions from net investment income | (.04) | - | - | - | - |
Distributions from net realized gain | - | (2.30) | (1.70) | (1.00) | (.75) |
Total distributions | (.04) | (2.30) | (1.70) | (1.00) | (.75) |
Redemption fees added to paid in capital C, G | - | - | - | - | - |
Net asset value, end of period | $ 15.94 | $ 20.79 | $ 24.26 | $ 21.16 | $ 20.68 |
Total Return A, B | (23.09)% | (5.44)% | 24.25% | 7.59% | 24.16% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.98% | 1.91% | 1.94% | 1.99% | 2.07% |
Expenses net of fee waivers, if any | 1.98% | 1.91% | 1.94% | 1.99% | 2.07% |
Expenses net of all reductions | 1.98% | 1.90% | 1.94% | 1.97% | 2.02% |
Net investment income (loss) | .14% | (.28)% | (.35)% | (.38)% | (.64)% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 37,862 | $ 57,742 | $ 57,862 | $ 42,363 | $ 20,595 |
Portfolio turnover rate E | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 | $ 18.48 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .19 | .18 | .16 | .16 | .07 |
Net realized and unrealized gain (loss) | (5.27) | (1.19) | 5.27 | 1.66 | 4.46 |
Total from investment operations | (5.08) | (1.01) | 5.43 | 1.82 | 4.53 |
Distributions from net investment income | (.17) | - | (.13) | - | - |
Distributions from net realized gain | (.02) | (2.53) | (1.81) | (1.11) | (.95) |
Total distributions | (.19) | (2.53) | (1.94) | (1.11) | (.95) |
Redemption fees added to paid in capital B, F | - | - | - | - | - |
Net asset value, end of period | $ 17.45 | $ 22.72 | $ 26.26 | $ 22.77 | $ 22.06 |
Total Return A | (22.31)% | (4.40)% | 25.53% | 8.73% | 25.41% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | .96% | .88% | .92% | .91% | 1.06% |
Expenses net of fee waivers, if any | .96% | .88% | .92% | .91% | 1.06% |
Expenses net of all reductions | .95% | .87% | .91% | .89% | 1.01% |
Net investment income (loss) | 1.16% | .75% | .67% | .69% | .37% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 12,762 | $ 33,642 | $ 19,498 | $ 13,043 | $ 4,379 |
Portfolio turnover rate D | 135% | 91% | 130% | 94% | 116% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Industrials
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Industrials Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments, as well as a reconciliation of assets and liabilities for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards, deferred trustee compensation, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 28,486,542 | |
Unrealized depreciation | (31,219,081) | |
Net unrealized appreciation (depreciation) | $ (2,732,539) | |
Undistributed ordinary income | $ 309,528 | |
Capital loss carryforward | $ (29,658,388) | |
Cost for federal income tax purposes | $ 265,845,120 | |
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, 2009 | July 31, 2008 |
Ordinary Income | $ 2,041,973 | $ 17,058,178 |
Long-term Capital Gains | - | 19,171,195 |
Total | $ 2,041,973 | $ 36,229,373 |
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 $350,069,006 and $382,670,613, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 311,483 | $ 11,150 |
Class T | .25% | .25% | 260,762 | 686 |
Class B | .75% | .25% | 252,778 | 189,779 |
Class C | .75% | .25% | 368,525 | 74,024 |
| | | $ 1,193,548 | $ 275,639 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 69,247 |
Class T | 9,296 |
Class B* | 71,891 |
Class C* | 14,329 |
| $ 164,763 |
* 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
Average
Net Assets |
Class A | $ 390,315 | .31 |
Class T | 163,523 | .31 |
Class B | 80,229 | .32 |
Class C | 114,890 | .31 |
Institutional Class | 48,422 | .29 |
| $ 797,379 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $12,845 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 4,540,200 | .41% | $ 259 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $1,165 and is reflected in Miscellaneous Expense 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 $194,854.
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 $4,048 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 $178.
Industrials
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 1,066,448 | $ - |
Class T | 306,371 | - |
Class B | 68,325 | - |
Class C | 103,234 | - |
Institutional Class | 211,740 | - |
Total | $ 1,756,118 | $ - |
From net realized gain | | |
Class A | $ 176,460 | $ 16,681,692 |
Class T | 79,143 | 7,329,611 |
Class B | - | 4,260,086 |
Class C | - | 5,759,702 |
Institutional Class | 30,252 | 2,198,282 |
Total | $ 285,855 | $ 36,229,373 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 2,551,802 | 3,949,728 | $ 40,597,092 | $ 92,641,467 |
Reinvestment of distributions | 72,593 | 645,516 | 1,139,555 | 15,365,861 |
Shares redeemed | (3,461,949) | (2,176,163) | (50,255,155) | (50,202,759) |
Net increase (decrease) | (837,554) | 2,419,081 | $ (8,518,508) | $ 57,804,569 |
Class T | | | | |
Shares sold | 1,041,987 | 1,380,018 | $ 15,774,329 | $ 31,838,651 |
Reinvestment of distributions | 24,634 | 292,360 | 365,354 | 6,876,188 |
Shares redeemed | (2,101,374) | (750,047) | (29,010,054) | (16,849,781) |
Net increase (decrease) | (1,034,753) | 922,331 | $ (12,870,371) | $ 21,865,058 |
Class B | | | | |
Shares sold | 339,206 | 453,829 | $ 5,035,039 | $ 10,091,104 |
Reinvestment of distributions | 4,471 | 159,890 | 56,194 | 3,612,025 |
Shares redeemed | (686,403) | (518,209) | (9,410,134) | (11,329,079) |
Net increase (decrease) | (342,726) | 95,510 | $ (4,318,901) | $ 2,374,050 |
Class C | | | | |
Shares sold | 638,949 | 947,863 | $ 9,440,300 | $ 21,153,831 |
Reinvestment of distributions | 6,551 | 198,290 | 82,541 | 4,489,229 |
Shares redeemed | (1,047,655) | (754,472) | (14,427,567) | (16,433,752) |
Net increase (decrease) | (402,155) | 391,681 | $ (4,904,726) | $ 9,209,308 |
Institutional Class | | | | |
Shares sold | 291,640 | 1,095,024 | $ 4,730,735 | $ 26,168,229 |
Reinvestment of distributions | 10,868 | 66,827 | 192,321 | 1,640,412 |
Shares redeemed | (1,052,089) | (423,274) | (15,378,162) | (10,027,561) |
Net increase (decrease) | (749,581) | 738,577 | $ (10,455,106) | $ 17,781,080 |
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
Advisor Technology Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Past 10
years |
Institutional Class | -5.71% | 3.23% | -2.94% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Technology Fund - Institutional Class on July 31, 1999. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Technology
Advisor Technology Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the year, the fund's Class A, Class T, Class B and Class C shares returned -5.93%, -6.20%, -6.68% and -6.65%, respectively (excluding sales charges), topping the -9.83% return of the MSCI® US Investable Market Information Technology Index and the S&P 500®. Versus the MSCI index, favorable stock picking and an overweighting in semiconductors provided a significant boost to fund performance. Stock picking in semiconductor equipment, home entertainment software and systems software also helped, although large overweightings in the first two weak-performing groups of that trio and a single underweighting in the relatively strong third group offset some of those benefits. My picks in Internet software/services further aided results, as did a modest cash position. Moreover, our foreign holdings contributed despite facing currency head winds. Our top relative contributor was Starent Networks, a provider of infrastructure hardware/software products, which posted a strong double-digit gain. Tessera Technologies, a provider of miniaturization solutions, hard-disk drive maker Seagate Technology and Chinese Internet company Tencent Holdings, an out-of-index position, helped as well. An underweighting and unfavorable stock selection in computer hardware held back performance, as did stock picking in communications equipment, electrical components/equipment and advertising. Increasing competition among providers of smartphones sidetracked two holdings: Canada's Research In Motion and Apple, and I sold off the former, an out-of index holding. Another non-index stock, electronic advertising company VisionChina Media, was hurt by a slowing Chinese economy.
Comments from Charlie Chai, Portfolio Manager of Fidelity® Advisor Technology Fund: During the past year, the fund's Institutional Class shares returned -5.71%, topping the -9.83% return of the MSCI® US Investable Market Information Technology Index and the S&P 500®. Versus the MSCI index, favorable stock picking and an overweighting in semiconductors provided a significant boost to fund performance. Stock picking in semiconductor equipment, home entertainment software and systems software also helped, although large overweightings in the first two weak-performing groups of that trio and a sizable underweighting in the relatively strong third group offset some of those benefits. My picks in Internet software/services further aided results, as did a modest cash position. Moreover, our foreign holdings contributed despite facing currency head winds. Our top relative contributor was Starent Networks, a provider of infrastructure hardware/software products, which posted a strong double-digit gain. Tessera Technologies, a provider of miniaturization solutions, hard-disk drive maker Seagate Technology and Chinese Internet company Tencent Holdings, an out-of-index position, helped as well. An underweighting and unfavorable stock selection in computer hardware held back performance, as did stock picking in communications equipment, electrical components/equipment and advertising. Increasing competition among providers of smartphones sidetracked two holdings: Canada's Research In Motion and Apple, and I sold off the former, an out-of index holding. Another non-index stock, electronic advertising company VisionChina Media, was hurt by a slowing Chinese economy.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Technology Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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 Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.24% | | | |
Actual | | $ 1,000.00 | $ 1,612.70 | $ 8.03 |
HypotheticalA | | $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.49% | | | |
Actual | | $ 1,000.00 | $ 1,610.50 | $ 9.64 |
HypotheticalA | | $ 1,000.00 | $ 1,017.41 | $ 7.45 |
Class B | 1.98% | | | |
Actual | | $ 1,000.00 | $ 1,606.80 | $ 12.80 |
HypotheticalA | | $ 1,000.00 | $ 1,014.98 | $ 9.89 |
Class C | 1.98% | | | |
Actual | | $ 1,000.00 | $ 1,607.40 | $ 12.80 |
HypotheticalA | | $ 1,000.00 | $ 1,014.98 | $ 9.89 |
Institutional Class | .98% | | | |
Actual | | $ 1,000.00 | $ 1,615.30 | $ 6.35 |
HypotheticalA | | $ 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).
Technology
Advisor Technology Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Microsoft Corp. | 8.7 | 3.5 |
Apple, Inc. | 7.5 | 2.2 |
Intel Corp. | 5.4 | 2.0 |
Google, Inc. Class A | 4.8 | 3.2 |
Hewlett-Packard Co. | 3.2 | 3.4 |
Oracle Corp. | 3.1 | 0.1 |
QUALCOMM, Inc. | 2.2 | 6.5 |
BMC Software, Inc. | 2.1 | 0.1 |
eBay, Inc. | 1.7 | 0.4 |
Micron Technology, Inc. | 1.5 | 1.6 |
| 40.2 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Software | 26.7% | |
| Semiconductors & Semiconductor Equipment | 25.6% | |
| Computers & Peripherals | 14.4% | |
| Internet Software & Services | 11.9% | |
| Communications Equipment | 9.8% | |
| All Others* | 11.6% | |
As of January 31, 2009 |
| Semiconductors & Semiconductor Equipment | 25.8% | |
| Communications Equipment | 22.2% | |
| Software | 16.1% | |
| Computers & Peripherals | 9.7% | |
| Electronic Equipment & Components | 6.3% | |
| All Others* | 19.9% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Technology Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.0% |
| Shares | | Value |
COMMUNICATIONS EQUIPMENT - 9.6% |
Communications Equipment - 9.6% |
3Com Corp. (a) | 95,600 | | $ 360,412 |
Adtran, Inc. | 33,500 | | 809,360 |
ADVA AG Optical Networking (a) | 442,449 | | 983,737 |
Alcatel-Lucent SA sponsored ADR (a) | 14,300 | | 39,468 |
Aruba Networks, Inc. (a) | 9,800 | | 87,024 |
Brocade Communications Systems, Inc. (a) | 258,000 | | 2,027,880 |
Ciena Corp. (a) | 99,200 | | 1,107,072 |
Cisco Systems, Inc. (a) | 189,900 | | 4,179,699 |
Cogo Group, Inc. (a) | 7,869 | | 51,463 |
CommScope, Inc. (a) | 87,900 | | 2,250,240 |
Comverse Technology, Inc. (a) | 120,800 | | 955,528 |
F5 Networks, Inc. (a) | 89,008 | | 3,303,977 |
Infinera Corp. (a) | 70,900 | | 479,993 |
Juniper Networks, Inc. (a) | 78,600 | | 2,053,818 |
Motorola, Inc. | 73,600 | | 526,976 |
OZ Optics Ltd. unit (a)(f) | 68,000 | | 320,960 |
Palm, Inc. (a) | 120,000 | | 1,887,600 |
Polycom, Inc. (a) | 83,900 | | 1,992,625 |
Powerwave Technologies, Inc. (a) | 166,600 | | 209,916 |
QUALCOMM, Inc. | 246,200 | | 11,376,902 |
Riverbed Technology, Inc. (a) | 102,200 | | 2,045,022 |
Sandvine Corp. (a) | 1,587,300 | | 1,738,538 |
Sandvine Corp. (U.K.) (a) | 1,078,100 | | 1,161,762 |
Sonus Networks, Inc. (a) | 29,060 | | 55,214 |
Starent Networks Corp. (a) | 284,577 | | 6,824,156 |
Tekelec (a) | 123,600 | | 2,273,004 |
Tellabs, Inc. (a) | 134,700 | | 781,260 |
| | 49,883,606 |
COMPUTERS & PERIPHERALS - 14.4% |
Computer Hardware - 11.7% |
3PAR, Inc. (a) | 5,900 | | 56,581 |
Apple, Inc. (a) | 241,255 | | 39,418,654 |
Dell, Inc. (a) | 37,600 | | 503,088 |
Hewlett-Packard Co. | 382,600 | | 16,566,580 |
Stratasys, Inc. (a)(d) | 108,790 | | 1,716,706 |
Teradata Corp. (a) | 20,400 | | 501,228 |
Toshiba Corp. | 439,000 | | 1,948,843 |
Wistron Corp. | 159,000 | | 316,934 |
| | 61,028,614 |
Computer Storage & Peripherals - 2.7% |
Chicony Electronics Co. Ltd. | 189,284 | | 419,990 |
EMC Corp. (a) | 207,900 | | 3,130,974 |
NetApp, Inc. (a) | 2,500 | | 56,150 |
SanDisk Corp. (a) | 296,413 | | 5,282,080 |
Seagate Technology | 251,200 | | 3,024,448 |
SIMPLO Technology Co. Ltd. | 68,200 | | 299,323 |
|
| Shares | | Value |
Synaptics, Inc. (a) | 29,700 | | $ 711,909 |
Western Digital Corp. (a) | 43,200 | | 1,306,800 |
| | 14,231,674 |
TOTAL COMPUTERS & PERIPHERALS | | 75,260,288 |
CONSTRUCTION & ENGINEERING - 0.0% |
Construction & Engineering - 0.0% |
MasTec, Inc. (a) | 14,500 | | 150,075 |
DIVERSIFIED CONSUMER SERVICES - 0.0% |
Education Services - 0.0% |
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 600 | | 44,100 |
ELECTRICAL EQUIPMENT - 1.6% |
Electrical Components & Equipment - 1.6% |
centrotherm photovoltaics AG (a) | 1,273 | | 65,897 |
Energy Conversion Devices, Inc. (a)(d) | 42,900 | | 610,896 |
First Solar, Inc. (a) | 4,514 | | 696,916 |
General Cable Corp. (a) | 13,000 | | 504,010 |
GT Solar International, Inc. (d) | 83,700 | | 518,940 |
JA Solar Holdings Co. Ltd. ADR (a) | 164,200 | | 789,802 |
Q-Cells SE (a) | 1,200 | | 21,601 |
Roth & Rau AG | 1,516 | | 51,186 |
Sunpower Corp.: | | | |
Class A (a) | 62,500 | | 2,012,500 |
Class B (a) | 71,244 | | 1,944,961 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 12,600 | | 231,714 |
Trina Solar Ltd. ADR (a) | 17,300 | | 488,898 |
Yingli Green Energy Holding Co. Ltd. ADR (a) | 33,800 | | 448,526 |
| | 8,385,847 |
ELECTRONIC EQUIPMENT & COMPONENTS - 4.1% |
Electronic Components - 0.5% |
Amphenol Corp. Class A | 1,400 | | 46,690 |
DTS, Inc. (a) | 16,500 | | 453,255 |
Everlight Electronics Co. Ltd. | 433,376 | | 1,208,592 |
Tripod Technology Corp. | 135,339 | | 282,970 |
Unimicron Technology Corp. | 311,000 | | 352,612 |
Vishay Intertechnology, Inc. (a) | 7,000 | | 49,770 |
| | 2,393,889 |
Electronic Equipment & Instruments - 0.7% |
Agilent Technologies, Inc. | 2,300 | | 53,406 |
China Security & Surveillance Technology, Inc. (a)(d) | 105,034 | | 926,400 |
Chroma ATE, Inc. | 1,217,641 | | 1,874,150 |
Comverge, Inc. (a)(d) | 10,189 | | 134,087 |
Coretronic Corp. | 174,300 | | 206,918 |
Itron, Inc. (a) | 11,100 | | 579,087 |
National Instruments Corp. | 2,000 | | 50,440 |
| | 3,824,488 |
Common Stocks - continued |
| Shares | | Value |
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED |
Electronic Manufacturing Services - 1.7% |
Flextronics International Ltd. (a) | 434,100 | | $ 2,309,412 |
Ju Teng International Holdings Ltd. | 608,000 | | 458,166 |
Molex, Inc. | 15,300 | | 271,728 |
Multi-Fineline Electronix, Inc. (a) | 2,289 | | 52,166 |
Trimble Navigation Ltd. (a) | 78,000 | | 1,849,380 |
Tyco Electronics Ltd. | 172,600 | | 3,705,722 |
| | 8,646,574 |
Technology Distributors - 1.2% |
Brightpoint, Inc. (a) | 40,300 | | 239,382 |
Digital China Holdings Ltd. (H Shares) | 3,788,000 | | 2,722,525 |
Ingram Micro, Inc. Class A (a) | 33,000 | | 555,060 |
Inspur International Ltd. | 3,276,000 | | 562,215 |
Synnex Technology International Corp. | 155,000 | | 300,930 |
WPG Holding Co. Ltd. | 1,670,000 | | 2,051,234 |
| | 6,431,346 |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | | 21,296,297 |
HEALTH CARE EQUIPMENT & SUPPLIES - 1.1% |
Health Care Equipment - 0.8% |
China Medical Technologies, Inc. sponsored ADR | 1,900 | | 30,077 |
Golden Meditech Co. Ltd. (a) | 2,168,000 | | 408,431 |
I-Flow Corp. (a) | 77,610 | | 590,612 |
Mindray Medical International Ltd. sponsored ADR | 200 | | 5,944 |
Mingyuan Medicare Development Co. Ltd. (a)(d) | 27,880,000 | | 2,985,916 |
| | 4,020,980 |
Health Care Supplies - 0.3% |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 682,000 | | 1,786,435 |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | | 5,807,415 |
HEALTH CARE TECHNOLOGY - 0.0% |
Health Care Technology - 0.0% |
athenahealth, Inc. (a) | 600 | | 22,164 |
HOTELS, RESTAURANTS & LEISURE - 0.3% |
Hotels, Resorts & Cruise Lines - 0.3% |
Ctrip.com International Ltd. sponsored ADR | 34,400 | | 1,763,000 |
HOUSEHOLD DURABLES - 0.2% |
Consumer Electronics - 0.2% |
Harman International Industries, Inc. | 48,500 | | 1,196,980 |
TomTom Group BV (a) | 160 | | 1,758 |
| | 1,198,738 |
INTERNET & CATALOG RETAIL - 1.0% |
Internet Retail - 1.0% |
Amazon.com, Inc. (a) | 35,100 | | 3,010,176 |
|
| Shares | | Value |
Expedia, Inc. (a) | 3,060 | | $ 63,373 |
Priceline.com, Inc. (a)(d) | 17,612 | | 2,282,867 |
| | 5,356,416 |
INTERNET SOFTWARE & SERVICES - 11.9% |
Internet Software & Services - 11.9% |
Akamai Technologies, Inc. (a) | 19,800 | | 325,512 |
Baidu.com, Inc. sponsored ADR (a) | 20,500 | | 7,136,870 |
comScore, Inc. (a) | 17,300 | | 263,306 |
Constant Contact, Inc. (a) | 8,924 | | 201,772 |
Daum Communications Corp. (a) | 24,270 | | 992,476 |
DealerTrack Holdings, Inc. (a) | 12,300 | | 243,909 |
eBay, Inc. (a) | 424,400 | | 9,018,500 |
Equinix, Inc. (a) | 700 | | 57,211 |
Google, Inc. Class A (a) | 56,200 | | 24,899,410 |
LogMeIn, Inc. | 4,100 | | 79,991 |
NetEase.com, Inc. sponsored ADR (a) | 66,400 | | 2,925,584 |
NHN Corp. (a) | 10,369 | | 1,513,753 |
Omniture, Inc. (a) | 2,900 | | 39,672 |
Open Text Corp. (a) | 13,600 | | 515,420 |
OpenTable, Inc. | 400 | | 11,880 |
SAVVIS, Inc. | 8,900 | | 129,139 |
Sina Corp. (a) | 133,400 | | 4,426,212 |
Sohu.com, Inc. (a) | 30,600 | | 1,871,802 |
Tencent Holdings Ltd. | 469,200 | | 6,332,809 |
VeriSign, Inc. (a) | 2,000 | | 40,880 |
VistaPrint Ltd. (a) | 22,200 | | 915,750 |
Vocus, Inc. (a) | 10,300 | | 173,246 |
Yahoo!, Inc. (a) | 3,100 | | 44,392 |
| | 62,159,496 |
IT SERVICES - 1.3% |
Data Processing & Outsourced Services - 0.6% |
CyberSource Corp. (a) | 31,895 | | 553,059 |
Lender Processing Services, Inc. | 1,500 | | 51,270 |
Visa, Inc. Class A | 37,000 | | 2,422,020 |
| | 3,026,349 |
IT Consulting & Other Services - 0.7% |
Amdocs Ltd. (a) | 20,200 | | 483,184 |
CACI International, Inc. Class A (a) | 3,600 | | 166,320 |
China Information Security Technology, Inc. (a)(d) | 8,917 | | 33,528 |
Cognizant Technology Solutions Corp. Class A (a) | 69,800 | | 2,065,382 |
Satyam Computer Services Ltd. sponsored ADR (d) | 11,600 | | 58,464 |
Yucheng Technologies Ltd. (a) | 135,000 | | 1,124,550 |
| | 3,931,428 |
TOTAL IT SERVICES | | 6,957,777 |
MACHINERY - 0.6% |
Industrial Machinery - 0.6% |
China Fire & Security Group, Inc. (a) | 24,900 | | 391,926 |
Common Stocks - continued |
| Shares | | Value |
MACHINERY - CONTINUED |
Industrial Machinery - continued |
Meyer Burger Technology AG (a) | 270 | | $ 44,467 |
Shin Zu Shing Co. Ltd. | 479,732 | | 2,573,387 |
| | 3,009,780 |
MEDIA - 0.8% |
Advertising - 0.5% |
AirMedia Group, Inc. ADR (a) | 111,900 | | 666,924 |
VisionChina Media, Inc. ADR (a) | 307,700 | | 2,021,589 |
| | 2,688,513 |
Cable & Satellite - 0.3% |
Sirius XM Radio, Inc. (a) | 719,500 | | 323,775 |
Virgin Media, Inc. | 98,600 | | 1,030,370 |
| | 1,354,145 |
TOTAL MEDIA | | 4,042,658 |
METALS & MINING - 0.0% |
Diversified Metals & Mining - 0.0% |
Timminco Ltd. (a) | 5,600 | | 5,458 |
PROFESSIONAL SERVICES - 0.0% |
Research & Consulting Services - 0.0% |
IHS, Inc. Class A (a) | 1,100 | | 54,934 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 24.6% |
Semiconductor Equipment - 6.7% |
Aixtron AG | 98,400 | | 1,612,813 |
Amkor Technology, Inc. (a)(d) | 690,700 | | 4,323,782 |
ASM Pacific Technology Ltd. | 17,200 | | 116,740 |
ASML Holding NV (NY Shares) | 266,500 | | 6,931,665 |
Cymer, Inc. (a) | 82,100 | | 2,808,641 |
FormFactor, Inc. (a) | 53,200 | | 1,226,260 |
Globe Specialty Metals, Inc. | 22,200 | | 159,840 |
KLA-Tencor Corp. | 18,600 | | 592,968 |
Lam Research Corp. (a) | 90,400 | | 2,717,424 |
LTX-Credence Corp. (a) | 497,102 | | 447,392 |
MEMC Electronic Materials, Inc. (a) | 80,900 | | 1,425,458 |
Photronics, Inc. (a) | 82,700 | | 422,597 |
Tessera Technologies, Inc. (a) | 239,300 | | 6,721,937 |
Varian Semiconductor Equipment Associates, Inc. (a) | 107,800 | | 3,453,912 |
Verigy Ltd. (a) | 137,300 | | 1,824,717 |
| | 34,786,146 |
Semiconductors - 17.9% |
Advanced Micro Devices, Inc. (a)(d) | 121,400 | | 444,324 |
Altera Corp. | 41,700 | | 779,373 |
ANADIGICS, Inc. (a) | 10,400 | | 43,056 |
Analog Devices, Inc. | 1,800 | | 49,266 |
Applied Micro Circuits Corp. (a) | 8,650 | | 74,823 |
ARM Holdings PLC sponsored ADR | 238,400 | | 1,523,376 |
Atmel Corp. (a) | 170,900 | | 712,653 |
Broadcom Corp. Class A (a) | 44,700 | | 1,261,881 |
|
| Shares | | Value |
Cavium Networks, Inc. (a) | 407,831 | | $ 7,695,771 |
Cree, Inc. (a) | 54,040 | | 1,732,522 |
CSR PLC (a) | 712,385 | | 5,082,075 |
Cypress Semiconductor Corp. (a) | 252,600 | | 2,682,612 |
Diodes, Inc. (a) | 15,100 | | 278,746 |
Elan Microelectronics Corp. | 155,000 | | 252,743 |
Elpida Memory, Inc. (a) | 30,600 | | 349,308 |
Epistar Corp. | 565,000 | | 1,542,944 |
Fairchild Semiconductor International, Inc. (a) | 212,000 | | 1,871,960 |
Global Unichip Corp. | 152,291 | | 835,489 |
Hynix Semiconductor, Inc. (a) | 137,540 | | 1,979,802 |
Infineon Technologies AG (a)(d) | 1,644,500 | | 6,643,596 |
Infineon Technologies AG rights 8/3/09 (a)(d) | 2,322,900 | | 1,088,857 |
Inotera Memories, Inc. (a) | 927,000 | | 483,136 |
Inotera Memories, Inc. sponsored ADR (a)(e) | 212,100 | | 1,105,428 |
Intel Corp. | 1,461,600 | | 28,135,800 |
International Rectifier Corp. (a) | 152,200 | | 2,520,432 |
Intersil Corp. Class A | 39,700 | | 570,489 |
Kinsus Interconnect Technology Corp. | 142,000 | | 303,822 |
LSI Corp. (a) | 10,300 | | 53,354 |
Marvell Technology Group Ltd. (a) | 329,400 | | 4,394,196 |
MediaTek, Inc. | 19,038 | | 273,588 |
Micron Technology, Inc. (a) | 1,230,200 | | 7,860,978 |
Monolithic Power Systems, Inc. (a) | 62,900 | | 1,395,751 |
MoSys, Inc. (a) | 32,100 | | 52,002 |
Netlogic Microsystems, Inc. (a) | 1,300 | | 51,662 |
NVIDIA Corp. (a) | 80,300 | | 1,038,279 |
O2Micro International Ltd. sponsored ADR (a) | 17,800 | | 92,204 |
Omnivision Technologies, Inc. (a) | 151,599 | | 2,005,655 |
PMC-Sierra, Inc. (a) | 65,300 | | 597,495 |
Power Integrations, Inc. | 2,100 | | 61,509 |
Powertech Technology, Inc. | 320,000 | | 858,275 |
Radiant Opto-Electronics Corp. | 334,750 | | 485,138 |
Silicon Laboratories, Inc. (a) | 13,900 | | 595,337 |
Skyworks Solutions, Inc. (a) | 4,700 | | 56,776 |
Standard Microsystems Corp. (a) | 90,500 | | 2,099,600 |
Supertex, Inc. (a) | 7,300 | | 168,265 |
TriQuint Semiconductor, Inc. (a) | 9,300 | | 66,774 |
Volterra Semiconductor Corp. (a) | 15,500 | | 257,145 |
Xilinx, Inc. | 44,400 | | 963,036 |
| | 93,471,303 |
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | | 128,257,449 |
SOFTWARE - 26.7% |
Application Software - 9.0% |
Adobe Systems, Inc. (a) | 169,800 | | 5,504,916 |
ANSYS, Inc. (a) | 5,900 | | 184,434 |
Autodesk, Inc. (a) | 1,800 | | 39,258 |
Common Stocks - continued |
| Shares | | Value |
SOFTWARE - CONTINUED |
Application Software - continued |
Blackboard, Inc. (a) | 19,900 | | $ 676,003 |
Cadence Design Systems, Inc. (a) | 293,700 | | 1,732,830 |
Callidus Software, Inc. (a) | 107,291 | | 273,592 |
Citrix Systems, Inc. (a) | 182,000 | | 6,479,200 |
Concur Technologies, Inc. (a) | 46,800 | | 1,614,132 |
Epicor Software Corp. (a) | 31,500 | | 191,520 |
Informatica Corp. (a) | 137,900 | | 2,535,981 |
Intuit, Inc. (a) | 141,500 | | 4,202,550 |
JDA Software Group, Inc. (a) | 50,000 | | 1,030,500 |
Kingdee International Software Group Co. Ltd. | 10,918,000 | | 2,042,762 |
Longtop Financial Technologies Ltd. ADR (a) | 33,800 | | 944,034 |
Mentor Graphics Corp. (a) | 205,200 | | 1,424,088 |
Nice Systems Ltd. sponsored ADR (a) | 8,265 | | 226,296 |
Nuance Communications, Inc. (a) | 17,300 | | 228,360 |
Parametric Technology Corp. (a) | 62,200 | | 803,002 |
Pegasystems, Inc. | 9,100 | | 257,530 |
Salesforce.com, Inc. (a) | 133,100 | | 5,768,554 |
Smith Micro Software, Inc. (a) | 230,200 | | 2,631,186 |
SolarWinds, Inc. | 2,700 | | 54,000 |
SuccessFactors, Inc. (a)(d) | 212,200 | | 2,238,710 |
Synchronoss Technologies, Inc. (a) | 121,348 | | 1,441,614 |
Synopsys, Inc. (a) | 57,600 | | 1,150,848 |
Taleo Corp. Class A (a) | 112,788 | | 1,973,790 |
TIBCO Software, Inc. (a) | 71,100 | | 620,703 |
Ulticom, Inc. | 318,926 | | 574,067 |
VanceInfo Technologies, Inc. ADR (a) | 22,000 | | 333,300 |
| | 47,177,760 |
Home Entertainment Software - 1.7% |
Activision Blizzard, Inc. (a) | 128,700 | | 1,473,615 |
Changyou.com Ltd. (A Shares) ADR | 800 | | 29,400 |
Electronic Arts, Inc. (a) | 146,900 | | 3,153,943 |
Kingsoft Corp. Ltd. | 323,000 | | 326,341 |
Perfect World Co. Ltd. sponsored ADR Class B (a) | 45,500 | | 1,627,990 |
Shanda Interactive Entertainment Ltd. sponsored ADR (a) | 18,700 | | 927,146 |
Take-Two Interactive Software, Inc. | 85,300 | | 812,056 |
THQ, Inc. (a) | 49,400 | | 331,474 |
| | 8,681,965 |
Systems Software - 16.0% |
Ariba, Inc. (a) | 18,908 | | 198,723 |
BMC Software, Inc. (a) | 324,500 | | 11,042,735 |
CA, Inc. | 2,200 | | 46,508 |
Check Point Software Technologies Ltd. (a) | 1,700 | | 45,373 |
CommVault Systems, Inc. (a) | 43,100 | | 750,371 |
Insyde Software Corp. | 344,239 | | 1,757,392 |
McAfee, Inc. (a) | 23,200 | | 1,034,256 |
Microsoft Corp. | 1,936,800 | | 45,553,539 |
|
| Shares | | Value |
Oracle Corp. | 737,400 | | $ 16,318,662 |
Phoenix Technologies Ltd. (a) | 31,000 | | 102,610 |
Red Hat, Inc. (a) | 258,300 | | 5,896,989 |
Symantec Corp. (a) | 14,300 | | 213,499 |
VMware, Inc. Class A (a) | 24,600 | | 792,858 |
| | 83,753,515 |
TOTAL SOFTWARE | | 139,613,240 |
WIRELESS TELECOMMUNICATION SERVICES - 0.8% |
Wireless Telecommunication Services - 0.8% |
Crown Castle International Corp. (a) | 8,000 | | 229,920 |
Sprint Nextel Corp. (a) | 132,200 | | 528,800 |
Syniverse Holdings, Inc. (a) | 178,257 | | 3,124,845 |
| | 3,883,565 |
TOTAL COMMON STOCKS (Cost $460,607,819) | 517,152,303 |
Convertible Bonds - 1.2% |
| Principal Amount | | |
COMMUNICATIONS EQUIPMENT - 0.2% |
Communications Equipment - 0.2% |
Ciena Corp. 0.25% 5/1/13 | | $ 1,270,000 | | 888,873 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.0% |
Semiconductors - 1.0% |
Advanced Micro Devices, Inc. 5.75% 8/15/12 | | 6,960,000 | | 5,124,300 |
TOTAL CONVERTIBLE BONDS (Cost $6,830,428) | 6,013,173 |
Money Market Funds - 2.6% |
| Shares | | |
Fidelity Cash Central Fund, 0.37% (b) | 1,125,412 | | 1,125,412 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 12,628,183 | | 12,628,183 |
TOTAL MONEY MARKET FUNDS (Cost $13,753,595) | 13,753,595 |
TOTAL INVESTMENT PORTFOLIO - 102.8% (Cost $481,191,842) | | 536,919,071 |
NET OTHER ASSETS - (2.8)% | | (14,806,416) |
NET ASSETS - 100% | $ 522,112,655 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $1,105,428 or 0.2% of net assets. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $320,960 or 0.1% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
OZ Optics Ltd. unit | 8/18/00 | $ 1,003,680 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 93,254 |
Fidelity Securities Lending Cash Central Fund | 849,077 |
Total | $ 942,331 |
Other Information |
The following is a summary of the inputs used, as of July 31, 2009, involving the Fund's assets and liabilities carried at 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 12,404,912 | $ 12,404,912 | $ - | $ - |
Health Care | 5,829,579 | 5,829,579 | - | - |
Industrials | 11,600,636 | 11,600,636 | - | - |
Information Technology | 483,428,153 | 474,269,312 | 8,837,881 | 320,960 |
Materials | 5,458 | 5,458 | - | - |
Telecommunication Services | 3,883,565 | 3,883,565 | - | - |
Corporate Bonds | 6,013,173 | - | 6,013,173 | - |
Money Market Funds | 13,753,595 | 13,753,595 | - | - |
Total Investments in Securities | $ 536,919,071 | $ 521,747,057 | $ 14,851,054 | $ 320,960 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ 821,100 |
Total Realized Gain (Loss) | 0 |
Total Unrealized Gain (Loss) | (500,140) |
Cost of Purchases | 0 |
Proceeds of Sales | 0 |
Amortization/Accretion | 0 |
Transfers in/out of Level 3 | 0 |
Ending Balance | $ 320,960 |
The change in unrealized gain (loss) attributable to Level 3 securities at July 31, 2009 | $ (500,140) |
The information used in the above reconciliation represents fiscal year to date activity for any Investment 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 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. 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 | 78.0% |
China | 5.0% |
Taiwan | 3.7% |
Cayman Islands | 3.0% |
Germany | 2.0% |
Bermuda | 1.6% |
United Kingdom | 1.4% |
Netherlands | 1.3% |
Others (individually less than 1%) | 4.0% |
| 100.0% |
Income Tax Information |
At July 31, 2009, the fund had a capital loss carryforward of approximately $1,522,364,216 of which $889,719,837, $499,806,783 and $132,837,596 will expire on July 31, 2010, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $110,337,017 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Technology
Advisor Technology Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $12,319,717) - See accompanying schedule: Unaffiliated issuers (cost $467,438,247) | $ 523,165,476 | |
Fidelity Central Funds (cost $13,753,595) | 13,753,595 | |
Total Investments (cost $481,191,842) | | $ 536,919,071 |
Foreign currency held at value (cost $22) | | 22 |
Receivable for investments sold | | 3,737,478 |
Receivable for fund shares sold | | 831,090 |
Dividends receivable | | 201,841 |
Interest receivable | | 184,210 |
Distributions receivable from Fidelity Central Funds | | 22,443 |
Prepaid expenses | | 1,680 |
Other receivables | | 29,910 |
Total assets | | 541,927,745 |
| | |
Liabilities | | |
Payable for investments purchased | $ 5,864,821 | |
Payable for fund shares redeemed | 720,913 | |
Accrued management fee | 229,086 | |
Distribution fees payable | 177,255 | |
Other affiliated payables | 149,450 | |
Other payables and accrued expenses | 45,382 | |
Collateral on securities loaned, at value | 12,628,183 | |
Total liabilities | | 19,815,090 |
| | |
Net Assets | | $ 522,112,655 |
Net Assets consist of: | | |
Paid in capital | | $ 2,108,046,834 |
Undistributed net investment income | | 425,528 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (1,642,087,988) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 55,728,281 |
Net Assets | | $ 522,112,655 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($258,432,921 ÷ 16,122,667 shares) | | $ 16.03 |
| | |
Maximum offering price per share (100/94.25 of $16.03) | | $ 17.01 |
Class T:
Net Asset Value and redemption price per share ($151,170,025 ÷ 9,695,772 shares) | | $ 15.59 |
| | |
Maximum offering price per share (100/96.50 of $15.59) | | $ 16.16 |
Class B:
Net Asset Value and offering price per share ($30,579,781 ÷ 2,083,958 shares)A | | $ 14.67 |
| | |
Class C:
Net Asset Value and offering price per share ($55,644,814 ÷ 3,775,585 shares)A | | $ 14.74 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($26,285,114 ÷ 1,576,903 shares) | | $ 16.67 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Advisor Technology Fund
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 2,411,843 |
Special dividends | | 1,460,681 |
Interest | | 878,076 |
Income from Fidelity Central Funds (including $849,077 from security lending) | | 942,331 |
Total income | | 5,692,931 |
| | |
Expenses | | |
Management fee | $ 2,300,137 | |
Transfer agent fees | 1,298,511 | |
Distribution fees | 1,821,572 | |
Accounting and security lending fees | 162,757 | |
Custodian fees and expenses | 76,790 | |
Independent trustees' compensation | 2,809 | |
Registration fees | 71,020 | |
Audit | 53,960 | |
Legal | 5,003 | |
Interest | 287 | |
Miscellaneous | 52,042 | |
Total expenses before reductions | 5,844,888 | |
Expense reductions | (39,826) | 5,805,062 |
Net investment income (loss) | | (112,131) |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (206,812,537) | |
Foreign currency transactions | (8,769) | |
Total net realized gain (loss) | | (206,821,306) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 162,023,169 | |
Assets and liabilities in foreign currencies | 16,092 | |
Total change in net unrealized appreciation (depreciation) | | 162,039,261 |
Net gain (loss) | | (44,782,045) |
Net increase (decrease) in net assets resulting from operations | | $ (44,894,176) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ (112,131) | $ (5,177,940) |
Net realized gain (loss) | (206,821,306) | (11,273,810) |
Change in net unrealized appreciation (depreciation) | 162,039,261 | (114,740,676) |
Net increase (decrease) in net assets resulting from operations | (44,894,176) | (131,192,426) |
Share transactions - net increase (decrease) | (14,948,367) | (67,084,453) |
Redemption fees | 15,958 | 32,772 |
Total increase (decrease) in net assets | (59,826,585) | (198,244,107) |
| | |
Net Assets | | |
Beginning of period | 581,939,240 | 780,183,347 |
End of period (including undistributed net investment income of $425,528 and undistributed net investment income of $77,762, respectively) | $ 522,112,655 | $ 581,939,240 |
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 | $ 13.98 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .02 F | (.10) | (.17) | (.15) | .02 G |
Net realized and unrealized gain (loss) | (1.03) | (3.41) | 5.13 | (.42) | 2.24 |
Total from investment operations | (1.01) | (3.51) | 4.96 | (.57) | 2.26 |
Distributions from net investment income | - | - | - | - | (.08) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 16.03 | $ 17.04 | $ 20.55 | $ 15.59 | $ 16.16 |
Total Return A, B | (5.93)% | (17.08)% | 31.82% | (3.53)% | 16.20% |
Ratios to Average Net Assets D, H | | | | | |
Expenses before reductions | 1.23% | 1.21% | 1.25% | 1.30% | 1.37% |
Expenses net of fee waivers, if any | 1.23% | 1.21% | 1.25% | 1.30% | 1.37% |
Expenses net of all reductions | 1.22% | 1.19% | 1.24% | 1.20% | 1.26% |
Net investment income (loss) | .17% F | (.49)% | (.91)% | (.88)% | .12% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 258,433 | $ 275,117 | $ 309,105 | $ 189,054 | $ 144,970 |
Portfolio turnover rate E | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.87)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 | $ 13.76 |
Income from Investment Operations | | | | | |
Net investment income (loss)C | (.01)F | (.14) | (.21) | (.19) | (.02)G |
Net realized and unrealized gain (loss) | (1.02) | (3.33) | 5.02 | (.41) | 2.21 |
Total from investment operations | (1.03) | (3.47) | 4.81 | (.60) | 2.19 |
Distributions from net investment income | - | - | - | - | (.07) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 15.59 | $ 16.62 | $ 20.09 | $ 15.28 | $ 15.88 |
Total ReturnA, B | (6.20)% | (17.27)% | 31.48% | (3.78)% | 15.94% |
Ratios to Average Net Assets D, H | | | | | |
Expenses before reductions | 1.49% | 1.46% | 1.51% | 1.55% | 1.60% |
Expenses net of fee waivers, if any | 1.49% | 1.46% | 1.51% | 1.55% | 1.60% |
Expenses net of all reductions | 1.48% | 1.45% | 1.49% | 1.44% | 1.48% |
Net investment income (loss) | (.09)% F | (.74)% | (1.16)% | (1.13)% | (.11)%G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 151,170 | $ 173,917 | $ 260,339 | $ 260,966 | $ 315,930 |
Portfolio turnover rate E | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.10)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 | $ 13.25 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07) F | (.23) | (.28) | (.27) | (.09) G |
Net realized and unrealized gain (loss) | (.98) | (3.15) | 4.79 | (.38) | 2.12 |
Total from investment operations | (1.05) | (3.38) | 4.51 | (.65) | 2.03 |
Distributions from net investment income | - | - | - | - | (.04) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 14.67 | $ 15.72 | $ 19.10 | $ 14.59 | $ 15.24 |
Total Return A, B | (6.68)% | (17.70)% | 30.91% | (4.27)% | 15.33% |
Ratios to Average Net Assets D, H | | | | | |
Expenses before reductions | 1.98% | 1.96% | 2.01% | 2.05% | 2.13% |
Expenses net of fee waivers, if any | 1.98% | 1.96% | 2.01% | 2.05% | 2.13% |
Expenses net of all reductions | 1.97% | 1.94% | 2.00% | 1.94% | 2.02% |
Net investment income (loss) | (.58)% F | (1.24)% | (1.67)% | (1.63)% | (.65)% G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 30,580 | $ 47,294 | $ 102,655 | $ 192,790 | $ 309,020 |
Portfolio turnover rate E | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.64)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 | $ 13.31 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | (.07)F | (.23) | (.29) | (.27) | (.08)G |
Net realized and unrealized gain (loss) | (.98) | (3.16) | 4.81 | (.38) | 2.12 |
Total from investment operations | (1.05) | (3.39) | 4.52 | (.65) | 2.04 |
Distributions from net investment income | - | - | - | - | (.04) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 14.74 | $ 15.79 | $ 19.18 | $ 14.66 | $ 15.31 |
Total ReturnA, B | (6.65)% | (17.67)% | 30.83% | (4.25)% | 15.34% |
Ratios to Average Net AssetsD, H | | | | | |
Expenses before reductions | 1.98% | 1.96% | 2.01% | 2.05% | 2.10% |
Expenses net of fee waivers, if any | 1.98% | 1.96% | 2.01% | 2.05% | 2.10% |
Expenses net of all reductions | 1.97% | 1.94% | 1.99% | 1.94% | 1.99% |
Net investment income (loss) | (.58)%F | (1.24)% | (1.66)% | (1.63)% | (.61)%G |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 55,645 | $ 63,590 | $ 86,974 | $ 82,835 | $ 108,287 |
Portfolio turnover rateE | 225% | 214% | 208% | 258% | 180% |
A Total returns 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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (1.60)%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Technology
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 | $ 14.32 |
Income from Investment Operations | | | �� | | |
Net investment income (loss)B | .06E | (.04) | (.11) | (.09) | .09 F |
Net realized and unrealized gain (loss) | (1.07) | (3.54) | 5.30 | (.44) | 2.30 |
Total from investment operations | (1.01) | (3.58) | 5.19 | (.53) | 2.39 |
Distributions from net investment income | - | - | - | - | (.11) |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 16.67 | $ 17.68 | $ 21.26 | $ 16.07 | $ 16.60 |
Total ReturnA | (5.71)% | (16.84)% | 32.30% | (3.19)% | 16.73% |
Ratios to Average Net AssetsC, G | | | | | |
Expenses before reductions | .98% | .94% | .93% | .90% | .92% |
Expenses net of fee waivers, if any | .98% | .94% | .93% | .90% | .92% |
Expenses net of all reductions | .97% | .92% | .92% | .80% | .81% |
Net investment income (loss) | .42% E | (.22)% | (.59)% | (.49)% | .57% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 26,285 | $ 22,021 | $ 21,111 | $ 11,681 | $ 11,640 |
Portfolio turnover rateD | 225% | 214% | 208% | 258% | 180% |
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 Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.42)%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Technology Fund (the Fund) is a fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers Class A, Class T, Class B, Class C and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares 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 distribution and service plan fees incurred. 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments, as well as a reconciliation of assets and liabilities for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. For corporate bonds pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Technology
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, net operating losses, market discount, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 94,604,678 | |
Unrealized depreciation | (47,837,594) | |
Net unrealized appreciation (depreciation) | $ 46,767,084 | |
Capital loss carryforward | $ (1,522,364,216) | |
Cost for federal income tax purposes | $ 490,151,987 | |
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.
Annual Report
Notes to Financial Statements - continued
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 $934,652,967 and $941,531,686, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 496,944 | $ 13,331 |
Class T | .25% | .25% | 604,768 | 2,448 |
Class B | .75% | .25% | 285,215 | 214,016 |
Class C | .75% | .25% | 434,645 | 22,306 |
| | | $ 1,821,572 | $ 252,101 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 38,659 |
Class T | 17,834 |
Class B* | 50,776 |
Class C* | 2,321 |
| $ 109,590 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
Technology
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 628,615 | .32 |
Class T | 391,403 | .32 |
Class B | 89,852 | .31 |
Class C | 137,317 | .31 |
Institutional Class | 51,324 | .31 |
| $ 1,298,511 | |
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 $25,249 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 5,267,500 | .49% | $ 287 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $1,803 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $39,084 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 $742.
Annual Report
Notes to Financial Statements - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 3,881,770 | 5,381,278 | $ 49,340,225 | $ 105,720,351 |
Shares redeemed | (3,900,491) | (4,279,571) | (47,190,702) | (82,236,119) |
Net increase (decrease) | (18,721) | 1,101,707 | $ 2,149,523 | $ 23,484,232 |
Class T | | | | |
Shares sold | 2,072,898 | 2,146,310 | $ 24,512,394 | $ 41,674,472 |
Shares redeemed | (2,840,598) | (4,638,425) | (33,936,510) | (86,554,961) |
Net increase (decrease) | (767,700) | (2,492,115) | $ (9,424,116) | $ (44,880,489) |
Class B | | | | |
Shares sold | 327,585 | 406,127 | $ 3,794,593 | $ 7,558,898 |
Shares redeemed | (1,251,978) | (2,773,060) | (14,128,827) | (50,298,253) |
Net increase (decrease) | (924,393) | (2,366,933) | $ (10,334,234) | $ (42,739,355) |
Class C | | | | |
Shares sold | 654,688 | 550,177 | $ 7,947,929 | $ 10,400,107 |
Shares redeemed | (906,545) | (1,056,703) | (10,144,084) | (18,857,821) |
Net increase (decrease) | (251,857) | (506,526) | $ (2,196,155) | $ (8,457,714) |
Institutional Class | | | | |
Shares sold | 753,599 | 628,983 | $ 10,483,415 | $ 12,989,931 |
Shares redeemed | (422,236) | (376,415) | (5,626,800) | (7,481,058) |
Net increase (decrease) | 331,363 | 252,568 | $ 4,856,615 | $ 5,508,873 |
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
Advisor Utilities Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | | Past 1
year | Past 5
years | Past 10
years |
Institutional Class A | | -23.24% | 6.77% | -0.57% |
A Prior to October 1, 2006, Advisor Utilities operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Utilities Fund - Institutional Class on July 31, 1999. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Utilities
Advisor Utilities Fund
Management's Discussion of Fund Performance
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -23.44%, -23.61%, -23.97% and -23.96%, respectively (excluding sales charges), underperforming the S&P 500® and the MSCI® US Investable Market Utilities Index, which returned -19.26%. Unfavorable stock selection among electric and gas utilities hurt performance versus the sector benchmark. An underweighting in multi-utilities also detracted, although that loss was nearly offset by strong stock picking in the group. Overweighting independent power/energy traders also helped, as did the fund's modest cash position, which held its value during a down period for the index. Detractors included two Pennsylvania-based electric utilities, PPL and Allegheny Energy; underweighting major index component Southern Company, an electric utility in Atlanta; independent power producer Constellation Energy, located in Maryland; and Ohio electric utility FirstEnergy. Among the top contributors to relative performance were San Diego-based multi-utility Sempra Energy, Wisconsin Energy and timely ownership of independent power producers AES and Calpine. Some of the stocks mentioned here were not held at period end.
Comments from Douglas Simmons, Portfolio Manager of Fidelity® Advisor Utilities Fund: For the year ending July 31, 2009, the fund's Institutional Class shares returned -23.24%, underperforming the S&P 500® and the MSCI® US Investable Market Utilities Index, which returned - -19.26%. Unfavorable stock selection among electric and gas utilities hurt performance versus the sector benchmark. An underweighting in multi-utilities also detracted, although that loss was nearly offset by strong stock picking in the group. Overweighting independent power/energy traders also helped, as did the fund's modest cash position, which held its value during a down period for the index. Detractors included two Pennsylvania-based electric utilities, PPL and Allegheny Energy; underweighting major index component Southern Company, an electric utility in Atlanta; independent power producer Constellation Energy, located in Maryland; and Ohio electric utility FirstEnergy. Among the top contributors to relative performance were San Diego-based multi-utility Sempra Energy, Wisconsin Energy and timely ownership of independent power producers AES and Calpine. Some stocks mentioned here were not held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Advisor Utilities Fund
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to July 31, 2009 |
Class A | 1.28% | | | |
Actual | | $ 1,000.00 | $ 1,054.60 | $ 6.52 |
Hypothetical A | | $ 1,000.00 | $ 1,018.45 | $ 6.41 |
Class T | 1.55% | | | |
Actual | | $ 1,000.00 | $ 1,052.40 | $ 7.89 |
Hypothetical A | | $ 1,000.00 | $ 1,017.11 | $ 7.75 |
Class B | 2.03% | | | |
Actual | | $ 1,000.00 | $ 1,050.10 | $ 10.32 |
Hypothetical A | | $ 1,000.00 | $ 1,014.73 | $ 10.14 |
Class C | 2.03% | | | |
Actual | | $ 1,000.00 | $ 1,050.30 | $ 10.32 |
Hypothetical A | | $ 1,000.00 | $ 1,014.73 | $ 10.14 |
Institutional Class | 1.02% | | | |
Actual | | $ 1,000.00 | $ 1,055.10 | $ 5.20 |
Hypothetical A | | $ 1,000.00 | $ 1,019.74 | $ 5.11 |
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
Advisor Utilities Fund
Investment Changes (Unaudited)
Top Ten Stocks as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
American Electric Power Co., Inc. | 13.3 | 4.9 |
FirstEnergy Corp. | 9.6 | 6.6 |
Sempra Energy | 6.9 | 4.9 |
FPL Group, Inc. | 6.8 | 3.2 |
Constellation Energy Group, Inc. | 6.4 | 2.5 |
CenterPoint Energy, Inc. | 6.2 | 0.0 |
TECO Energy, Inc. | 5.0 | 0.0 |
PG&E Corp. | 4.9 | 4.0 |
Pinnacle West Capital Corp. | 4.9 | 1.5 |
Entergy Corp. | 4.8 | 5.7 |
| 68.8 | |
Top Industries (% of fund's net assets) |
As of July 31, 2009 |
| Electric Utilities | 51.3% | |
| Multi-utilities | 29.9% | |
| Independent Power Producers & Energy Traders | 17.1% | |
| Commercial Services & Supplies | 0.9% | |
| Electrical Equipment | 0.5% | |
| All Others* | 0.3% | |
|
As of January 31, 2009 |
| Electric Utilities | 58.9% | |
| Multi-utilities | 26.5% | |
| Independent Power Producers & Energy Traders | 9.0% | |
| Gas Utilities | 4.7% | |
| Diversified Financial Services | 0.3% | |
| All Others* | 0.6% | |
* Includes short-term investments and net other assets. |
Annual Report
Advisor Utilities Fund
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 99.7% |
| Shares | | Value |
COMMERCIAL SERVICES & SUPPLIES - 0.9% |
Environmental & Facility Services - 0.9% |
Covanta Holding Corp. (a) | 75,500 | | $ 1,275,195 |
ELECTRIC UTILITIES - 51.3% |
Electric Utilities - 51.3% |
American Electric Power Co., Inc. | 591,400 | | 18,309,744 |
Entergy Corp. | 82,800 | | 6,651,324 |
Exelon Corp. | 123,500 | | 6,281,210 |
FirstEnergy Corp. | 318,700 | | 13,130,440 |
FPL Group, Inc. | 164,900 | | 9,344,883 |
NV Energy, Inc. | 535,400 | | 6,157,100 |
Pinnacle West Capital Corp. | 208,500 | | 6,663,660 |
Southern Co. | 124,600 | | 3,912,440 |
| | 70,450,801 |
ELECTRICAL EQUIPMENT - 0.5% |
Electrical Components & Equipment - 0.5% |
First Solar, Inc. (a) | 2,000 | | 308,780 |
Yingli Green Energy Holding Co. Ltd. ADR (a)(d) | 26,000 | | 345,020 |
| | 653,800 |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 17.1% |
Independent Power Producers & Energy Traders - 17.1% |
AES Corp. | 324,700 | | 4,152,913 |
Black Hills Corp. | 13,467 | | 350,277 |
Calpine Corp. (a) | 139,700 | | 1,799,336 |
Constellation Energy Group, Inc. | 306,700 | | 8,802,290 |
NRG Energy, Inc. (a) | 206,669 | | 5,623,463 |
RRI Energy, Inc. (a) | 512,000 | | 2,739,200 |
| | 23,467,479 |
MULTI-UTILITIES - 29.9% |
Multi-Utilities - 29.9% |
CenterPoint Energy, Inc. | 708,200 | | 8,533,810 |
|
| Shares | | Value |
CMS Energy Corp. | 355,600 | | $ 4,601,464 |
PG&E Corp. | 167,104 | | 6,745,988 |
Sempra Energy | 181,000 | | 9,489,830 |
TECO Energy, Inc. | 508,200 | | 6,855,618 |
Xcel Energy, Inc. | 242,000 | | 4,825,480 |
| | 41,052,190 |
TOTAL COMMON STOCKS (Cost $137,004,603) | 136,899,465 |
Money Market Funds - 1.5% |
| | | |
Fidelity Cash Central Fund, 0.37% (b) | 1,738,662 | | 1,738,662 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(c) | 356,250 | | 356,250 |
TOTAL MONEY MARKET FUNDS (Cost $2,094,912) | 2,094,912 |
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $139,099,515) | | 138,994,377 |
NET OTHER ASSETS - (1.2)% | | (1,581,198) |
NET ASSETS - 100% | $ 137,413,179 |
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 | $ 82,879 |
Fidelity Securities Lending Cash Central Fund | 21,598 |
Total | $ 104,477 |
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, 2009, the fund had a capital loss carryforward of approximately $246,849,971 of which $78,569,521, $154,412,532 and $13,867,918 will expire on July 31, 2010, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $34,108,371 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Utilities
Advisor Utilities Fund
Financial Statements
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $331,750) - See accompanying schedule: Unaffiliated issuers (cost $137,004,603) | $ 136,899,465 | |
Fidelity Central Funds (cost $2,094,912) | 2,094,912 | |
Total Investments (cost $139,099,515) | | $ 138,994,377 |
Receivable for investments sold | | 2,254,489 |
Receivable for fund shares sold | | 63,781 |
Dividends receivable | | 163,975 |
Distributions receivable from Fidelity Central Funds | | 551 |
Prepaid expenses | | 654 |
Total assets | | 141,477,827 |
| | |
Liabilities | | |
Payable for investments purchased | $ 3,258,664 | |
Payable for fund shares redeemed | 255,939 | |
Accrued management fee | 62,313 | |
Distribution fees payable | 53,712 | |
Other affiliated payables | 41,311 | |
Other payables and accrued expenses | 36,459 | |
Collateral on securities loaned, at value | 356,250 | |
Total liabilities | | 4,064,648 |
| | |
Net Assets | | $ 137,413,179 |
Net Assets consist of: | | |
Paid in capital | | $ 424,993,058 |
Undistributed net investment income | | 1,435,445 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (288,910,370) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (104,954) |
Net Assets | | $ 137,413,179 |
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($66,063,856 ÷ 4,325,542 shares) | | $ 15.27 |
| | |
Maximum offering price per share (100/94.25 of $15.27) | | $ 16.20 |
Class T:
Net Asset Value and redemption price per share ($33,989,054 ÷ 2,225,277 shares) | | $ 15.27 |
| | |
Maximum offering price per share (100/96.50 of $15.27) | | $ 15.82 |
Class B:
Net Asset Value and offering price per share ($10,634,495 ÷ 705,150 shares)A | | $ 15.08 |
| | |
Class C:
Net Asset Value and offering price per share ($22,352,377 ÷ 1,488,508 shares)A | | $ 15.02 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($4,373,397 ÷ 281,886 shares) | | $ 15.51 |
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, 2009 |
Investment Income | | |
Dividends | | $ 5,211,612 |
Interest | | 6,826 |
Income from Fidelity Central Funds | | 104,477 |
Total income | | 5,322,915 |
| | |
Expenses | | |
Management fee | $ 826,728 | |
Transfer agent fees | 471,069 | |
Distribution fees | 720,262 | |
Accounting and security lending fees | 58,076 | |
Custodian fees and expenses | 7,483 | |
Independent trustees' compensation | 1,032 | |
Registration fees | 57,744 | |
Audit | 46,603 | |
Legal | 2,732 | |
Miscellaneous | 11,919 | |
Total expenses before reductions | 2,203,648 | |
Expense reductions | (1,577) | 2,202,071 |
Net investment income (loss) | | 3,120,844 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (55,797,413) | |
Foreign currency transactions | 14,961 | |
Total net realized gain (loss) | | (55,782,452) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (1,797,090) | |
Assets and liabilities in foreign currencies | 184 | |
Total change in net unrealized appreciation (depreciation) | | (1,796,906) |
Net gain (loss) | | (57,579,358) |
Net increase (decrease) in net assets resulting from operations | | $ (54,458,514) |
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 3,120,844 | $ 2,259,007 |
Net realized gain (loss) | (55,782,452) | 15,062,436 |
Change in net unrealized appreciation (depreciation) | (1,796,906) | (20,022,346) |
Net increase (decrease) in net assets resulting from operations | (54,458,514) | (2,700,903) |
Distributions to shareholders from net investment income | (2,162,549) | (2,837,541) |
Share transactions - net increase (decrease) | (29,372,654) | (28,461,258) |
Redemption fees | 4,076 | 9,517 |
Total increase (decrease) in net assets | (85,989,641) | (33,990,185) |
| | |
Net Assets | | |
Beginning of period | 223,402,820 | 257,393,005 |
End of period (including undistributed net investment income of $1,435,445 and undistributed net investment income of $494,309, respectively) | $ 137,413,179 | $ 223,402,820 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 | $ 12.09 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .35 | .24 | .21 | .24 | .28 F |
Net realized and unrealized gain (loss) | (5.10) | (.38) | 3.56 | 2.06 | 3.01 |
Total from investment operations | (4.75) | (.14) | 3.77 | 2.30 | 3.29 |
Distributions from net investment income | (.26) | (.32) | (.23) | (.27) | (.21) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.27 | $ 20.28 | $ 20.74 | $ 17.20 | $ 15.17 |
Total Return A,B | (23.44)% | (.82)% | 22.14% | 15.38% | 27.48% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.26% | 1.21% | 1.27% | 1.34% | 1.39% |
Expenses net of fee waivers, if any | 1.26% | 1.21% | 1.27% | 1.34% | 1.39% |
Expenses net of all reductions | 1.26% | 1.21% | 1.26% | 1.32% | 1.36% |
Net investment income (loss) | 2.37% | 1.11% | 1.04% | 1.51% | 2.03% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 66,064 | $ 105,219 | $ 94,842 | $ 40,599 | $ 29,150 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.39%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class T
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 | $ 12.04 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .31 | .18 | .15 | .19 | .24 F |
Net realized and unrealized gain (loss) | (5.10) | (.39) | 3.56 | 2.08 | 2.99 |
Total from investment operations | (4.79) | (.21) | 3.71 | 2.27 | 3.23 |
Distributions from net investment income | (.20) | (.24) | (.18) | (.19) | (.17) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.27 | $ 20.26 | $ 20.71 | $ 17.18 | $ 15.10 |
Total Return A,B | (23.61)% | (1.11)% | 21.74% | 15.20% | 27.03% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 1.52% | 1.47% | 1.54% | 1.60% | 1.67% |
Expenses net of fee waivers, if any | 1.52% | 1.47% | 1.54% | 1.60% | 1.67% |
Expenses net of all reductions | 1.52% | 1.47% | 1.54% | 1.58% | 1.64% |
Net investment income (loss) | 2.11% | .84% | .76% | 1.25% | 1.76% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 33,989 | $ 54,346 | $ 62,592 | $ 52,128 | $ 55,683 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.12%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 | $ 11.82 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .24 | .08 | .05 | .12 | .17 F |
Net realized and unrealized gain (loss) | (5.04) | (.39) | 3.52 | 2.03 | 2.95 |
Total from investment operations | (4.80) | (.31) | 3.57 | 2.15 | 3.12 |
Distributions from net investment income | (.13) | (.08) | (.07) | (.08) | (.11) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.08 | $ 20.01 | $ 20.40 | $ 16.90 | $ 14.83 |
Total Return A,B | (23.97)% | (1.59)% | 21.18% | 14.57% | 26.51% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.01% | 1.96% | 2.04% | 2.09% | 2.14% |
Expenses net of fee waivers, if any | 2.01% | 1.96% | 2.04% | 2.09% | 2.14% |
Expenses net of all reductions | 2.01% | 1.95% | 2.03% | 2.06% | 2.11% |
Net investment income (loss) | 1.62% | .36% | .27% | .76% | 1.28% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 10,634 | $ 20,747 | $ 43,845 | $ 65,959 | $ 82,577 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .64%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
Financial Highlights - Class C
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 | $ 11.84 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .24 | .08 | .06 | .13 | .18 F |
Net realized and unrealized gain (loss) | (5.02) | (.39) | 3.51 | 2.04 | 2.94 |
Total from investment operations | (4.78) | (.31) | 3.57 | 2.17 | 3.12 |
Distributions from net investment income | (.13) | (.14) | (.10) | (.10) | (.12) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 15.02 | $ 19.93 | $ 20.38 | $ 16.91 | $ 14.84 |
Total Return A,B | (23.96)% | (1.58)% | 21.23% | 14.72% | 26.48% |
Ratios to Average Net Assets D,G | | | | | |
Expenses before reductions | 2.01% | 1.95% | 1.99% | 2.02% | 2.07% |
Expenses net of fee waivers, if any | 2.01% | 1.95% | 1.99% | 2.02% | 2.07% |
Expenses net of all reductions | 2.01% | 1.95% | 1.99% | 2.00% | 2.04% |
Net investment income (loss) | 1.62% | .36% | .32% | .83% | 1.36% F |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 22,352 | $ 37,387 | $ 43,292 | $ 32,823 | $ 34,827 |
Portfolio turnover rate E | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Utilities
Financial Highlights - Institutional Class
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 | $ 12.20 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .39 | .31 | .29 | .30 | .33 E |
Net realized and unrealized gain (loss) | (5.17) | (.38) | 3.58 | 2.10 | 3.03 |
Total from investment operations | (4.78) | (.07) | 3.87 | 2.40 | 3.36 |
Distributions from net investment income | (.23) | (.36) | (.30) | (.33) | (.25) |
Redemption fees added to paid in capital B,G | - | - | - | - | - |
Net asset value, end of period | $ 15.51 | $ 20.52 | $ 20.95 | $ 17.38 | $ 15.31 |
Total Return A | (23.24)% | (.49)% | 22.54% | 15.95% | 27.88% |
Ratios to Average Net Assets C,F | | | | | |
Expenses before reductions | 1.00% | .91% | .92% | .94% | .99% |
Expenses net of fee waivers, if any | 1.00% | .91% | .92% | .94% | .99% |
Expenses net of all reductions | 1.00% | .90% | .92% | .92% | .96% |
Net investment income (loss) | 2.63% | 1.41% | 1.39% | 1.91% | 2.44% E |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 4,373 | $ 5,704 | $ 12,822 | $ 6,479 | $ 1,766 |
Portfolio turnover rate D | 247% | 77% | 118% | 64% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.80%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended July 31, 2009
1. Organization.
Fidelity Advisor Utilities Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Utilities
3. Significant Accounting Policies - continued
Foreign Currency - continued
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, market discount, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 10,430,514 | |
Unrealized depreciation | (18,502,661) | |
Net unrealized appreciation (depreciation) | $ (8,072,147) | |
Undistributed ordinary income | $ 1,450,407 | |
Capital loss carryforward | $ (246,849,971) | |
Cost for federal income tax purposes | $ 147,066,524 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 2,162,549 | $ 2,837,541 |
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.
Annual Report
Notes to Financial Statements - continued
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $362,557,553 and $371,360,376, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | 0% | .25% | $ 175,548 | $ 7,291 |
Class T | .25% | .25% | 181,630 | 1,216 |
Class B | .75% | .25% | 123,698 | 92,816 |
Class C | .75% | .25% | 239,386 | 21,345 |
| | | $ 720,262 | $ 122,668 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares. For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 40,987 |
Class T | 6,617 |
Class B* | 31,601 |
Class C* | 3,207 |
| $ 82,412 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 222,951 | .32 |
Class T | 120,957 | .33 |
Class B | 39,435 | .32 |
Class C | 76,166 | .32 |
Institutional Class | 11,560 | .31 |
| $ 471,069 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Utilities
5. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8,767 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $687 and is reflected in Miscellaneous Expense 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 $21,598.
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 $1,539 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 $38.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 1,279,763 | $ 1,513,480 |
Class T | 508,856 | 697,662 |
Class B | 107,816 | 116,029 |
Class C | 209,682 | 289,510 |
Institutional Class | 56,432 | 220,860 |
Total | $ 2,162,549 | $ 2,837,541 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 856,135 | 2,354,893 | $ 12,539,810 | $ 52,162,968 |
Reinvestment of distributions | 73,926 | 60,065 | 1,138,401 | 1,341,196 |
Shares redeemed | (1,794,060) | (1,798,285) | (25,956,960) | (38,893,897) |
Net increase (decrease) | (863,999) | 616,673 | $ (12,278,749) | $ 14,610,267 |
Class T | | | | |
Shares sold | 257,339 | 607,632 | $ 3,753,639 | $ 13,411,231 |
Reinvestment of distributions | 31,967 | 29,500 | 480,828 | 659,942 |
Shares redeemed | (746,038) | (977,155) | (10,889,452) | (21,255,306) |
Net increase (decrease) | (456,732) | (340,023) | $ (6,654,985) | $ (7,184,133) |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions - continued
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class B | | | | |
Shares sold | 154,111 | 265,082 | $ 2,249,187 | $ 5,789,226 |
Reinvestment of distributions | 6,919 | 4,528 | 98,250 | 103,786 |
Shares redeemed | (492,642) | (1,382,108) | (7,223,742) | (29,771,682) |
Net increase (decrease) | (331,612) | (1,112,498) | $ (4,876,305) | $ (23,878,670) |
Class C | | | | |
Shares sold | 216,794 | 413,208 | $ 3,077,077 | $ 8,976,142 |
Reinvestment of distributions | 11,490 | 10,061 | 162,462 | 223,730 |
Shares redeemed | (615,787) | (671,632) | (8,815,385) | (14,302,911) |
Net increase (decrease) | (387,503) | (248,363) | $ (5,575,846) | $ (5,103,039) |
Institutional Class | | | | |
Shares sold | 137,801 | 1,285,993 | $ 1,988,698 | $ 28,765,131 |
Reinvestment of distributions | 2,995 | 7,559 | 45,330 | 173,189 |
Shares redeemed | (136,905) | (1,627,489) | (2,020,797) | (35,844,003) |
Net increase (decrease) | 3,891 | (333,937) | $ 13,231 | $ (6,905,683) |
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 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, and Fidelity Advisor Utilities Fund:
We have audited the accompanying statements of assets and liabilities of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Consumer Discretionary Fund, Fidelity 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, and Fidelity Advisor Utilities Fund (collectively, the "Funds"), including the schedules of investments, as of July 31, 2009, 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, 2009, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Fidelity Advisor Biotechnology Fund, Fidelity Advisor Communications Equipment Fund, Fidelity Advisor Consumer Discretionary Fund, Fidelity 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, and Fidelity Advisor Utilities Fund as of July 31, 2009, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 28, 2009
Annual Report
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review the fund's performance. Except for Mr. Edward C. Johnson 3rd and Mr. James C. Curvey, each of the Trustees oversees 220 funds advised by FMR or an affiliate. Mr. Johnson oversees 262 funds advised by FMR or an affiliate. Mr. Curvey oversees 392 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Edward C. Johnson 3d (79) |
| 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 (74) |
| 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.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation |
Dennis J. Dirks (61) |
| 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 (55) |
| 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 (65) |
| 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). 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 (64) |
| 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 (65) |
| 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 (70) |
| Year of Election or Appointment: 2001 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 (60) |
| 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 (58) |
| 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). |
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Peter S. Lynch (65) |
| 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 (39) |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2009-present) and is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (44) |
| 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 (37) |
| 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 (41) |
| 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 (40) |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Vice President and Associate General Counsel of FMR LLC (2005-present), and is an employee of Fidelity Investments. |
Holly C. Laurent (55) |
| 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 (50) |
| 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 (62) |
| 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 (47) |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian also serves as Chief Financial Officer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. Previously, Mr. Christian served as Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009) and as Vice President of Business Analysis (2003-2004). |
Bryan A. Mehrmann (48) |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes 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). |
John R. Hebble (51) |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (50) |
| 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
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| September 2008 | December 2008 |
Fidelity Advisor Consumer Discretionary Fund | | |
Institutional Class | - | 100% |
Fidelity Advisor Financial Services Fund | | |
Institutional Class | 93% | 68% |
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 2008 | December 2008 |
Fidelity Advisor Consumer Discretionary Fund | | |
Institutional Class | - | 100% |
Fidelity Advisor Financial Services Fund | | |
Institutional Class | 97% | 83% |
Fidelity Advisor Industrials Fund | | |
Institutional Class | 100% | 100% |
Fidelity Advisor Utilities Fund | | |
Institutional Class | 100% | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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 throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. 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. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2009 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 ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' investment personnel and the funds' investment objectives and disciplines. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. In response to last year's financial crisis, FMR took a number of actions intended to cut costs and improve efficiency without weakening the investment teams or resources. 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.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of a fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure and broaden the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) contractually agreeing to reduce the management fee on Fidelity U.S. Bond Index Fund; and (iv) expanding Class A and Class T load waiver categories to increase rollover retention opportunities and create consistent policies across the classes.
Annual Report
Investment Performance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance for each class, as well as each fund's relative investment performance for each class measured against a third-party-sponsored index that reflects the market sector in which the fund invests over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare any of the funds' performance.
For each of Advisor Biotechnology, Advisor Consumer Discretionary, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2008, 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 Advisor Communications Equipment, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2008, 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 stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Communications Equipment
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Consumer Discretionary
The Board stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for all the periods shown. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Electronics
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Energy
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Financial Services
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Health Care
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Advisor Industrials
The Board stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Advisor Technology
The Board stated that the investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Utilities
The Board stated that the investment performance of the fund was lower than its benchmark for the one- and three- year periods, although the five-year cumulative total return of Institutional Class (Class I) compared favorably to its benchmark. The Board discussed with FMR actions that have been taken by FMR to improve the fund's below-benchmark performance. The Board will continue to closely monitor the performance of the fund in the coming year and discuss with FMR other appropriate actions to address the performance of the fund. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. For each of Advisor Biotechnology, Advisor Communications Equipment, Advisor Electronics, Advisor Energy, Advisor Financial Services, Advisor Health Care, Advisor Industrials, Advisor Technology, and Advisor Utilities, the Board reviewed the year-to-date performance of Class A through May 31, 2009 and stated that it exceeded the fund's benchmark. For Advisor Consumer Discretionary, the Board reviewed the year-to-date performance of Class A through May 31, 2009 and stated that it was lower than the fund's benchmark.
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 2008, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee ranked, is also included in the charts and considered by the Board.
Annual Report
Advisor Biotechnology
Advisor Communications Equipment
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Consumer Discretionary
Advisor Electronics
Annual Report
Advisor Energy
Advisor Financial Services
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Advisor Health Care
Advisor Industrials
Annual Report
Advisor Technology
Advisor Utilities
The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2008.
Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the total expenses of each class of each fund, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of each fund compared to competitive fund median expenses. Each class of each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expenses of the classes of each fund vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
The Board noted that the total expenses of each of Class A and Class C of Advisor Biotechnology ranked below its competitive median for 2008, the total expenses of Institutional Class ranked equal to its competitive median for 2008, and the total expenses of each of Class T and Class B ranked above its competitive median for 2008. 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.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the total expenses of each of Class A and Class C of Advisor Communications Equipment ranked below its competitive median for 2008 and the total expenses of each of Class T, Class B, and Institutional Class ranked above its competitive median for 2008. 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 and Class C of Advisor Consumer Discretionary ranked below its competitive median for 2008 and the total expenses of each of Class T, Class B, and Institutional Class ranked above its competitive median for 2008. 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 and Class C of Advisor Electronics ranked below its competitive median for 2008 and the total expenses of each of Class T, Class B, and Institutional Class ranked above its competitive median for 2008. 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 2008.
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 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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 Industrials ranked below its competitive median for 2008.
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 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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 Utilities ranked below its competitive median for 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of each fund were reasonable, although in some cases above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.
Annual Report
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 created an Ad Hoc Committee (the "Committee") to analyze economies of scale. The Committee was formed to consider 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 determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, considering the findings of the Committee, that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends, 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; (iii) Fidelity's compensation structure for portfolio managers and key personnel, including performance benchmarks used by Fidelity in evaluating incentive compensation for portfolio managers and research analysts; (iv) the structure and process of equity research and actions taken by FMR to improve the quality of research; (v) the selection of and compensation paid by FMR to fund sub-advisers; (vi) Fidelity's fee structures and rationale for recommending different fees among categories of funds; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; (viii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; and (ix) explanations for 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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors (U.K.) Ltd.
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-0909
1.789242.105
(Fidelity Investment logo)(registered trademark)
Fidelity® Advisor
Real Estate
Fund - Class A, Class T, Class B
and Class C
Annual Report
July 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | <Click Here> | The Chairman's message to shareholders. |
Performance | <Click Here> | How the fund has done over time. |
Management's Discussion | <Click Here> | The manager's review of fund performance, strategy and outlook. |
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights. |
Notes | <Click Here> | Notes to financial statements. |
Report of Independent Registered Public Accounting Firm | <Click Here> | |
Trustees and Officers | <Click Here> | |
Distributions | <Click Here> | |
Board Approval of Investment Advisory Contracts and Management Fees | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/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
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
We've seen a welcome uptick in the global equity markets this spring and summer, as signs of stabilization in some economic indicators have brought many investors back into the marketplace. But there remain other key measures - notably high unemployment and slack consumer spending - that suggest the road back to economic health could still be a bumpy ride. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There 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,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Fidelity Advisor Real Estate Fund - Class A, T, B, and C
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Life of Fund A |
Class A (incl. 5.75% sales charge) | -43.63% | -1.88% | 3.44% |
Class T (incl. 3.50% sales charge) | -42.42% | -1.66% | 3.52% |
Class B (incl. contingent deferred sales charge) B | -43.47% | -1.77% | 3.55% |
Class C (incl. contingent deferred sales charge) C | -41.22% | -1.46% | 3.55% |
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 Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund: For the year ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -40.19%, -40.33%, -40.60% and -40.64%, respectively (excluding sales charges), lagging the S&P 500® but beating the Dow Jones U.S. Select Real Estate Securities IndexSM, which returned -41.75%. The Macerich Co., a relatively highly leveraged mall company with significant retail exposure to Southern California and Arizona, was the fund's top individual contributor versus the Dow Jones index, benefiting from timely ownership. Its shares rebounded for a variety of reasons: nervous investors had overestimated Macerich's bankruptcy risk; the company improved its balance sheet; and some technical factors boosted the stock as well. Also helping performance was data center operator Digital Realty Trust - which benefited from favorable supply/demand fundamentals - being underweighted in poor-performing shopping center real estate investment trust (REIT) Kimco Realty and holding a modest stake in cash in an overall down market. The biggest negative was owning mall company General Growth Properties, which declared bankruptcy and which I no longer held at period end. Office REIT SL Green Realty and industrial REIT ProLogis also underperformed, hurt by their high debt loads.
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund: For the year ending July 31, 2009, the fund's Institutional Class shares returned -40.03%, lagging the S&P 500® but beating the Dow Jones U.S. Select Real Estate Securities IndexSM, which returned -41.75%. The Macerich Co., a relatively highly leveraged mall company with significant retail exposure to Southern California and Arizona, was the fund's top individual contributor versus the Dow Jones index, benefiting from timely ownership. Its shares rebounded for a variety of reasons: nervous investors had overestimated Macerich's bankruptcy risk; the company improved its balance sheet; and some technical factors boosted the stock as well. Also helping performance was data center operator Digital Realty Trust - which benefited from favorable supply/demand fundamentals - - being underweighted in poor-performing shopping center real estate investment trust (REIT) Kimco Realty and holding a modest stake in cash in an overall down market. The biggest negative was owning mall company General Growth Properties, which declared bankruptcy and which I no longer held at period end. Office REIT SL Green Realty and industrial REIT ProLogis also underperformed, hurt by their high debt loads.
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, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.25% | | | |
Actual | | $ 1,000.00 | $ 1,211.40 | $ 6.85 |
HypotheticalA | | $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | 1.50% | | | |
Actual | | $ 1,000.00 | $ 1,209.70 | $ 8.22 |
HypotheticalA | | $ 1,000.00 | $ 1,017.36 | $ 7.50 |
Class B | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,207.30 | $ 10.95 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,206.20 | $ 10.94 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | 1.00% | | | |
Actual | | $ 1,000.00 | $ 1,213.20 | $ 5.49 |
HypotheticalA | | $ 1,000.00 | $ 1,019.84 | $ 5.01 |
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, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Simon Property Group, Inc. | 9.0 | 7.3 |
Ventas, Inc. | 6.3 | 6.4 |
Public Storage | 4.8 | 6.5 |
ProLogis Trust | 4.7 | 3.9 |
Digital Realty Trust, Inc. | 3.9 | 4.4 |
Highwoods Properties, Inc. (SBI) | 3.9 | 4.6 |
SL Green Realty Corp. | 3.6 | 2.2 |
Vornado Realty Trust | 3.5 | 6.5 |
HCP, Inc. | 3.2 | 2.2 |
The Macerich Co. | 3.2 | 0.4 |
| 46.1 | |
Top Five REIT Sectors as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
REITs - Office Buildings | 17.8 | 17.4 |
REITs - Apartments | 13.6 | 18.0 |
REITs - Malls | 13.4 | 8.3 |
REITs - Industrial Buildings | 13.0 | 11.0 |
REITs - Shopping Centers | 11.4 | 14.3 |
Asset Allocation (% of fund's net assets) |
As of July 31, 2009 * | As of January 31, 2009 ** |
 | Stocks 96.2% | | | Stocks 97.2% | |
 | Short-Term
Investments and
Net Other Assets 3.8% | | | Short-Term
Investments and
Net Other Assets 2.8% | |
* Foreign investments | 1.6% | | ** Foreign investments | 1.4% | |
Annual Report
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 96.2% |
| Shares | | Value |
HEALTH CARE PROVIDERS & SERVICES - 0.5% |
Health Care Facilities - 0.5% |
Capital Senior Living Corp. (a) | 7,600 | | $ 37,392 |
Emeritus Corp. (a) | 76,454 | | 890,689 |
TOTAL HEALTH CARE FACILITIES | | 928,081 |
HOUSEHOLD DURABLES - 1.1% |
Homebuilding - 1.1% |
Centex Corp. | 24,900 | | 271,659 |
D.R. Horton, Inc. | 13,800 | | 159,942 |
Lennar Corp. Class A | 17,100 | | 202,464 |
M/I Homes, Inc. | 16,400 | | 215,332 |
Meritage Homes Corp. (a) | 23,200 | | 496,480 |
Pulte Homes, Inc. | 43,600 | | 495,732 |
TOTAL HOMEBUILDING | | 1,841,609 |
REAL ESTATE INVESTMENT TRUSTS - 91.3% |
REITs - Apartments - 13.6% |
Apartment Investment & Management Co. Class A | 371,547 | | 3,485,111 |
AvalonBay Communities, Inc. | 51,131 | | 2,975,824 |
Camden Property Trust (SBI) | 181,200 | | 5,347,212 |
Equity Residential (SBI) | 176,400 | | 4,233,600 |
Essex Property Trust, Inc. | 31,300 | | 2,034,813 |
Home Properties, Inc. | 96,000 | | 3,427,200 |
UDR, Inc. | 274,200 | | 2,865,390 |
TOTAL REITS - APARTMENTS | | 24,369,150 |
REITs - Factory Outlets - 0.6% |
Tanger Factory Outlet Centers, Inc. | 28,700 | | 1,019,998 |
REITs - Health Care Facilities - 11.4% |
HCP, Inc. | 223,000 | | 5,744,480 |
Healthcare Realty Trust, Inc. | 144,809 | | 2,810,743 |
Nationwide Health Properties, Inc. | 12,300 | | 356,946 |
Omega Healthcare Investors, Inc. | 12,600 | | 210,546 |
Ventas, Inc. | 317,900 | | 11,221,870 |
TOTAL REITS - HEALTH CARE FACILITIES | | 20,344,585 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Hotels - 6.2% |
DiamondRock Hospitality Co. | 570,460 | | $ 3,856,310 |
Host Hotels & Resorts, Inc. | 303,694 | | 2,757,542 |
Sunstone Hotel Investors, Inc. | 814,066 | | 4,526,207 |
TOTAL REITS - HOTELS | | 11,140,059 |
REITs - Industrial Buildings - 13.0% |
Duke Realty LP | 503,500 | | 4,778,215 |
ProLogis Trust | 959,123 | | 8,430,691 |
Public Storage | 118,518 | | 8,600,851 |
U-Store-It Trust | 288,600 | | 1,399,710 |
TOTAL REITS - INDUSTRIAL BUILDINGS | | 23,209,467 |
REITs - Malls - 13.4% |
CBL & Associates Properties, Inc. (c) | 348,712 | | 2,071,349 |
Simon Property Group, Inc. | 290,169 | | 16,168,216 |
The Macerich Co. (c) | 290,409 | | 5,712,345 |
TOTAL REITS - MALLS | | 23,951,910 |
REITs - Management/Investment - 3.9% |
Digital Realty Trust, Inc. (c) | 172,300 | | 6,986,765 |
REITs - Office Buildings - 17.8% |
Alexandria Real Estate Equities, Inc. (c) | 117,800 | | 4,489,358 |
Boston Properties, Inc. | 96,900 | | 5,126,010 |
Brandywine Realty Trust (SBI) | 529,000 | | 4,327,220 |
Corporate Office Properties Trust (SBI) | 133,700 | | 4,533,767 |
Highwoods Properties, Inc. (SBI) | 271,200 | | 6,945,432 |
SL Green Realty Corp. | 252,900 | | 6,519,762 |
TOTAL REITS - OFFICE BUILDINGS | | 31,941,549 |
REITs - Shopping Centers - 11.4% |
Acadia Realty Trust (SBI) | 175,600 | | 2,405,720 |
Developers Diversified Realty Corp. | 491,338 | | 2,756,406 |
Inland Real Estate Corp. | 204,598 | | 1,509,933 |
Kimco Realty Corp. | 91,490 | | 900,262 |
Kite Realty Group Trust | 205,700 | | 658,240 |
Ramco-Gershenson Properties Trust (SBI) | 32,820 | | 298,334 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Shopping Centers - continued |
Regency Centers Corp. | 177,800 | | $ 5,703,824 |
Vornado Realty Trust | 123,254 | | 6,288,419 |
TOTAL REITS - SHOPPING CENTERS | | 20,521,138 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 163,484,621 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.3% |
Real Estate Operating Companies - 1.6% |
BR Malls Participacoes SA (a) | 29,000 | | 301,501 |
Brookfield Properties Corp. | 268,900 | | 2,543,796 |
TOTAL REAL ESTATE OPERATING COMPANIES | | 2,845,297 |
Real Estate Services - 1.7% |
CB Richard Ellis Group, Inc. Class A (a) | 280,323 | | 3,055,521 |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | | 5,900,818 |
TOTAL COMMON STOCKS (Cost $212,296,887) | 172,155,129 |
Money Market Funds - 13.3% |
| | | |
Fidelity Cash Central Fund, 0.37% (d) | 6,784,735 | | 6,784,735 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(d) | 17,057,675 | | 17,057,675 |
TOTAL MONEY MARKET FUNDS (Cost $23,842,410) | 23,842,410 |
TOTAL INVESTMENT PORTFOLIO - 109.5% (Cost $236,139,297) | | 195,997,539 |
NET OTHER ASSETS - (9.5)% | | (16,964,144) |
NET ASSETS - 100% | $ 179,033,395 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) 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 | $ 63,176 |
Fidelity Securities Lending Cash Central Fund | 224,276 |
Total | $ 287,452 |
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, 2009, the fund had a capital loss carryforward of approximately $15,429,654 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $47,012,174 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $16,866,118) - See accompanying schedule: Unaffiliated issuers (cost $212,296,887) | $ 172,155,129 | |
Fidelity Central Funds (cost $23,842,410) | 23,842,410 | |
Total Investments (cost $236,139,297) | | $ 195,997,539 |
Cash | | 15 |
Foreign currency held at value (cost $21) | | 19 |
Receivable for investments sold | | 2,343,890 |
Receivable for fund shares sold | | 476,052 |
Dividends receivable | | 26,652 |
Distributions receivable from Fidelity Central Funds | | 17,437 |
Prepaid expenses | | 906 |
Receivable from investment adviser for expense reductions | | 3,050 |
Total assets | | 198,865,560 |
| | |
Liabilities | | |
Payable for investments purchased | $ 2,227,455 | |
Payable for fund shares redeemed | 328,904 | |
Accrued management fee | 74,966 | |
Distribution fees payable | 43,013 | |
Other affiliated payables | 50,811 | |
Other payables and accrued expenses | 49,341 | |
Collateral on securities loaned, at value | 17,057,675 | |
Total liabilities | | 19,832,165 |
| | |
Net Assets | | $ 179,033,395 |
Net Assets consist of: | | |
Paid in capital | | $ 306,525,246 |
Undistributed net investment income | | 216,338 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (87,564,665) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (40,143,524) |
Net Assets | | $ 179,033,395 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($62,421,637 ÷ 6,633,039 shares) | | $ 9.41 |
| | |
Maximum offering price per share (100/94.25 of $9.41) | | $ 9.98 |
Class T:
Net Asset Value and redemption price per share ($40,275,773 ÷ 4,275,614 shares) | | $ 9.42 |
| | |
Maximum offering price per share (100/96.50 of $9.42) | | $ 9.76 |
Class B:
Net Asset Value and offering price per share ($7,933,066 ÷ 848,725 shares)A | | $ 9.35 |
| | |
Class C:
Net Asset Value and offering price per share ($13,226,057 ÷ 1,415,911 shares)A | | $ 9.34 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($55,176,862 ÷ 5,835,403 shares) | | $ 9.46 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 6,697,460 |
Interest | | 5 |
Income from Fidelity Central Funds | | 287,452 |
Total income | | 6,984,917 |
| | |
Expenses | | |
Management fee | $ 985,349 | |
Transfer agent fees | 566,324 | |
Distribution fees | 630,829 | |
Accounting and security lending fees | 74,072 | |
Custodian fees and expenses | 25,469 | |
Independent trustees' compensation | 1,183 | |
Registration fees | 73,922 | |
Audit | 49,248 | |
Legal | 1,061 | |
Miscellaneous | 21,317 | |
Total expenses before reductions | 2,428,774 | |
Expense reductions | (41,057) | 2,387,717 |
Net investment income (loss) | | 4,597,200 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (79,846,185) | |
Foreign currency transactions | 5,687 | |
Total net realized gain (loss) | | (79,840,498) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (44,019,811) | |
Assets and liabilities in foreign currencies | (1,766) | |
Total change in net unrealized appreciation (depreciation) | | (44,021,577) |
Net gain (loss) | | (123,862,075) |
Net increase (decrease) in net assets resulting from operations | | $ (119,264,875) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 4,597,200 | $ 4,557,574 |
Net realized gain (loss) | (79,840,498) | (4,638,718) |
Change in net unrealized appreciation (depreciation) | (44,021,577) | (14,457,064) |
Net increase (decrease) in net assets resulting
from operations | (119,264,875) | (14,538,208) |
Distributions to shareholders from net investment income | (5,963,213) | (3,429,631) |
Distributions to shareholders from net realized gain | (564,328) | (15,771,090) |
Total distributions | (6,527,541) | (19,200,721) |
Share transactions - net increase (decrease) | (1,196,796) | 47,082,496 |
Total increase (decrease) in net assets | (126,989,212) | 13,343,567 |
| | |
Net Assets | | |
Beginning of period | 306,022,607 | 292,679,040 |
End of period (including undistributed net investment income of $216,338 and undistributed net investment income of $776,465, respectively) | $ 179,033,395 | $ 306,022,607 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .27 | .30 | .18 | .29 | .31 |
Net realized and unrealized gain (loss) | (6.86) | (1.24) | (.17) | 2.85 | 5.52 |
Total from investment operations | (6.59) | (.94) | .01 | 3.14 | 5.83 |
Distributions from net investment income | (.36) | (.26) | (.18) | (.23) | (.29) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.39) | (1.34) G | (1.68) | (1.03) | (.82) |
Net asset value, end of period | $ 9.41 | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 |
Total Return A, B | (40.19)% | (5.66)% | (.65)% | 18.32% | 45.48% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.27% | 1.22% | 1.25% | 1.29% | 1.31% |
Expenses net of fee waivers, if any | 1.25% | 1.22% | 1.25% | 1.25% | 1.28% |
Expenses net of all reductions | 1.25% | 1.21% | 1.25% | 1.24% | 1.25% |
Net investment income (loss) | 2.73% | 1.71% | .81% | 1.59% | 1.98% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 62,422 | $ 109,442 | $ 117,831 | $ 85,000 | $ 53,097 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .25 | .26 | .12 | .24 | .26 |
Net realized and unrealized gain (loss) | (6.87) | (1.24) | (.16) | 2.84 | 5.53 |
Total from investment operations | (6.62) | (.98) | (.04) | 3.08 | 5.79 |
Distributions from net investment income | (.33) | (.17) | (.13) | (.20) | (.24) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.36) | (1.26) G | (1.63) | (1.00) | (.77) |
Net asset value, end of period | $ 9.42 | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 |
Total Return A, B | (40.33)% | (5.88)% | (.89)% | 17.98% | 45.12% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.54% | 1.47% | 1.50% | 1.55% | 1.61% |
Expenses net of fee waivers, if any | 1.50% | 1.47% | 1.50% | 1.50% | 1.57% |
Expenses net of all reductions | 1.50% | 1.47% | 1.49% | 1.49% | 1.54% |
Net investment income (loss) | 2.48% | 1.45% | .57% | 1.34% | 1.70% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 40,276 | $ 81,938 | $ 100,621 | $ 91,224 | $ 66,303 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .20 | .17 | .01 | .15 | .18 |
Net realized and unrealized gain (loss) | (6.81) | (1.23) | (.16) | 2.83 | 5.50 |
Total from investment operations | (6.61) | (1.06) | (.15) | 2.98 | 5.68 |
Distributions from net investment income | (.27) | (.10) | (.05) | (.15) | (.17) |
Distributions from net realized gain | (.03) | (1.09) | (1.48) | (.80) | (.53) |
Total distributions | (.30) | (1.19) G | (1.53) | (.95) | (.70) |
Net asset value, end of period | $ 9.35 | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 |
Total Return A,B | (40.60)% | (6.37)% | (1.45)% | 17.42% | 44.31% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 2.04% | 1.96% | 2.02% | 2.05% | 2.10% |
Expenses net of fee waivers, if any | 2.00% | 1.96% | 2.00% | 2.00% | 2.07% |
Expenses net of all reductions | 2.00% | 1.96% | 2.00% | 1.98% | 2.03% |
Net investment income (loss) | 1.98% | .96% | .07% | .84% | 1.20% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 7,933 | $ 16,879 | $ 25,114 | $ 27,397 | $ 26,349 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .19 | .17 | .01 | .15 | .19 |
Net realized and unrealized gain (loss) | (6.81) | (1.23) | (.16) | 2.84 | 5.50 |
Total from investment operations | (6.62) | (1.06) | (.15) | 2.99 | 5.69 |
Distributions from net investment income | (.27) | (.11) | (.05) | (.15) | (.17) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.30) | (1.19) G | (1.55) | (.95) | (.70) |
Net asset value, end of period | $ 9.34 | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 |
Total Return A, B | (40.64)% | (6.35)% | (1.45)% | 17.46% | 44.38% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 2.01% | 1.96% | 2.01% | 2.05% | 2.09% |
Expenses net of fee waivers, if any | 2.00% | 1.96% | 2.00% | 2.00% | 2.05% |
Expenses net of all reductions | 2.00% | 1.96% | 2.00% | 1.98% | 2.02% |
Net investment income (loss) | 1.98% | .96% | .06% | .84% | 1.22% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,226 | $ 24,984 | $ 36,854 | $ 36,669 | $ 29,410 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .30 | .34 | .24 | .35 | .36 |
Net realized and unrealized gain (loss) | (6.90) | (1.23) | (.17) | 2.85 | 5.56 |
Total from investment operations | (6.60) | (.89) | .07 | 3.20 | 5.92 |
Distributions from net investment income | (.38) | (.35) | (.24) | (.26) | (.34) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.41) | (1.44) F | (1.74) | (1.06) | (.87) |
Net asset value, end of period | $ 9.46 | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 |
Total Return A | (40.03)% | (5.39)% | (.37)% | 18.61% | 46.05% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | 1.01% | .95% | .98% | .94% | .91% |
Expenses net of fee waivers, if any | 1.00% | .95% | .98% | .94% | .91% |
Expenses net of all reductions | 1.00% | .95% | .97% | .92% | .88% |
Net investment income (loss) | 2.98% | 1.97% | 1.09% | 1.90% | 2.35% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 55,177 | $ 72,780 | $ 12,259 | $ 7,152 | $ 4,162 |
Portfolio turnover rate D | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, 2009
1. Organization.
Fidelity Advisor Real Estate Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency - continued
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 11,700,352 | |
Unrealized depreciation | (76,973,284) | |
Net unrealized appreciation (depreciation) | $ (65,272,932) | |
| | |
Undistributed ordinary income | $ 222,914 | |
Capital loss carryforward | $ (15,429,654) | |
| | |
Cost for federal income tax purposes | $ 261,270,471 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 5,963,213 | $ 3,429,631 |
Long-term Capital Gains | 564,328 | 15,771,090 |
Total | $ 6,527,541 | $ 19,200,721 |
Annual Report
4. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $178,680,082 and $175,450,713, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | .00% | .25% | $ 163,209 | $ 6,079 |
Class T | .25% | .25% | 231,228 | - |
Class B | .75% | .25% | 92,013 | 69,011 |
Class C | .75% | .25% | 144,379 | 20,415 |
| | | $ 630,829 | $ 95,505 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 28,403 |
Class T | 8,236 |
Class B* | 22,522 |
Class C* | 3,084 |
| $ 62,245 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 209,735 | .32 |
Class T | 156,248 | .34 |
Class B | 31,446 | .34 |
Class C | 45,819 | .32 |
Institutional Class | 123,076 | .31 |
| $ 566,324 | |
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 $7,555 for the period.
Annual Report
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $781 and is reflected in Miscellaneous Expense 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 $224,276.
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.
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions - continued
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.25% | $ 13,749 |
Class T | 1.50% | 17,366 |
Class B | 2.00% | 3,609 |
Class C | 2.00% | 2,115 |
Institutional Class | 1.00% | 2,917 |
| | $ 39,756 |
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 $1,301 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 2,373,225 | $ 1,522,432 |
Class T | 1,559,018 | 826,361 |
Class B | 251,874 | 112,289 |
Class C | 401,222 | 169,086 |
Institutional Class | 1,377,874 | 799,463 |
Total | $ 5,963,213 | $ 3,429,631 |
From net realized gain | | |
Class A | $ 204,885 | $ 6,384,487 |
Class T | 150,062 | 5,512,568 |
Class B | 31,214 | 1,322,405 |
Class C | 46,271 | 1,826,579 |
Institutional Class | 131,896 | 725,051 |
Total | $ 564,328 | $ 15,771,090 |
Annual Report
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 3,043,573 | 3,084,736 | $ 29,321,172 | $ 53,959,357 |
Reinvestment of distributions | 261,214 | 414,796 | 2,477,765 | 7,549,476 |
Shares redeemed | (3,348,691) | (3,133,970) | (29,451,189) | (55,521,726) |
Net increase (decrease) | (43,904) | 365,562 | $ 2,347,748 | $ 5,987,107 |
Class T | | | | |
Shares sold | 1,740,100 | 1,683,774 | $ 16,246,028 | $ 29,339,323 |
Reinvestment of distributions | 166,425 | 335,605 | 1,591,698 | 6,128,515 |
Shares redeemed | (2,627,118) | (2,420,642) | (23,368,486) | (42,866,254) |
Net increase (decrease) | (720,593) | (401,263) | $ (5,530,760) | $ (7,398,416) |
Class B | | | | |
Shares sold | 136,838 | 196,548 | $ 1,421,735 | $ 3,413,355 |
Reinvestment of distributions | 27,253 | 70,595 | 256,567 | 1,284,671 |
Shares redeemed | (353,148) | (586,018) | (3,397,456) | (10,346,901) |
Net increase (decrease) | (189,057) | (318,875) | $ (1,719,154) | $ (5,648,875) |
Class C | | | | |
Shares sold | 422,080 | 442,357 | $ 4,270,150 | $ 7,808,076 |
Reinvestment of distributions | 43,425 | 97,814 | 402,486 | 1,779,201 |
Shares redeemed | (586,087) | (994,473) | (5,492,116) | (17,624,265) |
Net increase (decrease) | (120,582) | (454,302) | $ (819,480) | $ (8,036,988) |
Institutional Class | | | | |
Shares sold | 7,788,306 | 6,261,402 | $ 62,314,949 | $ 103,513,317 |
Reinvestment of distributions | 54,679 | 48,936 | 559,339 | 883,388 |
Shares redeemed | (6,427,386) | (2,542,604) | (58,349,438) | (42,217,037) |
Net increase (decrease) | 1,415,599 | 3,767,734 | $ 4,524,850 | $ 62,179,668 |
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
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, 2009, 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, 2009, 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, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 28, 2009
Annual Report
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Mr. Edward C. Johnson 3d and Mr. James C. Curvey, each of the Trustees oversees 220 funds advised by FMR or an affiliate. Mr. Johnson oversees 262 funds advised by FMR or an affiliate. Mr. Curvey oversees 392 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Edward C. Johnson 3d (79) |
| 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 (74) |
| 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.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation |
Dennis J. Dirks (61) |
| 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 (55) |
| 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 (65) |
| 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). 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 (64) |
| 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 (65) |
| 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 (70) |
| Year of Election or Appointment: 2001 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 (60) |
| 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 (58) |
| 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). |
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Peter S. Lynch (65) |
| 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 (39) |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2009-
present) and is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (44) |
| 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 (37) |
| 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 (41) |
| 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 (40) |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Vice President and Associate General Counsel of FMR LLC (2005-present), and is an employee of Fidelity Investments. |
Holly C. Laurent (55) |
| 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 (50) |
| 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 (62) |
| 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 (47) |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian also serves as Chief Financial Officer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. Previously, Mr. Christian served as Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009) and as Vice President of Business Analysis (2003-2004). |
Bryan A. Mehrmann (48) |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes 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). |
John R. Hebble (51) |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (50) |
| 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
A total of 0.16% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
A percentage of the dividends distributed during the fiscal year for the fund qualifies for the dividends-received deduction for corporate shareholders.
| Class A | Class T | Class B | Class C |
September 2008 | 1% | 1% | 2% | 2% |
December 2008 (Ex-Date 12/19/08) | 2% | 3% | 3% | 3% |
December 2008 (Ex-Date 12/30/08) | 2% | 2% | 2% | 2% |
March 2009 | 0% | 0% | 0% | 0% |
June 2009 | 0% | 0% | 0% | 0% |
A percentage of the dividends distributed during the fiscal year for the fund may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Class A | Class T | Class B | Class C |
September 2008 | 2% | 2% | 3% | 3% |
December 2008 (Ex-Date 12/19/08) | 4% | 4% | 5% | 5% |
December 2008 (Ex-Date 12/30/08) | 4% | 4% | 4% | 4% |
March 2009 | 0% | 0% | 0% | 0% |
June 2009 | 0% | 0% | 0% | 0% |
The fund will notify shareholders in January 2010 of amounts for use in preparing 2009 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 throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. 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. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2009 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 ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. In response to last year's financial crisis, FMR took a number of actions to cut costs and improve efficiency without weakening the investment teams or resources. 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.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure and broaden the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) contractually agreeing to reduce the management fee on Fidelity U.S. Bond Index Fund; and (iv) expanding Class A and Class T load waiver categories to increase rollover retention opportunities and create consistent policies across the classes.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against a broad-based securities market index over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2008, 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 stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board reviewed the year-to-date performance of Class A through May 31, 2009 and stated that it exceeded the fund's benchmark.
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 2008, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Annual Report
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked, is also included in the chart and considered by the Board.
Advisor Real Estate Fund
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2008.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class ranked below its competitive median for 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, 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.
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 any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
In February 2009, the Board created an Ad Hoc Committee (the "Committee") to analyze economies of scale. The Committee was formed to consider 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 determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board concluded, considering the findings of the Committee, that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends, 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; (iii) Fidelity's compensation structure for portfolio managers and key personnel, including performance benchmarks used by Fidelity in evaluating incentive compensation for portfolio managers and research analysts; (iv) the structure and process of equity research and actions taken by FMR to improve the quality of research; (v) the selection of and compensation paid by FMR to fund sub-advisers; (vi) Fidelity's fee structures and rationale for recommending different fees among categories of funds; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; (viii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; and (ix) explanations for 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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York Mellon
New York, NY
ARE-UANN-0909
1.789707.106
(Fidelity Investment logo)(registered trademark)
Fidelity ® Advisor
Real Estate
Fund - Institutional Class
Annual Report
July 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | <Click Here> | The Chairman's message to shareholders. |
Performance | <Click Here> | How the fund has done over time. |
Management's Discussion | <Click Here> | The manager's review of fund performance, strategy and outlook. |
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights. |
Notes | <Click Here> | Notes to financial statements. |
Report of Independent Registered Public Accounting Firm | <Click Here> | |
Trustees and Officers | <Click Here> | |
Distributions | <Click Here> | |
Board Approval of Investment Advisory Contracts and Management Fees | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/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
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
We've seen a welcome uptick in the global equity markets this spring and summer, as signs of stabilization in some economic indicators have brought many investors back into the marketplace. But there remain other key measures - notably high unemployment and slack consumer spending - that suggest the road back to economic health could still be a bumpy ride. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There 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,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended July 31, 2009 | Past 1
year | Past 5
years | Life of
fund A |
Institutional Class | -40.03% | -0.42% | 4.65% |
A From September 12, 2002.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Fidelity® Advisor Real Estate Fund - Institutional Class on September 12, 2002, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Market Recap: U.S. stocks - battered by the effects of a global credit crisis for most of the year - were aided by early signs of a healing economy during the final months of the year ending July 31, 2009. For roughly half of the 12-month period, equities were in free fall, as a succession of large financial institutions around the world either collapsed or were forced into mergers or government conservatorship, and harried investors relinquished riskier assets in a massive flight to quality. By March, however, as unprecedented government interventions around the world took root, signs of a potential recovery began to emerge: corporate profits, though still weak, began to stabilize and valuations started to return to normal trading ranges. Against this improving backdrop, major equity indexes posted significant gains in March and April, which carried through to the end of the period. For the year overall, the Standard & Poor's 500SM Index declined 19.96%, while the Dow Jones U.S. Total Stock Market IndexSM - the broadest overall gauge of domestic equities - was down 19.95%. Meanwhile, the blue-chip-laden Dow Jones Industrial AverageSM fell 16.62% and the technology-heavy Nasdaq Composite® Index posted a 14.05% loss.
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund: For the year ending July 31, 2009, the fund's Class A, Class T, Class B and Class C shares returned -40.19%, -40.33%, -40.60% and -40.64%, respectively (excluding sales charges), lagging the S&P 500® but beating the Dow Jones U.S. Select Real Estate Securities IndexSM, which returned -41.75%. The Macerich Co., a relatively highly leveraged mall company with significant retail exposure to Southern California and Arizona, was the fund's top individual contributor versus the Dow Jones index, benefiting from timely ownership. Its shares rebounded for a variety of reasons: nervous investors had overestimated Macerich's bankruptcy risk; the company improved its balance sheet; and some technical factors boosted the stock as well. Also helping performance was data center operator Digital Realty Trust - which benefited from favorable supply/demand fundamentals - being underweighted in poor-performing shopping center real estate investment trust (REIT) Kimco Realty and holding a modest stake in cash in an overall down market. The biggest negative was owning mall company General Growth Properties, which declared bankruptcy and which I no longer held at period end. Office REIT SL Green Realty and industrial REIT ProLogis also underperformed, hurt by their high debt loads.
Comments from Samuel Wald, Portfolio Manager of Fidelity® Advisor Real Estate Fund: For the year ending July 31, 2009, the fund's Institutional Class shares returned -40.03%, lagging the S&P 500® but beating the Dow Jones U.S. Select Real Estate Securities IndexSM, which returned -41.75%. The Macerich Co., a relatively highly leveraged mall company with significant retail exposure to Southern California and Arizona, was the fund's top individual contributor versus the Dow Jones index, benefiting from timely ownership. Its shares rebounded for a variety of reasons: nervous investors had overestimated Macerich's bankruptcy risk; the company improved its balance sheet; and some technical factors boosted the stock as well. Also helping performance was data center operator Digital Realty Trust - which benefited from favorable supply/demand fundamentals - - being underweighted in poor-performing shopping center real estate investment trust (REIT) Kimco Realty and holding a modest stake in cash in an overall down market. The biggest negative was owning mall company General Growth Properties, which declared bankruptcy and which I no longer held at period end. Office REIT SL Green Realty and industrial REIT ProLogis also underperformed, hurt by their high debt loads.
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, 2009 to July 31, 2009).
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
Expense Ratio | Beginning
Account Value
February 1, 2009 | Ending
Account Value
July 31, 2009 | Expenses Paid
During Period*
February 1, 2009 to
July 31, 2009 |
Class A | 1.25% | | | |
Actual | | $ 1,000.00 | $ 1,211.40 | $ 6.85 |
HypotheticalA | | $ 1,000.00 | $ 1,018.60 | $ 6.26 |
Class T | 1.50% | | | |
Actual | | $ 1,000.00 | $ 1,209.70 | $ 8.22 |
HypotheticalA | | $ 1,000.00 | $ 1,017.36 | $ 7.50 |
Class B | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,207.30 | $ 10.95 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% | | | |
Actual | | $ 1,000.00 | $ 1,206.20 | $ 10.94 |
HypotheticalA | | $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Institutional Class | 1.00% | | | |
Actual | | $ 1,000.00 | $ 1,213.20 | $ 5.49 |
HypotheticalA | | $ 1,000.00 | $ 1,019.84 | $ 5.01 |
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, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Simon Property Group, Inc. | 9.0 | 7.3 |
Ventas, Inc. | 6.3 | 6.4 |
Public Storage | 4.8 | 6.5 |
ProLogis Trust | 4.7 | 3.9 |
Digital Realty Trust, Inc. | 3.9 | 4.4 |
Highwoods Properties, Inc. (SBI) | 3.9 | 4.6 |
SL Green Realty Corp. | 3.6 | 2.2 |
Vornado Realty Trust | 3.5 | 6.5 |
HCP, Inc. | 3.2 | 2.2 |
The Macerich Co. | 3.2 | 0.4 |
| 46.1 | |
Top Five REIT Sectors as of July 31, 2009 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
REITs - Office Buildings | 17.8 | 17.4 |
REITs - Apartments | 13.6 | 18.0 |
REITs - Malls | 13.4 | 8.3 |
REITs - Industrial Buildings | 13.0 | 11.0 |
REITs - Shopping Centers | 11.4 | 14.3 |
Asset Allocation (% of fund's net assets) |
As of July 31, 2009 * | As of January 31, 2009 ** |
| Stocks 96.2% | | | Stocks 97.2% | |
| Short-Term
Investments and
Net Other Assets 3.8% | | | Short-Term
Investments and
Net Other Assets 2.8% | |
* Foreign investments | 1.6% | | ** Foreign investments | 1.4% | |
Annual Report
Investments July 31, 2009
Showing Percentage of Net Assets
Common Stocks - 96.2% |
| Shares | | Value |
HEALTH CARE PROVIDERS & SERVICES - 0.5% |
Health Care Facilities - 0.5% |
Capital Senior Living Corp. (a) | 7,600 | | $ 37,392 |
Emeritus Corp. (a) | 76,454 | | 890,689 |
TOTAL HEALTH CARE FACILITIES | | 928,081 |
HOUSEHOLD DURABLES - 1.1% |
Homebuilding - 1.1% |
Centex Corp. | 24,900 | | 271,659 |
D.R. Horton, Inc. | 13,800 | | 159,942 |
Lennar Corp. Class A | 17,100 | | 202,464 |
M/I Homes, Inc. | 16,400 | | 215,332 |
Meritage Homes Corp. (a) | 23,200 | | 496,480 |
Pulte Homes, Inc. | 43,600 | | 495,732 |
TOTAL HOMEBUILDING | | 1,841,609 |
REAL ESTATE INVESTMENT TRUSTS - 91.3% |
REITs - Apartments - 13.6% |
Apartment Investment & Management Co. Class A | 371,547 | | 3,485,111 |
AvalonBay Communities, Inc. | 51,131 | | 2,975,824 |
Camden Property Trust (SBI) | 181,200 | | 5,347,212 |
Equity Residential (SBI) | 176,400 | | 4,233,600 |
Essex Property Trust, Inc. | 31,300 | | 2,034,813 |
Home Properties, Inc. | 96,000 | | 3,427,200 |
UDR, Inc. | 274,200 | | 2,865,390 |
TOTAL REITS - APARTMENTS | | 24,369,150 |
REITs - Factory Outlets - 0.6% |
Tanger Factory Outlet Centers, Inc. | 28,700 | | 1,019,998 |
REITs - Health Care Facilities - 11.4% |
HCP, Inc. | 223,000 | | 5,744,480 |
Healthcare Realty Trust, Inc. | 144,809 | | 2,810,743 |
Nationwide Health Properties, Inc. | 12,300 | | 356,946 |
Omega Healthcare Investors, Inc. | 12,600 | | 210,546 |
Ventas, Inc. | 317,900 | | 11,221,870 |
TOTAL REITS - HEALTH CARE FACILITIES | | 20,344,585 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Hotels - 6.2% |
DiamondRock Hospitality Co. | 570,460 | | $ 3,856,310 |
Host Hotels & Resorts, Inc. | 303,694 | | 2,757,542 |
Sunstone Hotel Investors, Inc. | 814,066 | | 4,526,207 |
TOTAL REITS - HOTELS | | 11,140,059 |
REITs - Industrial Buildings - 13.0% |
Duke Realty LP | 503,500 | | 4,778,215 |
ProLogis Trust | 959,123 | | 8,430,691 |
Public Storage | 118,518 | | 8,600,851 |
U-Store-It Trust | 288,600 | | 1,399,710 |
TOTAL REITS - INDUSTRIAL BUILDINGS | | 23,209,467 |
REITs - Malls - 13.4% |
CBL & Associates Properties, Inc. (c) | 348,712 | | 2,071,349 |
Simon Property Group, Inc. | 290,169 | | 16,168,216 |
The Macerich Co. (c) | 290,409 | | 5,712,345 |
TOTAL REITS - MALLS | | 23,951,910 |
REITs - Management/Investment - 3.9% |
Digital Realty Trust, Inc. (c) | 172,300 | | 6,986,765 |
REITs - Office Buildings - 17.8% |
Alexandria Real Estate Equities, Inc. (c) | 117,800 | | 4,489,358 |
Boston Properties, Inc. | 96,900 | | 5,126,010 |
Brandywine Realty Trust (SBI) | 529,000 | | 4,327,220 |
Corporate Office Properties Trust (SBI) | 133,700 | | 4,533,767 |
Highwoods Properties, Inc. (SBI) | 271,200 | | 6,945,432 |
SL Green Realty Corp. | 252,900 | | 6,519,762 |
TOTAL REITS - OFFICE BUILDINGS | | 31,941,549 |
REITs - Shopping Centers - 11.4% |
Acadia Realty Trust (SBI) | 175,600 | | 2,405,720 |
Developers Diversified Realty Corp. | 491,338 | | 2,756,406 |
Inland Real Estate Corp. | 204,598 | | 1,509,933 |
Kimco Realty Corp. | 91,490 | | 900,262 |
Kite Realty Group Trust | 205,700 | | 658,240 |
Ramco-Gershenson Properties Trust (SBI) | 32,820 | | 298,334 |
Common Stocks - continued |
| Shares | | Value |
REAL ESTATE INVESTMENT TRUSTS - CONTINUED |
REITs - Shopping Centers - continued |
Regency Centers Corp. | 177,800 | | $ 5,703,824 |
Vornado Realty Trust | 123,254 | | 6,288,419 |
TOTAL REITS - SHOPPING CENTERS | | 20,521,138 |
TOTAL REAL ESTATE INVESTMENT TRUSTS | | 163,484,621 |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.3% |
Real Estate Operating Companies - 1.6% |
BR Malls Participacoes SA (a) | 29,000 | | 301,501 |
Brookfield Properties Corp. | 268,900 | | 2,543,796 |
TOTAL REAL ESTATE OPERATING COMPANIES | | 2,845,297 |
Real Estate Services - 1.7% |
CB Richard Ellis Group, Inc. Class A (a) | 280,323 | | 3,055,521 |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | | 5,900,818 |
TOTAL COMMON STOCKS (Cost $212,296,887) | 172,155,129 |
Money Market Funds - 13.3% |
| | | |
Fidelity Cash Central Fund, 0.37% (d) | 6,784,735 | | 6,784,735 |
Fidelity Securities Lending Cash Central Fund, 0.22% (b)(d) | 17,057,675 | | 17,057,675 |
TOTAL MONEY MARKET FUNDS (Cost $23,842,410) | 23,842,410 |
TOTAL INVESTMENT PORTFOLIO - 109.5% (Cost $236,139,297) | | 195,997,539 |
NET OTHER ASSETS - (9.5)% | | (16,964,144) |
NET ASSETS - 100% | $ 179,033,395 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) 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 | $ 63,176 |
Fidelity Securities Lending Cash Central Fund | 224,276 |
Total | $ 287,452 |
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, 2009, the fund had a capital loss carryforward of approximately $15,429,654 all of which will expire on July 31, 2017. |
The fund intends to elect to defer to its fiscal year ending July 31, 2010 approximately $47,012,174 of losses recognized during the period November 1, 2008 to July 31, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities
| July 31, 2009 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $16,866,118) - See accompanying schedule: Unaffiliated issuers (cost $212,296,887) | $ 172,155,129 | |
Fidelity Central Funds (cost $23,842,410) | 23,842,410 | |
Total Investments (cost $236,139,297) | | $ 195,997,539 |
Cash | | 15 |
Foreign currency held at value (cost $21) | | 19 |
Receivable for investments sold | | 2,343,890 |
Receivable for fund shares sold | | 476,052 |
Dividends receivable | | 26,652 |
Distributions receivable from Fidelity Central Funds | | 17,437 |
Prepaid expenses | | 906 |
Receivable from investment adviser for expense reductions | | 3,050 |
Total assets | | 198,865,560 |
| | |
Liabilities | | |
Payable for investments purchased | $ 2,227,455 | |
Payable for fund shares redeemed | 328,904 | |
Accrued management fee | 74,966 | |
Distribution fees payable | 43,013 | |
Other affiliated payables | 50,811 | |
Other payables and accrued expenses | 49,341 | |
Collateral on securities loaned, at value | 17,057,675 | |
Total liabilities | | 19,832,165 |
| | |
Net Assets | | $ 179,033,395 |
Net Assets consist of: | | |
Paid in capital | | $ 306,525,246 |
Undistributed net investment income | | 216,338 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (87,564,665) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (40,143,524) |
Net Assets | | $ 179,033,395 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities - continued
| July 31, 2009 |
| | |
Calculation of Maximum Offering Price Class A:
Net Asset Value and redemption price per share ($62,421,637 ÷ 6,633,039 shares) | | $ 9.41 |
| | |
Maximum offering price per share (100/94.25 of $9.41) | | $ 9.98 |
Class T:
Net Asset Value and redemption price per share ($40,275,773 ÷ 4,275,614 shares) | | $ 9.42 |
| | |
Maximum offering price per share (100/96.50 of $9.42) | | $ 9.76 |
Class B:
Net Asset Value and offering price per share ($7,933,066 ÷ 848,725 shares)A | | $ 9.35 |
| | |
Class C:
Net Asset Value and offering price per share ($13,226,057 ÷ 1,415,911 shares)A | | $ 9.34 |
| | |
Institutional Class:
Net Asset Value, offering price and redemption price per share ($55,176,862 ÷ 5,835,403 shares) | | $ 9.46 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
| Year ended July 31, 2009 |
| | |
Investment Income | | |
Dividends | | $ 6,697,460 |
Interest | | 5 |
Income from Fidelity Central Funds | | 287,452 |
Total income | | 6,984,917 |
| | |
Expenses | | |
Management fee | $ 985,349 | |
Transfer agent fees | 566,324 | |
Distribution fees | 630,829 | |
Accounting and security lending fees | 74,072 | |
Custodian fees and expenses | 25,469 | |
Independent trustees' compensation | 1,183 | |
Registration fees | 73,922 | |
Audit | 49,248 | |
Legal | 1,061 | |
Miscellaneous | 21,317 | |
Total expenses before reductions | 2,428,774 | |
Expense reductions | (41,057) | 2,387,717 |
Net investment income (loss) | | 4,597,200 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (79,846,185) | |
Foreign currency transactions | 5,687 | |
Total net realized gain (loss) | | (79,840,498) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (44,019,811) | |
Assets and liabilities in foreign currencies | (1,766) | |
Total change in net unrealized appreciation (depreciation) | | (44,021,577) |
Net gain (loss) | | (123,862,075) |
Net increase (decrease) in net assets resulting from operations | | $ (119,264,875) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended
July 31,
2009 | Year ended
July 31,
2008 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 4,597,200 | $ 4,557,574 |
Net realized gain (loss) | (79,840,498) | (4,638,718) |
Change in net unrealized appreciation (depreciation) | (44,021,577) | (14,457,064) |
Net increase (decrease) in net assets resulting
from operations | (119,264,875) | (14,538,208) |
Distributions to shareholders from net investment income | (5,963,213) | (3,429,631) |
Distributions to shareholders from net realized gain | (564,328) | (15,771,090) |
Total distributions | (6,527,541) | (19,200,721) |
Share transactions - net increase (decrease) | (1,196,796) | 47,082,496 |
Total increase (decrease) in net assets | (126,989,212) | 13,343,567 |
| | |
Net Assets | | |
Beginning of period | 306,022,607 | 292,679,040 |
End of period (including undistributed net investment income of $216,338 and undistributed net investment income of $776,465, respectively) | $ 179,033,395 | $ 306,022,607 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended July 31, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 | $ 13.22 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .27 | .30 | .18 | .29 | .31 |
Net realized and unrealized gain (loss) | (6.86) | (1.24) | (.17) | 2.85 | 5.52 |
Total from investment operations | (6.59) | (.94) | .01 | 3.14 | 5.83 |
Distributions from net investment income | (.36) | (.26) | (.18) | (.23) | (.29) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.39) | (1.34) G | (1.68) | (1.03) | (.82) |
Net asset value, end of period | $ 9.41 | $ 16.39 | $ 18.67 | $ 20.34 | $ 18.23 |
Total Return A, B | (40.19)% | (5.66)% | (.65)% | 18.32% | 45.48% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.27% | 1.22% | 1.25% | 1.29% | 1.31% |
Expenses net of fee waivers, if any | 1.25% | 1.22% | 1.25% | 1.25% | 1.28% |
Expenses net of all reductions | 1.25% | 1.21% | 1.25% | 1.24% | 1.25% |
Net investment income (loss) | 2.73% | 1.71% | .81% | 1.59% | 1.98% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 62,422 | $ 109,442 | $ 117,831 | $ 85,000 | $ 53,097 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 | $ 13.21 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .25 | .26 | .12 | .24 | .26 |
Net realized and unrealized gain (loss) | (6.87) | (1.24) | (.16) | 2.84 | 5.53 |
Total from investment operations | (6.62) | (.98) | (.04) | 3.08 | 5.79 |
Distributions from net investment income | (.33) | (.17) | (.13) | (.20) | (.24) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.36) | (1.26) G | (1.63) | (1.00) | (.77) |
Net asset value, end of period | $ 9.42 | $ 16.40 | $ 18.64 | $ 20.31 | $ 18.23 |
Total Return A, B | (40.33)% | (5.88)% | (.89)% | 17.98% | 45.12% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 1.54% | 1.47% | 1.50% | 1.55% | 1.61% |
Expenses net of fee waivers, if any | 1.50% | 1.47% | 1.50% | 1.50% | 1.57% |
Expenses net of all reductions | 1.50% | 1.47% | 1.49% | 1.49% | 1.54% |
Net investment income (loss) | 2.48% | 1.45% | .57% | 1.34% | 1.70% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 40,276 | $ 81,938 | $ 100,621 | $ 91,224 | $ 66,303 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 | $ 13.18 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .20 | .17 | .01 | .15 | .18 |
Net realized and unrealized gain (loss) | (6.81) | (1.23) | (.16) | 2.83 | 5.50 |
Total from investment operations | (6.61) | (1.06) | (.15) | 2.98 | 5.68 |
Distributions from net investment income | (.27) | (.10) | (.05) | (.15) | (.17) |
Distributions from net realized gain | (.03) | (1.09) | (1.48) | (.80) | (.53) |
Total distributions | (.30) | (1.19) G | (1.53) | (.95) | (.70) |
Net asset value, end of period | $ 9.35 | $ 16.26 | $ 18.51 | $ 20.19 | $ 18.16 |
Total Return A,B | (40.60)% | (6.37)% | (1.45)% | 17.42% | 44.31% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 2.04% | 1.96% | 2.02% | 2.05% | 2.10% |
Expenses net of fee waivers, if any | 2.00% | 1.96% | 2.00% | 2.00% | 2.07% |
Expenses net of all reductions | 2.00% | 1.96% | 2.00% | 1.98% | 2.03% |
Net investment income (loss) | 1.98% | .96% | .07% | .84% | 1.20% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 7,933 | $ 16,879 | $ 25,114 | $ 27,397 | $ 26,349 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 | $ 13.18 |
Income from Investment Operations | | | | | |
Net investment income (loss) C | .19 | .17 | .01 | .15 | .19 |
Net realized and unrealized gain (loss) | (6.81) | (1.23) | (.16) | 2.84 | 5.50 |
Total from investment operations | (6.62) | (1.06) | (.15) | 2.99 | 5.69 |
Distributions from net investment income | (.27) | (.11) | (.05) | (.15) | (.17) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.30) | (1.19) G | (1.55) | (.95) | (.70) |
Net asset value, end of period | $ 9.34 | $ 16.26 | $ 18.51 | $ 20.21 | $ 18.17 |
Total Return A, B | (40.64)% | (6.35)% | (1.45)% | 17.46% | 44.38% |
Ratios to Average Net Assets D, F | | | | | |
Expenses before reductions | 2.01% | 1.96% | 2.01% | 2.05% | 2.09% |
Expenses net of fee waivers, if any | 2.00% | 1.96% | 2.00% | 2.00% | 2.05% |
Expenses net of all reductions | 2.00% | 1.96% | 2.00% | 1.98% | 2.02% |
Net investment income (loss) | 1.98% | .96% | .06% | .84% | 1.22% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 13,226 | $ 24,984 | $ 36,854 | $ 36,669 | $ 29,410 |
Portfolio turnover rate E | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 | $ 13.28 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .30 | .34 | .24 | .35 | .36 |
Net realized and unrealized gain (loss) | (6.90) | (1.23) | (.17) | 2.85 | 5.56 |
Total from investment operations | (6.60) | (.89) | .07 | 3.20 | 5.92 |
Distributions from net investment income | (.38) | (.35) | (.24) | (.26) | (.34) |
Distributions from net realized gain | (.03) | (1.09) | (1.50) | (.80) | (.53) |
Total distributions | (.41) | (1.44) F | (1.74) | (1.06) | (.87) |
Net asset value, end of period | $ 9.46 | $ 16.47 | $ 18.80 | $ 20.47 | $ 18.33 |
Total Return A | (40.03)% | (5.39)% | (.37)% | 18.61% | 46.05% |
Ratios to Average Net Assets C, E | | | | | |
Expenses before reductions | 1.01% | .95% | .98% | .94% | .91% |
Expenses net of fee waivers, if any | 1.00% | .95% | .98% | .94% | .91% |
Expenses net of all reductions | 1.00% | .95% | .97% | .92% | .88% |
Net investment income (loss) | 2.98% | 1.97% | 1.09% | 1.90% | 2.35% |
Supplemental Data | | | | | |
Net assets, end of period (000 omitted) | $ 55,177 | $ 72,780 | $ 12,259 | $ 7,152 | $ 4,162 |
Portfolio turnover rate D | 98% | 86% | 84% | 65% | 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior 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, 2009
1. Organization.
Fidelity Advisor Real Estate Fund (the Fund) is a non-diversified fund of Fidelity Advisor Series VII (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, September 28, 2009, have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued 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. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are classified into three levels. Level 1 includes readily available unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes observable inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 includes unobservable inputs when market prices are not readily available or reliable. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. The aggregate value by input level, as of July 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments. Valuation techniques of the Fund's major categories of assets and liabilities as presented in the Schedule of Investments 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. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency - continued
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no 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 generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 11,700,352 | |
Unrealized depreciation | (76,973,284) | |
Net unrealized appreciation (depreciation) | $ (65,272,932) | |
| | |
Undistributed ordinary income | $ 222,914 | |
Capital loss carryforward | $ (15,429,654) | |
| | |
Cost for federal income tax purposes | $ 261,270,471 | |
The tax character of distributions paid was as follows:
| July 31, 2009 | July 31, 2008 |
Ordinary Income | $ 5,963,213 | $ 3,429,631 |
Long-term Capital Gains | 564,328 | 15,771,090 |
Total | $ 6,527,541 | $ 19,200,721 |
Annual Report
4. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $178,680,082 and $175,450,713, 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
Fee | Service
Fee | Paid to
FDC | Retained
by FDC |
Class A | .00% | .25% | $ 163,209 | $ 6,079 |
Class T | .25% | .25% | 231,228 | - |
Class B | .75% | .25% | 92,013 | 69,011 |
Class C | .75% | .25% | 144,379 | 20,415 |
| | | $ 630,829 | $ 95,505 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained
by FDC |
Class A | $ 28,403 |
Class T | 8,236 |
Class B* | 22,522 |
Class C* | 3,084 |
| $ 62,245 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of
Average
Net Assets |
Class A | $ 209,735 | .32 |
Class T | 156,248 | .34 |
Class B | 31,446 | .34 |
Class C | 45,819 | .32 |
Institutional Class | 123,076 | .31 |
| $ 566,324 | |
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 $7,555 for the period.
Annual Report
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $781 and is reflected in Miscellaneous Expense 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 $224,276.
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.
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions - continued
The following classes were in reimbursement during the period:
| Expense
Limitations | Reimbursement
from adviser |
Class A | 1.25% | $ 13,749 |
Class T | 1.50% | 17,366 |
Class B | 2.00% | 3,609 |
Class C | 2.00% | 2,115 |
Institutional Class | 1.00% | 2,917 |
| | $ 39,756 |
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 $1,301 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended July 31, | 2009 | 2008 |
From net investment income | | |
Class A | $ 2,373,225 | $ 1,522,432 |
Class T | 1,559,018 | 826,361 |
Class B | 251,874 | 112,289 |
Class C | 401,222 | 169,086 |
Institutional Class | 1,377,874 | 799,463 |
Total | $ 5,963,213 | $ 3,429,631 |
From net realized gain | | |
Class A | $ 204,885 | $ 6,384,487 |
Class T | 150,062 | 5,512,568 |
Class B | 31,214 | 1,322,405 |
Class C | 46,271 | 1,826,579 |
Institutional Class | 131,896 | 725,051 |
Total | $ 564,328 | $ 15,771,090 |
Annual Report
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended July 31, | 2009 | 2008 | 2009 | 2008 |
Class A | | | | |
Shares sold | 3,043,573 | 3,084,736 | $ 29,321,172 | $ 53,959,357 |
Reinvestment of distributions | 261,214 | 414,796 | 2,477,765 | 7,549,476 |
Shares redeemed | (3,348,691) | (3,133,970) | (29,451,189) | (55,521,726) |
Net increase (decrease) | (43,904) | 365,562 | $ 2,347,748 | $ 5,987,107 |
Class T | | | | |
Shares sold | 1,740,100 | 1,683,774 | $ 16,246,028 | $ 29,339,323 |
Reinvestment of distributions | 166,425 | 335,605 | 1,591,698 | 6,128,515 |
Shares redeemed | (2,627,118) | (2,420,642) | (23,368,486) | (42,866,254) |
Net increase (decrease) | (720,593) | (401,263) | $ (5,530,760) | $ (7,398,416) |
Class B | | | | |
Shares sold | 136,838 | 196,548 | $ 1,421,735 | $ 3,413,355 |
Reinvestment of distributions | 27,253 | 70,595 | 256,567 | 1,284,671 |
Shares redeemed | (353,148) | (586,018) | (3,397,456) | (10,346,901) |
Net increase (decrease) | (189,057) | (318,875) | $ (1,719,154) | $ (5,648,875) |
Class C | | | | |
Shares sold | 422,080 | 442,357 | $ 4,270,150 | $ 7,808,076 |
Reinvestment of distributions | 43,425 | 97,814 | 402,486 | 1,779,201 |
Shares redeemed | (586,087) | (994,473) | (5,492,116) | (17,624,265) |
Net increase (decrease) | (120,582) | (454,302) | $ (819,480) | $ (8,036,988) |
Institutional Class | | | | |
Shares sold | 7,788,306 | 6,261,402 | $ 62,314,949 | $ 103,513,317 |
Reinvestment of distributions | 54,679 | 48,936 | 559,339 | 883,388 |
Shares redeemed | (6,427,386) | (2,542,604) | (58,349,438) | (42,217,037) |
Net increase (decrease) | 1,415,599 | 3,767,734 | $ 4,524,850 | $ 62,179,668 |
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
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, 2009, 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, 2009, 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, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 28, 2009
Annual Report
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Mr. Edward C. Johnson 3d and Mr. James C. Curvey, each of the Trustees oversees 220 funds advised by FMR or an affiliate. Mr. Johnson oversees 262 funds advised by FMR or an affiliate. Mr. Curvey oversees 392 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Edward C. Johnson 3d (79) |
| 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 (74) |
| 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.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation |
Dennis J. Dirks (61) |
| 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 (55) |
| 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 (65) |
| 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). 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 (64) |
| 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 (65) |
| 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 (70) |
| Year of Election or Appointment: 2001 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 (60) |
| 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 (58) |
| 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). |
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Peter S. Lynch (65) |
| 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 (39) |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as Assistant Treasurer of other Fidelity funds (2009-
present) and is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (44) |
| 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 (37) |
| 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 (41) |
| 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 (40) |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Vice President and Associate General Counsel of FMR LLC (2005-present), and is an employee of Fidelity Investments. |
Holly C. Laurent (55) |
| 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 (50) |
| 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 (62) |
| 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 (47) |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian also serves as Chief Financial Officer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. Previously, Mr. Christian served as Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009) and as Vice President of Business Analysis (2003-2004). |
Bryan A. Mehrmann (48) |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes 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). |
John R. Hebble (51) |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (50) |
| 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
A total of 0.16% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
A percentage of the dividends distributed during the fiscal year for the fund qualifies for the dividends-received deduction for corporate shareholders.
| | | | |
September 2008 | 1% | | | |
December 2008 (Ex-Date 12/19/08) | 2% | | | |
December 2008 (Ex-Date 12/30/08) | 2% | | | |
March 2009 | 0% | | | |
June 2009 | 0% | | | |
A percentage of the dividends distributed during the fiscal year for the fund may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| | | | |
September 2008 | 2% | | | |
December 2008 (Ex-Date 12/19/08) | 4% | | | |
December 2008 (Ex-Date 12/30/08) | 4% | | | |
March 2009 | 0% | | | |
June 2009 | 0% | | | |
The fund will notify shareholders in January 2010 of amounts for use in preparing 2009 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 throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. 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. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2009 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 ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. In response to last year's financial crisis, FMR took a number of actions to cut costs and improve efficiency without weakening the investment teams or resources. 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.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure and broaden the focus of the investment research teams; (ii) bolstering the senior management team that oversees asset management; (iii) contractually agreeing to reduce the management fee on Fidelity U.S. Bond Index Fund; and (iv) expanding Class A and Class T load waiver categories to increase rollover retention opportunities and create consistent policies across the classes.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for each class, as well as the fund's relative investment performance for each class measured against a broad-based securities market index over multiple periods. The Board noted that FMR does not believe that a meaningful peer group exists against which to compare the fund's performance. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2008, 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 stated that the investment performance of Institutional Class (Class I) of the fund compared favorably to its benchmark for the three- and five-year periods, although the fund's one-year cumulative total return was lower than its benchmark. The Board considered that the variations in performance among the fund's classes reflect the variations in class expenses, which result in lower performance for higher expense classes.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance. The Board reviewed the year-to-date performance of Class A through May 31, 2009 and stated that it exceeded the fund's benchmark.
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 2008, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
Annual Report
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 6% means that 94% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked, is also included in the chart and considered by the Board.
Advisor Real Estate Fund
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2008.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class's total expenses, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expenses of each of Class A, Class B, Class C, and Institutional Class ranked below its competitive median for 2008 and the total expenses of Class T ranked above its competitive median for 2008. 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.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable, 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.
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 any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
In February 2009, the Board created an Ad Hoc Committee (the "Committee") to analyze economies of scale. The Committee was formed to consider 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 determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board concluded, considering the findings of the Committee, that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends, 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; (iii) Fidelity's compensation structure for portfolio managers and key personnel, including performance benchmarks used by Fidelity in evaluating incentive compensation for portfolio managers and research analysts; (iv) the structure and process of equity research and actions taken by FMR to improve the quality of research; (v) the selection of and compensation paid by FMR to fund sub-advisers; (vi) Fidelity's fee structures and rationale for recommending different fees among categories of funds; (vii) the rationale for any differences between fund fee structures and fee structures in place for other Fidelity clients; (viii) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees; and (ix) explanations for 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 material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York Mellon
New York, NY
AREI-UANN-0909
1.789708.106
Item 2. Code of Ethics
As of the end of the period, July 31, 2009, 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, 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 | $- |
July 31, 2008 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Fidelity Advisor Biotechnology Fund | $34,000 | $- | $4,500 | $- |
Fidelity Advisor Communications Equipment Fund | $35,000 | $- | $4,500 | $- |
Fidelity Advisor Consumer Discretionary Fund | $34,000 | $- | $5,600 | $- |
Fidelity Advisor Electronics Fund | $34,000 | $- | $4,500 | $- |
Fidelity Advisor Energy Fund | $37,000 | $- | $5,600 | $- |
Fidelity Advisor Financial Services Fund | $36,000 | $- | $5,600 | $- |
Fidelity Advisor Health Care Fund | $36,000 | $- | $5,600 | $- |
Fidelity Advisor Industrials Fund | $35,000 | $- | $5,600 | $- |
Fidelity Advisor Real Estate Fund | $37,000 | $- | $5,600 | $- |
Fidelity Advisor Technology Fund | $37,000 | $- | $5,600 | $- |
Fidelity Advisor Utilities Fund | $34,000 | $- | $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, 2009A | July 31, 2008A |
Audit-Related Fees | $815,000 | $410,000 |
Tax Fees | $2,000 | $- |
All Other Fees | $405,000 | $470,000B |
A Amounts may reflect rounding.
B Reflects current period presentation.
"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, 2009 A | July 31, 2008 A |
Deloitte Entities | $1,395,000 | $1,130,000 |
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: | October 7, 2009 |
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: | October 7, 2009 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
| |
Date: | October 7, 2009 |
